DWP rules on bank savings for benefit claimants - and when payments are affected (2024)

If you claim Government benefits, there are rules in place on how much money you are allowed to save before your payments are affected.

The Department for Work and Pensions has spelled out the rules on savings and the capital limits you are allowed to have. There are also instances when your savings may not count towards the capital limits you can have.

This comes as planned new powers will enable officials to find out if people have too much money to be entitled to benefits. The new Data Protection and Digital Information Bill will mean banks can be asked to check for any accounts that have more than the capital limits.

• Read More: DWP confirms every bank where benefit claimants' accounts will be monitored

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Britain's top 15 banks will be asked to set up systems that can monitor claimants' finances, reports BirminghamLive. Here we have detailed what savings are allowed in Government legislation and which ones could mean your benefits are cut or stopped altogether.

The limit on savings

There is a capital limit of £16,000 if you are claiming any of these means-tested benefits:

• Universal Credit
• Income-based Jobseeker's Allowance
• Income-related Employment and Support Allowance
• Income Support
• Housing Benefit if you are under State Pension age

This limit will stay unchanged when the new increased benefit rates come into effect in April 2024. You can have up to £6,000 in savings before your payments start to be affected. For every £250, or part of £250, over £6,000, you are treated as if you had £4.35 in income if you are on Universal Credit and this is deducted. So, for example, if you have £6,300 you will lose 2 x £4.35 = £8.70 off your monthly Universal Credit payment.

Those on income-based JSA, income-related ESA, Income Support and Housing Benefit lose £1 per week for every £250, or part of £250, that's over £6,000. These benefits are normally paid into accounts every two weeks. So, in these cases, if you have £6,300 you would lose 2 x £1 = £2 per week off your payment, meaning £4 is deducted when it goes in fortnightly.

Pension Credit

If you are getting Pension Credit, the first £10,000 of savings is not taken into account by the DWP. Every £500 over that amount counts as £1 of weekly income which is then deducted from your payment. There is no upper savings limit for being entitled to Pension Credit.

Housing Benefit (of pension age and over)

A useful guide at Scope explains that for those of pension age who receive Housing Benefit, you can have up to £10,000 in savings before it affects your claim. Every £500 over that amount counts as £1 of weekly income. And if you are getting Pension Credit guarantee credit, you can have more than £16,000 in savings without it affecting your Housing Benefit.

But if you are a pensioner claiming Housing Benefit jointly with someone who is below State Pension age, the working age savings limit of £6,000 applies before it affects your claim.

Care homes

The rules are different if you live in a care home. You can then have up to £10,000 in savings before it affects your income-based JSA, income-related ESA or Income Support payments.

Benefits not affected by savings

Savings do not affect the amount you receive in the following benefits:

• New style Jobseeker's Allowance
• New Style Employment and Support Allowance
• State Pension
• Disability benefits including Personal Independence Payment, Disability Living Allowance, Attendance Allowance
• Carer's Allowance

What exactly counts as savings?

Capital means any amount of cash you have to your name including savings in any bank or building society account, as well as premium bonds, stocks, shares and the value of any property that isn't being used as your main home.

Some amounts can be disregarded and there is a full list below.

Full list of all the money that can be disregarded

Government guidance goes into detail on when money doesn't count towards the capital limits you are allowed to have, and for how long it is ignored under DWP rules. Some cash is not taken into account for six months, some for 12 months, and other amounts are disregarded indefinitely.

Pension pots and compensation payments are among the amounts that aren't taken into consideration. The full lists are included below.

Capital that's disregarded indefinitely

• personal injury compensation payments
• the value of a property (including if you temporarily go into hospital or a care home and intend to return to the property to live in it). If you have more than one property, both can be disregarded if each of the premises is occupied by members of the claimant's family and the purpose is to avoid statutory overcrowding. But one of them will be counted as capital if it is occupied by non-dependants or was purchased as an investment opportunity, weekend retreat or country cottage.
• the value of a life insurance policy or an investment that includes life insurance

• money deposited with a housing association

• an occupational or personal pension scheme or any other registered pension scheme

• any payment made to people because they hold the Victoria Cross or George Cross

• the value of any premises occupied as the home of a close relative who has limited capability for work or has reached the qualifying age for State Pension

• the value of any premises occupied by a person's former partner if the person and their former partner are not estranged but are forced to live apart because of circ*mstances such as a person being in long-term care

• special compensation schemes established or approved by the Government including for Creutzfeldt-Jakob disease, contaminated blood products, the 2005 London bombings (the London Bombings Relief Charitable Fund), the Second World War (for being imprisoned or having suffered forced labour, injury, property loss or loss of a child), the London terrorist attacks, the Manchester bombing, historical institutional child abuse or Windrush, or to support anyone with a disability to live independently in their accommodation.

• the value of a funeral plan

Capital that's disregarded for up to 12 months

• local authority payments for children, young persons and others under certain legislation; for welfare needs related to disability or old age (other than living expenses); and Widowed Parent's Allowance or Bereavement Support Payment made under the bereavement Benefits Remedial Order

• any payment received within the previous 12 months by way of arrears of or compensation for late payment of certain benefits including Universal Credit, income-based Jobseeker's Allowance, income-related Employment & Support Allowance, Income Support, Housing Benefit, Child Tax Credit, Working Tax Credit and Council Tax Benefit

• payment of arrears (or to compensate due to non-payment of arrears) for Maternity Allowance of under £5,000

• a payment in consequence of a personal injury but not held in trust or used to purchase an annuity or not otherwise disposed of

• a payment made from the social fund - this can include the Winter Fuel Payment, Cold Weather Payments or any benefit-related advance payments such as Budgeting Advances (for emergency expenses if you are on Universal Credit) and Budgeting Loans (similar advances for those on Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance and Pension Credit)

• all elements of the Best Start Grant offered to parents in Scotland

• Funeral Support Payments from the Scottish Government

• payments made from the 2022 energy rebate scheme and £150 council tax rebate

• Local welfare provision - which means financial or other assistance given by a local authority to help with short-term emergency needs, including the Household Support Fund

• Bereavement Support Payment made to a claimant in receipt of Universal Credit

Capital that's disregarded for up to six months

• the value of premises a person intends to occupy as their home if acquired within the past six months, or where steps to obtain possession began within the past six months, or where essential repairs or alterations to make the premises fit for occupation were started within the last six months. This can be disregarded for longer if there are good reasons such as legal proceedings are still underway, or repairs will take longer than six months

• where a person has ceased to occupy premises as their home following estrangement from their former partner

• where a person is trying to dispose of premises - this can be disregarded for longer if the property hasn't sold and is for sale at an asking price that is "no more than the premises are worth"

• business assets where a person has ceased to be engaged in that business within the last six months and is taking reasonable steps to dispose of these assets or expects to restart the business when fit and able after recovering from illness. This can be disregarded for longer if the person's recovery is slower but they will still be able to resume the business at a later point.

• where a person has received an amount within the past six months to purchase a new home, as long as the cash is the proceeds from the sale of their previous home, has been deposited with a housing association, or is a grant made for the sole purpose of purchasing a home

• an amount received from an insurance policy within the past six months for loss or damage to a home or personal possessions

• a loan, grant or other funds for making essential repairs or alterations to premises occupied or intended to be occupied as the person's home - if the work takes longer, the disregard of the amount can be extended