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Your Savings and Benefits

By: Paul Geraghty - Updated: 6 Jun 2017 | comments*Discuss
 
Your Savings And Benefits

In the old days people had to fend for themselves, and would put money away in the good times so they could cope with the bad times. Today, the government provides a safety net for everyone, making a stock of savings less of a necessity than it was before. Some people still do accumulate significant savings, though. So will your eligibility for benefits be affected if you are one of those?

It seems rather paradoxical that those who have acted responsibly by building up a stock of savings to help them cope with adversity are penalised for doing so by the government. That is how it is, however. Your savings do affect your eligibility to receive some government benefits, potentially either reducing the amount you get or even meaning that you will get nothing whatsoever.

For those who have just been made redundant, this is an especially important issue because, in most cases, you will have received a lump sum redundancy payment. Sometimes, this can be a very large amount. Up to £30,000 can be paid free of tax, but if you just retain it, it will affect your eligibility for some state benefits.

Benefits Which are Affected By Your Savings

If you’ve just been made redundant, unless you have a new job lined up, you will naturally want to claim Jobseeker’s Allowance. There are two forms of Jobseeker’s Allowance : contribution-based and income-based.

Contribution-based Jobseeker’s Allowance is only available to those who have made enough national insurance contributions and is only payable for six months. It does not take account of your level of savings. Income-based Jobseeker’s Allowance does take your savings into account when determining you eligibility. It is not time-limited. Both contribution-based and income-based Jobseeker’s Allowance can be claimed at the same time.

The main state benefits which take savings into account when determining eligibility include income-based Jobseeker’s Allowance, Council Tax Benefit, Income Support and Housing Benefit.

How the Amount of Your Savings Affects Your Eligibility for State Benefits

For those benefits which are affected by savings, the basic rule is that if you have savings above the upper savings limit, which is currently £16,000, you will not be eligible to receive any benefit. If you have savings below the lower savings limit, currently £6000, your benefits will be unaffected. (Note that these values can change over time, so you will need to check for the latest values.)

For savings in between the two limits, your savings are assumed to yield a weekly “tariff income” of £1 for every £250 of savings. This equates to an assumed annual tariff income of approximately £50 for every £250 of savings, equivalent to an interest rate of 20%, which is clearly absurd and unattainable in the real world. Nonetheless, this is the basis the government uses for their calculations. The benefit payments you receive each week will be reduced by your assumed tariff income. So, if the lower limit is £6000, and you have £10,000 saved, £4000 of that will be counted. £4000 divided by 250 is 16, so you will get £16 less per week in benefits.

Savings and Benefits – Conclusion

When you’re made redundant, the payment you get from your employer is the silver lining to the cloud. Just be aware that, when it comes to Applying for Benefits, the silver lining may have a whole new cloud of its own.

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Trev - Your Question:
My wife works 16hr I am out of work due to being a carer for my mum who past away. She has left me 30.000 will this affect my housing benifit as I want to put 15.000 in a pension as I dont have one and pay a few bills of my rent is 1000 pm so the money wont ladt long

Our Response:
Yes, this is likely to affect your means-tested benefits. Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put himself or herself in a better position when claiming particular benefits. If you are found to have deliberately deprived yourself of capital and assets you will be treated as having “'notional capital'” to the value of the capital you disposed of.
RedundancyExpert - 13-Jun-17 @ 1:00 PM
My wife works 16hr i am out of work due to being a carer for my mum who past away. She has left me 30.000 will this affect my housing benifit as i want to put 15.000 in a pension as i dont have one and pay a few bills of my rent is 1000 pm so the money wont ladt long
Trev - 6-Jun-17 @ 7:52 AM
My husband got a lump sum plus arrears from a mine workers pension he wasnt expecting, the total was £21000, as he wasnt expecting this he gave early inheritance to grandchildren, totaling £20,000 went to council and was told as he gave it away it is still classed as our money !!! but if he spent it on a car it would have been ok !! although I am waiting for them to assess us I have been reading we will have to pay full rent. I cant really ask for the monies back, if after around 6 months we are struggling can I apply for housing benefit again. I am 70 husband ( disabled) 65. Thankyou
Chezza - 3-Jun-17 @ 9:58 AM
Denise Allen - Your Question:
HI I've just had to put a claim in for income based jsa after my national insurance based jsa finished I'm claiming just for my self as my husband has a private pension does any one know how long you must wait to hear from them please

Our Response:
You would need to contact Jobcentre Plus directly, as we have no knowledge of its administrative procedures and/or how long a claim may take.
RedundancyExpert - 24-May-17 @ 10:42 AM
HI I've just had to put a claim in for income based jsa after my national insurance based jsa finished I'm claiming just for my self as my husband has a private pension does any one know how long you must wait to hear from them please
Denise - 23-May-17 @ 2:04 PM
Hi: My husband received a £6000 pension pot two years ago. That was used to pay debts and purchase a car. Two years later, I am considering taking a lump sum pension pot of my own of £8000. We are and have been in receipt of Housing Benefit for three years due to my husbands disability. My question is, will Housing Benefit say I have £8000 capital which is permitted or will they add the two sums together is 6000+8000=£14000. Even though the first sum is long gone and was two years ago. I cant decide whether to take mypension pot or not. We are hoping to downsize to a Council Bungalow soon and I wanted it to fund the move, soft furnishings etc.
kaz - 23-May-17 @ 7:06 AM
I have just been accepted for a 1 bedroom flat, I'm currently getting ESA (support) I will be getting full housing benefit etc, I have just under £6000 in my account, now the housing officer has told me my ESA is going to be affected and I'm going to be losing money every week, I'm confused I just want to know where I stand, do I lose money each week or not?? Thank you
Bella - 11-May-17 @ 7:06 PM
I'm asking for a friend who is a pensioner she has £10k in savings & is receiving housing benefit & council tax benefit she also receives her pension (state) will theses savings affect her benefits ?
Sheri - 25-Apr-17 @ 12:51 PM
Husband is about to be made redundant with a fair sized redundancy package which we intend to use to clear debts.I work 19 hours a week and hubby intends to stay home and care for our baby and claim carers allowance for our disabled son.Will his redundancy payment affect our ability to claim tax credits and housing benefit etc?
Nessie - 21-Apr-17 @ 8:40 PM
I may be made redundant in the near future, I am 62. My husband 67 works 22.5 hours a week. Can I claim unemployment benefit?
Bobby - 21-Apr-17 @ 4:38 PM
I'm asking for a friend she's on slagging benefits and has been given £8000 by a friend will this affect her benefits she said she will open a 2nd bank acc to put £8000 in and keep quiet but I think it's a bad idea
Bush - 3-Apr-17 @ 3:44 PM
Hello, my job got made redundant on the 11 of march 2017 after 18 years of service. my service was carried over with 3 different TUPEs. last one happened 8 months before and the new employer went into administration after failed CVA. initially I was advised my the administrator to claim redundancy and accrued holiday via RPS but later they agreed to pay accrued holiday with the last monthly pay. when got paid the accrued holiday I receivedthe amount for hourly rate of holiday remaining hours only and did not get paid thelocation/car allowance which was a part of my store manager salary package. I've been receiving that allowance for more than10 years and never got stop or change. now they refusing to pay me that part and also they claim that I was getting that by due an payroll error for last eight months and will be recovering. !! I have payslips too prove that I've been getting paid months after months prior and after TUPE. Please help me with this. Thank you
khan - 1-Apr-17 @ 12:13 PM
Hello, I am on all benefits , that is isa , child tax credit , child benefit and dla, I have a private pension due to me in 2018 that by the way did not remember as I went bankrupt in 2000, ,so my pension is about 9,000 give or take when it comes , can I claim benefits still pls , housing and council tax also I get ?
R - 22-Feb-17 @ 1:55 PM
Hi, I'm the sole director of my own company and also 50% shareholder (the other 50% belongs to the wife who is a housewife and does not work). My contract has been terminated for more than a year and I have not been able to find a permanent or contract job since then. My wife and I have about £4000 saving all together in our personal accounts, but there is still £30k in our business account which I am reluctant to take out of the business as for any new contracts I will have to put some investment (buying tools, machines, etc.). Would this business saving affect my claim of JSA (or housing benefit) if I apply?
Director - 11-Feb-17 @ 8:37 PM
m4tyk - Your Question:
I am a UK citizen and spent three years working in Canada after transferring there with my job of 17 years. I was made redundant and received a lump sum that equated to £80k but 50% of that was taken in tax by the Canadian government. Upon returning to the UK I found that the £40k savings meant that I could not claim any kind of benefits so had to pay cash for everything in order to re-establish myself.Since returning, my wife decided she wanted a divorce and I share custody with our young child - she will likely receive 50% of my capital which leaves me with around £20k. She has a part time job and receives the maximum benefits which means that her annual income is in the region of £24k. I have been told that, because the money is in my bank, I am not entitled to any benefits and I am currently unemployed.I have a small pension in Canada and no other assets. I have also estimated that I have contributed to the state to the tune of £750k during my time in employment.My question is this: is it against any law to give that money away in order to be entitled to some kind of benefits?Please can you advise on my options?

Our Response:
I'm afraid this would be classed as 'deprivation of capital' and would affect your benefit claim at assessment stage.
RedundancyExpert - 10-Feb-17 @ 3:07 PM
I am a UK citizen and spent three years working in Canada after transferring there with my job of 17 years. I was made redundant and received a lump sum that equated to £80k but 50% of that was taken in tax by the Canadian government. Upon returning to the UK I found that the £40k savings meant that I could not claim any kind of benefits so had to pay cash for everything in order to re-establish myself. Since returning, my wife decided she wanted a divorce and I share custody with our young child - she will likely receive 50% of my capital which leaves me with around £20k. She has a part time job and receives the maximum benefits which means that her annual income is in the region of £24k. I have been told that, because the money is in my bank, I am not entitled to any benefits and I am currently unemployed. I have a small pension in Canada and no other assets. I have also estimated that I have contributed to the state to the tune of £750k during my time in employment. My question is this: is it against any law to give that money away in order to be entitled to some kind of benefits? Please can you advise on my options?
m4tyk - 9-Feb-17 @ 5:43 PM
I am a UK citizen and spent three years working in Canada after transferring there with my job of 17 years. I was made redundant and received a lump sum that equated to £80k but 50% of that was taken in tax by the Canadian government. Upon returning to the UK I found that the £40k savings meant that I could not claim any kind of benefits so had to pay cash for everything in order to re-establish myself. Since returning, my wife decided she wanted a divorce and I share custody with our young child - she will likely receive 50% of my capital which leaves me with around £20k. She has a part time job and receives the maximum benefits which means that her annual income is in the region of £24k. I have been told that, because the money is in my bank, I am not entitled to any benefits and I am currently unemployed. I have a small pension in Canada and no other assets. I have also estimated that I have contributed to the state to the tune of £750k during my time in employment. My question is this: is it against any law to give that money away in order to be entitled to some kind of benefits? Please can you advise on my options?
m4tyk - 9-Feb-17 @ 4:02 PM
Janeden - Your Question:
I have worked for lancashire county council for the last 16 years. This has been for 2 separate departments. 10 hours for one and 20 hours for the other. I also receive working tax credits which I will lose because I will be working under 30 hours. I am being made redundant for the 10 hour post at the end of march. I will be receiving just under £1500. I have £3000 in savings and a very low mortgage. Is there anything I will be able to claim while I find another part time job.

Our Response:
You may be able to claim Jobseekers Allowance if you have paid your National Insurance contributions for the last two years. This is regardless of the amount of savings you have. If you have children, you may be able to claim Universal Credit, please see Entitled To link here.
RedundancyExpert - 9-Feb-17 @ 2:30 PM
I have worked for lancashire county councilfor the last 16 years. This has been for 2 separate departments. 10 hours for one and 20 hours for the other. I also receive working tax credits which i will lose because i will be working under 30 hours. I am being made redundant for the 10 hour post at the end of march. I will be receiving just under £1500. I have £3000 in savings and a very low mortgage. Is there anything i will be able to claim while i find another part time job.
Janeden - 8-Feb-17 @ 9:14 PM
Squinty - Your Question:
I am currently going to be made redundant in May. The question I have is since my mother died 2 years ago approx my Father put me as joint name on his bank accounts due to the problems caused trying to access my mothers money will this affect my Job Seekers claim as my father has around £30000 in these accounts and although I have access to these this is not my money.

Our Response:
The amount of savings you have will not affect your eligibility to claim non-means-tested Jobseekers Allowance.
RedundancyExpert - 8-Feb-17 @ 11:26 AM
I am currently going to be made redundant in May. The question I have is since my mother died 2 years ago approx my Father put me as joint name on his bank accounts due to the problems caused trying to access my mothers money will this affect my Job Seekers claim as my father has around £30000 in these accounts and although I have access to these this is not my money.
Squinty - 7-Feb-17 @ 6:16 PM
Emlar - Your Question:
HiMy husband was left £30k when his dad passed away from the sale of his house, split between brothers. I as his wife have recently left work due to stress, but have interviews lined up in January. My husband is a self employed and has just been diagnosed with carpul elbow syndrome and it is painful to work. Would there be any way he would be entitled to any benefits? He has paid NI but scale 2, which he was advised to do, but would this have a bearing on what he could claim, as well as the savings? Is there any way he could invest the savings legally so not to be penalised?

Our Response:
Please see Entitled To link here . It has a benefits calculator which will be able to help assess what benefits your husband may be entitled to.
RedundancyExpert - 20-Dec-16 @ 1:57 PM
Hi My husband was left £30k when his dad passed away from the sale of his house, split between brothers.I as his wife have recently left work due to stress, but have interviews lined up in January.My husband is a self employed and has just been diagnosed with carpul elbow syndrome and it is painful to work.Would there be any way he would be entitled to any benefits?He has paid NI but scale 2, which he was advised to do, but would this have a bearing on what he could claim, as well as the savings?Is there any way he could invest the savings legally so not to be penalised?
Emlar - 20-Dec-16 @ 9:35 AM
Rich - Your Question:
I am a part time worker being offered voluntary redundancy. I care for an elderly mother and am unable to work full time though do pay NI contributions.I also get a small pension from a former employer on health grounds. Am I likely to receive JSA? The redundancy will be a small amount so won't take me over the threshold for claiming but my annual pension probably would. Is there also a minimum amount of hours I would have to be available for work were I to claim?

Our Response:
You would have to contact the DWP directly regarding this matter in order to see if you would qualify. If you are seeking work there is no earnings limit to qualify for JSA if you have paid NI for two tax years or more and if you are actively seeking work, please see link here.
RedundancyExpert - 8-Dec-16 @ 1:43 PM
I am a part time worker being offered voluntary redundancy. I care for an elderly mother and am unable to work full time though do pay NI contributions.I also get a small pension from a former employer on health grounds. Am I likely to receive JSA? The redundancy will be a small amount so won't take me over the threshold for claiming but my annual pension probably would. Is there also a minimum amount of hours I would have to be available for work were I to claim?
Rich - 8-Dec-16 @ 8:42 AM
I claim ESA and had a isa back in 2014. I earned 300 pound from my isa which totalled to £5,906. I draw out the £5,000 to pay a debt off. Will this effect my benefits?? I had money in my every day current account at the time but not savings. Thank you
Jo - 22-Nov-16 @ 6:08 PM
confused - Your Question:
My savings were for a rainy day but being honest with the dwp hasn't worked out.benefits reduced etc. scared to spend any money now incase they think I'm trying to reduce savings just in order to scrounge more benefits.Just what am allowed to spend my own money on ?Thinking of making a will and paying for my own funeral now.would they allow that ?advice appreciated.best wishes,Owen

Our Response:
The deprivation of capital has to be 'intentional' and something you wouldn't ordinarily spend money upon. Therefore, if you need a replacement car, then this is understandable, but if you decide to buy a brand new Range Rover, then this could be seen as spending beyond your means. You would have to speak to the DWP directly regarding this as we cannot comment upon individual purchases. But as a rule the DWP will look into whether it can be proved that you are deliberately getting rid of capital in order to qualify for means tested benefits.
RedundancyExpert - 16-Nov-16 @ 12:37 PM
my savings were for a rainy day but being honest with thedwp hasn't worked out ...benefits reduced etc .scared to spend any money now incase they think I'm trying to reduce savings just in order to scrounge more benefits . Just what am allowed to spend my own money on ? Thinking of making a will and paying for my own funeral now ...would they allow that ? advice appreciated . best wishes, Owen
confused - 15-Nov-16 @ 2:13 PM
we have sayings of £23,000 that we put buy in an isa for the kids and totally forgot about it can, and were claiming esa as i am now unfit to work. the benefits section has pulled us in saying we were claiming benefits that we were not entitled to what can happen to us. the money has been put away for over 9 years and we have not used it as we forgot about it any help or advice would be helpful regards bm
bm - 12-Nov-16 @ 7:11 PM
tina - Your Question:
I had over 16000 in 2012 I had an overpayment of esa which I pay back monthly out of my dla now the esa are saying I have still got that money which I havnt and wont pay me esa could I claim jsa

Our Response:
You can only claim JSA contribition-based JSA if you’ve paid enough National Insurance contributions as an employee in the previous two tax years.
RedundancyExpert - 31-Oct-16 @ 10:20 AM
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