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?
If you've lost your job and need to understand how savings affect your benefits claim, you might find it helpful to use our Redundancy Action Plan.
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.
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Try our Redundancy Action Plan free, here on this site →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.
Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.
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.
PPS I planned this interest only mortgage deal to coincide with my retirement, but had to have a triple bypass, then only to be told a year later I was diabetic lol
Quote: “The best laid schemes o' mice an' men / Gang aft a-gley.”
My house just sold for £173,170 and I have found a house local so I do not need to sign on in another post code. My JSA coach is a treasure and is good with me. She told me if I stay in the same post code I will only have to report my change of address.
The house I am going to buy is just over 95k and I reckon I will have £16.220 left in my bank account after I purchase it.
The house is in need of work inside and outside, so that will cost at least 10k leaving me with £6220.
I will be buying a car and hope in my last few years, it will get me a job but I am not counting on it.
I own my brother £3,400 as he was paying my interest only mortgage because the government decided not to help people that paid their taxes and national insurance contribution since leaving school with their mortgage payments.
They (The government) wanted to charge me interest on helping with my mortgage payment, so I told em to ' go do one! And asked my brother to help and I would pay him when I sold the house.
The time has come and now I am undecided what to do with my situation. My ultimate question is (I Guess) do I have to tell my JSA coach that at some point I will have money over the limit of £16k but will need it to make the house safer to retire in, and will the fact I have to pay back the money my brother was giving me to pay the mortgage, get the house fixed and buy a car affect my JSA?
Ps I could go on and I know there are a great many people in their 60s in this same situation as I find myself in.
PPS I planned this interest only mortgage deal to coincide with my retirement, but had to have a triple bypass, then only to be told a year later I was diabetic lol
Quote: “The best laid schemes o' mice an' men / Gang aft a-gley.”
I don't want to just do nothing and watch this money dwindle away so I have thought of a business to start which would bring me into contact with people only minimally. Although I get no payments from ESA I am still credited with N.I payments. Do you know if I am entitled to any financial & other help from the Enterprise Gateway to get started. Normally anyone who is on ESA and does this, do receive this help.
My question is - I've heard that a lot of benefits are means tested and I am trying to understand whether my wife's separate savings Would be taken into account as part of means testing If I wanted to claim benefits or whether it's just my savings. FYI. - we live in council rented accommodation.
Thank you
I thought I would have to live on my redundancy and no one told me any other. I now have no money left so I went to claim universal credit where I was told I didn't have to use my redundancy to live on and I could of claimed.
Is there anyway I can get some of my universal credit back dated as I didn't know any of this.
Thanks
Grateful for your advice on whether I am actually eligible for NI credits (I'm sure it's based on NI contributions, so there's no reason why not) and if so, is there a quicker way to apply for them? Thanks.
I have been saving to get a deposit for a house, and these savings now come to around £8.5k.
However I also have another account in my name that my daughters child benefit allowance goes straight into that I don't touch so she will have a nest egg when she turns 18. There is roughly around £2k in there at the moment. This money obviously isn't for me, but is in my name.
Therefore my savings total comes to around £10.5k. I know this still comes under the £16k threshold so can still claim, but what I receive would be reduced. My question is, what about if I transferred this money to my parents to look after? Would the benefits people check accounts and see that I've just transferred £2k from my account and think I'm trying to cheat them? Also would it be possible to transfer more to my parents so that my savings then go below the £6k and therefore benefits received won't be affected at all?
My fiancé has died unexpectedly, I took a lump sum to purchase a motor home which I've now sold
Therefore, I have money in the bank but it I'd pension money
Will I still be able to claim sickness benefits
I've recently been made redundant. Would my husband's loan of £10K be taken into account (as "savings") for an application for JSA/Universal credit? If so, think this would be entirely unfair as he took the loan out to tide us over our financial crisis?
poor people will never be able to buy a small flat.. and never be able to do buzemss..
If he was to take the lump sum payment of 13,000 what would happen to his benifits. He doesn't claim anything but my mother receives income support and that's what they live on.
Would their benifits be affected?
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 received the amount for hourly rate of holiday remaining hours only and did not get paid the location/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
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?
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?
Thank you
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
regards
bm
Also I've worked part time as a musician earning 5k, which I will be stopping at the end of the year. Will I still be able to claim benefits at the beginning of next year, or will I get deducted money based on my previous year's tax return. Despite the fact that I won't be working or have an income or have any savings?
Thanks in advance
I understand our joint savings attract the Tariff income between £6000 and £16000 but as our outgoings bills/mortgage/food etc will reduce our savings weekli and monthly is the tariff ammended according or do we have to keep sending bank statements? The JSA advisors seem not to know the answer to this question. Thanks in advance for your assistance.
I did not spend this money in case I became unemployed and needed to help support myself.
I am a single person living alone in a rented house.
My previous experience of being unemployed showed me that because of this I would only get a certain amount of Housing benefit which would leave me having to make up a shortfall of around £250 a month.
I never moved as I have usually found employment within 6 months and moving to a shared house seemed an unnecessary upheaval for what is usually a shortish period of time .
Therefore every month my savings will reduce by around £250 to supplement my rent (along with any other expenses which the JSA does not cover .
So although I start off £2,000 over the allowed amount this will reduce quickly through supplementing the rent. So so I have to keep showing my bank balance every month for my JSA to be recalculated and how is this taken into account?
Thanks
I have 3 children work part time and therefore receives housing benefit, child credit and SGO allowance for our little one.
Can I open an ISA account and up to how much can I save per year for my benefit not to be affected is that £6000 ? I am a bite confused.
I would like at some point be able to buy.
Thanks by advanced
I am currently in my notice period & am due to be made redundant (voluntary) next month. I will receive just over £11,000 but also have approximately £13,000 in an ISA. I do have a mortgage but this will be covered by the rent I receive from my tenant as I have moved in with my partner. What, if any, benefits would I be able to claim as it would appear that being sensible and saving is not going to benefit me.
Many thanks
unfortunately the benefit people still think he has this stashed away and are deducting some of his benefits off him although he has submitted statements from the building society stating his account is closed.At present he is awaiting a detox course but this reduction in his benefits is getting him down is there a way we can appeal and get his benefits back to normal regards Dave
I was told that I will receive my redundancy payment from the National Insurance Fund and that the statutory amount would be paid in full.
I was also told that I could claim my pay in lieu of notice after the three months period was up. (12 weeks was my proper notice period)
I have some questions as I am getting mixed answers:
1) Is the redundancy money counted as taxable income ?
2) I understand the pay in lieu of notice is having deductions made of monies earned in the interim. I get Universal Credit. Will it deduct the full amount paid, or does it not take in to account the Housing Benefit included within that ? I was told there is a limit of about £77 a week on what they can deduct from earnings that come through benefits. It's all a bit confused.
Many thanks.
how do i appeal against this finding i have already submitted Bank statements to show this.
There was an occasion when i drew out £7000 in one go and they think i stashed it away
how do i appeal against this finding
I was made redundant in November 2014 and claimed contribution-based JSA for 6 months, from July 2015 to January 2016. When this finished I made a claim for income-based JSA. This was turned down by the Job Centre as my total savings are £22,000, which is obviously £6,000 over the £16,000 limit. However, of my total savings, £12,000 is a loan from my building society (which I took out for home improvements but never used and is currently sitting in an ISA), for which I am making interest-only payments and will have to repay the £12,000 capital in full when the mortgage completes in about 7 years' time. Was the Job Centre correct in turning me down? Are loans meant to be considered as part of the £16,000 limit?
Can I claim job seekers allowance?
Can I claim my pension before I am 65?
I have some savings and have paid NI all my working life, with no breaks.
Our problem is when should we give her this notice? The CAB had two different pieces of advice. ACAS agreed with one but they weren't entirely sure.
One answer was that if we give her redundancy notice after she has stopped receiving SSP from us i.e. in February or later 2016, then we are told she may no longer be entitled to any redundancy pay from us as she will be on ESA and we will no longer be paying her - her last working week will have been June 2015 and the SSP will have finished in January 2016. In that case we would have to give her redundancy notice in October so that she would receive the correct amount of redundancy money in January.
Other answer was that the above is incorrect and we can give her redundancy notice at any time that suits us and to tie in with our planned retirement date. In other words we can give her notice in March and she will be entitled to the same amount of redundancy payment as if we had given her notice in October this year.
Many thanks.
So because I couldn't go back I was offered voluntary redundancy, as I was between a rock and a hard place .. So I taken this offer ..
Now at the same time back in sept last year my 27 year old son suffers from seizures and learning problems he was in a care home, but was not being looked after and also making cuts within the system. So he returned home. To live with me,
So I made a claim for carers allowance to look after my son, but I back dated it from the 26th March 2015. But I should have made it from the 8th July, 2015. My last day of work of being made redundant but I put the 26th by advice given as I was looking after Jason my son even the fact I was also ill, not counted because I was getting SSP. Which is fair enough,
She asked me what my final payout was, which was £3,300 and pay in lieu of notice 1,757.75
SSP £332.00 after taxing me on my redundancy I was left net of £ 4,864.00
Will I still be about to get carers allowance for looking after my son, ? And will I get income support.. . .? Not really sure how this all works as I have always worked and only to my health and my sons poor health I am here where I am, other wise I be still working and would have paid someone to look after jay the only thing I would change is to work part time which I can't do any at the moment not until my tests return. Please help as the woman from carers allowance didn't come across to nice :(
I have savings above £16,000 ..and would like to split this between my three children.
Would I have to show my bank account and savings account to show how the the money was spent in the last 6months...
Savings above £16'000 and would love to give my three children the rest of the money ,
I am widowed and live in a 2 bed apartment,can I claim any benefits and would I have to show my bank account and savings account to show where the money went after 6 months ..
We also receive Housing benefit and council tax benefit.
How much money are we permitted to save before our benefits are affected.
both over 80.. Or total income ie pensions attendance allowance, carers allowance and income support equals £247.10 per week plus £110.00 housing benefit.
How can I legally reduce my savings.The £11,000 includes £2,000 left in a will to my Wife.
Kind regards....................George Shepherd
Would this of affected his claim to jobseekers and would he of had to declare it.
a one off sum at all. I don't want to live it up on expensive holidays etc. I just want to use the money for carpets, furniture etc to make my home comfortable during my old age. I am only 55 but due to advancing ostioarthrtis I am unable to work any longer.
Can I also get widows pension? and if so, will that effect any other money I get? I think I am entitled to half of my Husbands works pension also and if so, will I be allowed to keep the widows pension and half of my Husbands works pension? with the remainder of life insurance I will get, the 19,000, will I be allowed to get jobs done at home, ie, garden done and new furniture and take a holiday, before anything happens to the 19,000
Thank you
I understand the rules on savings, but as I technically would not receive any money/savings directly, would this be possible? Btw, I live in Scotland.
Many thanks in anticipation.
I can find no clear info if i have to declare it, and if i am allowed to gift some of it to my house mate to help pay some of hers?
I know there will be another payment coming soonish which will be over £16k will they also take into account this £5k if i spend it all / loan it to my house mate to stop her paying so much interest?
Thanks in advance
-Khal
Thanks blodwyn
I have a £186,000 mortgage and no idea of when I will get another Job.
I am feeling very worried and stressed, To help put my mind at rest, are there any benefits that I would be entitled to, and would I get any help with my mortgage payments ?
Should I use my savings as planned to reduce my mortgage payments and fix my rotten windows ? (would this help or go against any assistance I could receive ?
All advise / information would be very help full, please help me.
Lots of families give money away before a death - the reason is that you can avoid paying some inheritance tax by gifting people things before your passing. But there is a limit to how much you can give away
I am suggesting you do a similar thing here, if your daughter has the money in her savings account or in a trust fund for her future then surely the funds are then not available to you and not legally yours in which case can you now claim?
Further research needs to be done but that's the road In would look to go down - good luck x
in bank accounts outside of the UK does that capital still count? Is the IOM or Jersey outside of the UK for this purpose?
regards pc
can this be questioned-can they prove i am getting the amount that they have
stipulated-has this been passed by an act of parliment.
I am in receipt of disbaility living allowance and ESA. It was a good few years ago that I last worked, yet have worked throughout most of my life in menial jobs that eventually added to the clinical depression I suffer permanently. I am now 41, living in supported housing and absolutely teriffied for my future, as have no substantiative savings, no family support or children to assist me when I reach my old age years.
I was severely abused as a child and the traumatic experiences marred much of my attempts to try and better my circumstances. I am quite educated and smart, yet know that I will never be able to go back into work, (unless) it will be rewarding and salary well above anything I have ever earned before - another menial job well below my skill set, even if capable, would swiftly destroy my personal morale. I have no idea how to get myself out of the predicamant I am faced, and do not enjoy living on benefits whatsoever. I can't afford essential furniture or even a holiday - my last one was a good ten years ago now.
I am fearful of saving the pittance I get on benefits in case I end up with too much and be thrown off them in 20 years or so, and so I either get lucky and train extensively on free courses in order to get a well paid salaried job from home - I am immensley (agoraphobic), part of my legitimate anxiety condition; or I save what little I have and hope that by the time I get a state pension; will at least be able to support myself okay when the time comes.
I assumed I was on contribution based esa which would not affect my savings but recently had a notification of customer compliance interview letter from DWP and I cannot find my my original paperwork and are now unsure if my esa is contribution based or income based...now in a state of panic !
How can I find this out and just how much are you able to save if it is income based esa ?
I've recently taken voluntary redundancy after 26 years service in the public sector.
Am I entitled to job seekers allowance or any other benefit until I find further work?
Many thanks.
Do the ISA accounts have to be declared when claiming benefits, Job Seekers and Housing Benefit?
Thanks
I have been offered vol. redundancy and would receive a total of approx. £10.500. total.
Can you advise what benefits I would be entitled to/ can I claim immediately and how much can I claim Ie would be eligible for Housing / council tax benefit/ JSA.
I would be keen to pay off debts of appox £4,000 from the redundancy money.
I'm an 49 and been with the company approx. 5yrs and my husband is 56 & unemployed for the past 3 yrs but is not in receipt of any benefits -
We have no savings and no other income.
I am 62 years old and I don't have my state pension yet.
Thanks
i have jobseeker's allowence as alone parent , and my husbaned just come to live with me ,and we want to make Jobseeker's Allowance - Joint Claims and he had saveing more 7000 befor 2 monthes but he don't have that mony now because he bought a car 4000 and pay for car insurance 1500 should i still tell them about that mony . They want bank statment for the last six monthes .
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