Diploma for Financial Advisers
Diploma in Accounting
Member of London Institute of Banking and Finance

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If you’re claiming Universal Credit or considering applying, you might be wondering, “Do Universal Credits check your savings?” Understanding how your savings affect your eligibility and payments is crucial. Universal Credit is designed to provide financial support for those on low incomes or out of work, but it’s means-tested, which means your financial circumstances, including savings, are taken into account. Here’s everything you need to know about how savings impact your Universal Credit claim.

How Do Savings Affect Universal Credit?

When you apply for Universal Credit, the Department for Work and Pensions (DWP) will assess your financial situation. This includes checking your income, household circumstances, and savings. Your total savings, along with those of your partner (if applicable), can directly affect the amount you receive.

1. Savings Under £6,000:
   If your total savings are below £6,000, they won’t affect your Universal Credit entitlement. You can have this amount in your bank accounts or other accessible funds without any reduction to your payments.
2. Savings Between £6,000 and £16,000:
   If your savings fall within this range, they will impact your payments. For every £250 (or part thereof) above £6,000, the DWP assumes you receive £4 of monthly income from these savings. This “tariff income” reduces the amount of Universal Credit you’re entitled to.Example:
   If you have £10,000 in savings, this is £4,000 over the £6,000 threshold. The DWP will treat this as providing £16 of monthly income (£4 for every £250 over the threshold), which will reduce your Universal Credit payments by £16 per month.
3. Savings Over £16,000:
   If you or your partner have combined savings of £16,000 or more, you won’t qualify for Universal Credit. In this case, you’ll need to rely on your savings or explore other benefits that aren’t means-tested.

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What Types of Savings Are Considered?

The DWP looks at a variety of financial assets when determining your eligibility:

• Bank and Building Society Accounts:
  This includes cash savings and current account balances.
• Stocks, Shares, and Bonds:
  Investments are included, and their value is taken into account.
• Property (Other Than Your Home):
  Any additional properties you own are considered, including their market value minus any outstanding mortgage.
• Premium Bonds:
  These are treated as savings and factored into your total.

It’s important to note that the DWP requires transparency. Deliberately hiding savings could lead to penalties or legal action.

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How Does the DWP Check Your Savings?

The DWP has access to a variety of tools and databases to verify your financial circumstances. When you submit your claim, you’re required to provide honest and accurate information about your savings. The DWP may also conduct the following checks:

• Bank Statements:
  They might ask for your recent bank statements to verify your savings and spending habits.
• Data Matching:
  The DWP can cross-check your details with information from HMRC and other government agencies.
• Fraud Investigations:
  If there’s suspicion of incorrect reporting or fraud, a more detailed investigation may occur, including requesting additional documentation or even visiting your home.

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Tips for Managing Savings While on Universal Credit

1. Be Honest:
   Always declare your savings accurately when applying or updating your claim. Failure to do so can lead to overpayments, fines, or benefit suspension.
2. Plan Your Finances:
   If your savings are close to the £6,000 or £16,000 thresholds, consider how accessing or spending these funds might impact your entitlement.
3. Seek Advice:
   If you’re unsure how your savings might affect your Universal Credit claim, reach out to a financial guidance professional or a benefits adviser for tailored advice.

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Final Thoughts

While savings can affect your Universal Credit entitlement, they don’t automatically disqualify you unless they exceed £16,000. By understanding the rules and reporting your circumstances accurately, you can avoid unnecessary complications and make the most of the support available to you. If you’re in doubt, seek professional advice to ensure you’re managing your finances effectively while remaining eligible for the benefits you need.

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