The Department for Work and Pensions (DWP) enforces strict rules around how much capital or savings a claimant can have before it affects their eligibility for means-tested benefits. Thousands of claimants find their benefit payments halted, reduced, or denied altogether if they exceed the savings threshold.
This article explains the savings limits applied by the DWP, how exceeding them affects benefit payments, and the financial thresholds that prospective claimants need to be aware of.
Understanding DWP Savings Rules
The DWP manages a broad range of social security benefits in the UK, including Universal Credit, Income Support, and Pension Credit. Many of these are means-tested, which means your income and savings can impact how much you receive—or whether you are eligible at all.
The pivotal savings threshold currently stands at £16,000. Claimants with savings above that figure are not eligible for most means-tested benefits. Claimants with more than £6,000 but less than £16,000 will face a tapering of their benefits—the more they save, the less they receive.
Savings limits are assessed under what is known as a capital rule. The “capital” in question includes money in current accounts, savings accounts, ISAs, shares, property (other than your main residence), and premium bonds.
Key Thresholds Explained
The rules differ slightly depending on the benefit being claimed. Below is a breakdown of how savings levels impact different benefits:
Universal Credit (UC)
Universal Credit claimants are allowed to have up to £6,000 in savings without any impact on their payments. Once savings exceed this amount, the DWP applies a “tariff income”—an assumed income of £4.35 per month for every £250 (or part of £250) over £6,000.
If a claimant’s savings reach or exceed £16,000, they are no longer eligible to claim Universal Credit.
Pension Credit
Similar to Universal Credit, the lower threshold is £10,000 for Pension Credit. Any amount above this incurs a tariff income of £1 per every £500 of savings. This reduces the level of Pension Credit paid.
For those with savings over £16,000, it’s still possible to claim Pension Credit, but the savings will significantly reduce the payment amount.
Income-Based Jobseeker’s Allowance (JSA)
Both of these benefits also implement the £6,000 lower threshold and £16,000 upper cut-off. Claimants with savings above £6,000 see deductions, and those with £16,000+ are entirely disqualified from claiming the benefit.
What Counts as Savings?
Common sources of capital assessed by the DWP include:
– Money in bank or building society accounts (including current accounts)
– National Savings certificates and Premium Bonds
– Stocks and shares
– Property (excluding your main home)
– Redundancy payments
Even if savings are held jointly (e.g., in a couple), the total capital is considered when calculating eligibility and payments.
Certain types of savings or capital may be disregarded for specific periods or under certain circumstances. For example, compensation payments for personal injury might be disregarded for up to 52 weeks.
What Happens If You Breach the Threshold?
If your savings increase above the permitted limit, you are required to inform the DWP as part of the conditions set out in your benefits agreement. Failing to do so can lead to investigations and repayment demands.
For instance, if you inherit money, receive a large redundancy payment, or have a lump-sum pension withdrawal that increases your savings beyond £16,000, you must report it. The DWP can backdate payment adjustments and seek recovery of overpaid amounts, which may incur penalties or sanctions.
Reviews and Reassessments
The DWP conducts regular eligibility assessments. In many cases, if a change in circumstances—such as savings changes—isn’t disclosed voluntarily, it may still be picked up during scheduled reviews or data-matching processes with banks and HMRC.
Claimants are encouraged to keep clear records of their financial accounts and transaction history to support their benefit claims during any review process.
What to Do If Your Benefits Are Cut
If your benefits have been reduced or stopped due to savings exceeding thresholds, you can:
– Request a mandatory reconsideration if you believe the DWP made an error
– Contact a welfare rights adviser for guidance
– Appeal to an independent tribunal if the mandatory reconsideration is unsuccessful
Summary
While saving money is prudent, for those reliant on means-tested benefits, exceeding the DWP’s savings threshold can have serious financial implications. Understanding the savings rules and staying within the prescribed limits is essential to maintaining eligibility for support. Transparency with the DWP, timely reporting of changes, and keeping documentation in order can help avoid sanctions or sudden loss of financial support.
