How much savings you are allowed before it affects the benefits

Gazella77 · 24 January 2008 at 9:02PM

Damo, thanks, I don't think I will qualify for income support anyway.

So this mortgage free flat abroad will be treated as capital, right? As I said I bought it for £10.000 and it's worth around £20.000 - £25.000 now.
The flat I bought here has got a mortgage for another 24 years, currently £720 a month, raising to £740 next year. So it's huge for me :-(

Gazella77 · 24 January 2008 at 9:11PM

and also maybe you can help me with this:

my brother, who lives with me lost his job and went to job centre to find out if he can claim anything. He came back saying he could get some housing benefit but I would have to claim it as the property is in my name.
But I don't want to have any troubles in future, with my current salary I am not entitled to any help, and my brother contributes to the bills only. It even crossed my mind that he can be treated as a part of my household. But in reality he only sleeps here, we do not share anything else, not even food . He can't afford renting so I agreed to have him here.

lucia15 · 25 January 2008 at 10:03PM

Hi again Gazella. With regards to your 2nd property abroad, an independent valuation would be done. Any outstanding mortgage amount would be deducted, and the remainder treated as capital.

To your other query, your brother is unableto claim HB as the property has no rent liability as you own it. He cannot rent from you as he is classes as living with a close relative. I assume that you are the council tax payer so neithr would he be able to claim council tax benefit. You could claim 2nd adult rebate (contact your local Housing Benefit office). For this, all you need to do is complete a claim form and provide proof of your NI number. No proof of your income and capital is required. An assessment would be done on the income your brother has (if any), and you would receive a rebate of up to 25% on your council tax bill.
As for your brother claiming Jobseekers, etc, it depends how he left his last job, ie, was he made redundant/sacked? If he was sacked, JSA can be sanctioned from 1-26 weeks so he would need to contact his local DWP office to discuss his circs.

Lucy, HB Assessor.

Gazella77 · 26 January 2008 at 12:36AM

Thanks Lucy,

there is no remaining mortgage on a foreign property, as I was working in 3 posts, evenings and weekends to pay it off and have it off my chest, now I can see it wasn't worth it :-(

Yes, my brother has just brought paperwork for 2nd adult rebate, so we'll do that.
I just hope it won't affect me in future, and I hope his income, however low, will not be taken into account when I make any claims in future.

Thanks so much for all the info.

bestpud · 26 January 2008 at 11:20PM

I may be wrong but I think the confusion is because people on here do not know what you will be claiming.

If you are going to continue working and claim tax credits only, then it will only be the interest you earn on any savings (well, if it is over £300 a year) that will be taken into account. Plus, for tax credit purposes, money in an ISA account does not count as income.

If on the other hand, you won't be working (or think you may not be) and you will be applying for income support and council tax benefit etc, then the £6000 savings rule comes into play.

You have to declare savings for both - it is just treated differently.

Does that ease the confusion a bit?

Gazella77 · 27 January 2008 at 12:51PM

Thanks, it does.
I guess I am the one causing confusion as I don't know what to do after 6 months of my maternity. I am afraid that what I earn working full time is not enough for my mortgage (£740)+ child care costs (around £800) and was trying to find out what I can be entitled to if I go back to work part time. My savings won't last me long obviously with such expenses:mad:

I guess I need to wait for the baby and then claim and get more advice because for now the offices can't help me.

kilos · 27 January 2008 at 4:40PM

Read this topic with great interest. Some say you only declare the interest made on the savings but the expert Benefits Advisor state all accounts to be declared, otherwise its fraud; others say, savings don't effect tax credit.

I recently fell on my feet, thanks to a Premium Bonds win and now have a total of £21,000 savings, would this effect my Tax Credit 2008-2009 application ? my status is married, 3 children under 18 and job annum pay of £19,000.

OR

If I decided to pay my mortgage off £13,000 leaving me with £8,000 savings left, will the Inland Revenue see it as, trying to lower my savings, so I would qualify for better Tax Credit ?

Basically if keep the savings, what effect will it have ? If I pay mortgage, what effect will it have in April Tax Credit renewal.

Got to say, I am only in this situation, thanks to a lucky win, can't even a get £10 on the lottery. Thats why Tax/Working Credit is very important to me and my family; as its been a life and bread line.

Another question, if the lowest saving amount is £6,000 before it effects your application, then surely you are allowed to deduct this £6,000 from any savings total, as it does not count; they are allowing you this, before some sort of calculation is done to work out your Tax Credit, as stated in previous post £6,000 - £16,000 bracket; they must be giving you £5,999,99p grace.
Therefore in my case my total savings would be £15,000 am I correct in saying this. Thanks!

Gazella77 · 27 January 2008 at 5:29PM

Wow! Congratulations Kilos:beer:

From what I learned here probably now this would be treated as your capital. Maybe try to leave 6000 and pay the rest into your mortgage? At the end of the day you are trying to lower your debt but I am no expert here.

I also thought of using some of my savings for the mortgage but am really scared of being left without some emergency money.

bestpud · 27 January 2008 at 5:51PM

kilos wrote: »

Read this topic with great interest. Some say you only declare the interest made on the savings but the expert Benefits Advisor state all accounts to be declared, otherwise its fraud; others say, savings don't effect tax credit.

I recently fell on my feet, thanks to a Premium Bonds win and now have a total of £21,000 savings, would this effect my Tax Credit 2008-2009 application ? my status is married, 3 children under 18 and job annum pay of £19,000.

OR

If I decided to pay my mortgage off £13,000 leaving me with £8,000 savings left, will the Inland Revenue see it as, trying to lower my savings, so I would qualify for better Tax Credit ?

Basically if keep the savings, what effect will it have ? If I pay mortgage, what effect will it have in April Tax Credit renewal.

Got to say, I am only in this situation, thanks to a lucky win, can't even a get £10 on the lottery. Thats why Tax/Working Credit is very important to me and my family; as its been a life and bread line.

Another question, if the lowest saving amount is £6,000 before it effects your application, then surely you are allowed to deduct this £6,000 from any savings total, as it does not count; they are allowing you this, before some sort of calculation is done to work out your Tax Credit, as stated in previous post £6,000 - £16,000 bracket; they must be giving you £5,999,99p grace.
Therefore in my case my total savings would be £15,000 am I correct in saying this. Thanks!

It is only any interest you earn which will count as income if you are working and claim tax credits as a top up. You still have to declare the savings BUT they will only count any interest over £300 per year.

I don't think it makes any difference at all whether you pay off some of your mortgage, except you will earn less interest on the smaller amount. I'm pretty sure you wouldn't be penalised for it but you could ring the helpline and make a general enquiry?

It is not the same as being unemployed and claiming benefits instead. Then you have to abide by the £6000 rule and possibly would be guilty of reducing your income for benefits purposes if you got rid of some. And with that amount, you would likely lose your benefits and be expected to live off the money.

In your situation, the money itself will make no difference - only the interest you earn on it. So you do have to tell them you have it but it is unlikely to affect your award by much, if anything.

Gazella77 · 27 January 2008 at 9:04PM

and Kilos go to mortgage free wannabe sub forum, they will advise you when and how best to pay off some of your mortgage, and I'm sure they will tell you it's best to have 3 000 put aside in ISA as interests on most ISAs are higher than mortgage interests.

Good luck :-)

How much savings you are allowed before it affects the benefits

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