Isa and housing benefit

pramwoman

I have been left some money in a will from an elderly relative and i would like to invest it into a cash isa. I am receiving housing benfit and would like to know how much i can have in savings before my benefit is affected. Can anyone help?

jem16

£16,000.

See here;
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG_10018926

quietishone

£16,000 is the limit above which you can not claim ANY housing benefit at all. Below this level os savings the first £6,000 is disregarded but you are assumed to be receiving £1 of income a week from every £250 you have above this level and this notional income is deducted from your benefit (or indeed for part of £250, so that if you had £6,250 you would lose £1 a week but with 6,251 to £6,500 you would lose £2, i.e. you almost always lose £1 a week more than you think you should).

So, if you (and your partner if applicable) are not a pensioner nor receiving other benefits it then -

£0 to £6000 savings - full housing benefit
£6000 to £16000 savings - £1 deduction for each £250 (or part £250) over £6000
over £16000 savings - no benefit

Swindon County Council have a leaflet which explains it more clearly and you can see it here -
http://www.swindon.gov.uk/leaflet_23-2.pdf

Joe_Bloggs

I find it interesting that £1 in £250 per week equates to an annual savings rate of 23%. How can notional interest be justified at these notional rates ?
J_B.

quietishone

Joe_Bloggs wrote: »

I find it interesting that £1 in £250 per week equates to an annual savings rate of 23%. How can notional interest be justified at these notional rates ?
J_B.

The government don't expect you to be able to get that rate of interest on your capital. - though interest rates were just into double digits when the system was introduced in the 1980's (previously you got full benefits if you had less than £3,000 and nothing at all if you were one pound over this). It is supposed to be the 'fair' rate at which any capital you have should fall towards the £6,000 lower limit while you are claiming benefits. If you have more than the lower limit then the system expects you to spend some of it to support yourself and if you have more than £16,000 then you are expected to support yourself and will only get contribution based benefits (and for only six months rather than for a year as you could until the late 1990's).

Joe_Bloggs

The government should call it what it is rather than use the term notional interest.
I would suggest they use the term excess savings penalty.
J_B.

jon3001

quietishone wrote: »

It is supposed to be the 'fair' rate at which any capital you have should fall towards the £6,000 lower limit while you are claiming benefits. If you have more than the lower limit then the system expects you to spend some of it to support yourself and if you have more than £16,000 then you are expected to support yourself and will only get contribution based benefits (and for only six months rather than for a year as you could until the late 1990's).

In practice it must be simple for anyone with modest savings to work around.

• Fill the attic with non-perishables: tinned food, dried food, booze and cigarettes (e.g. all the essentials to get you through unemployment while you're down).
• Overpay the mortgage and utility bills. Pay them while you can...
• Pump up the pension fund (you can always cut back later).
• Get a quality piece of art or an antique for the lounge (at a fair price you can recoup when times are good).

Any other ideas?

Hungerdunger

jon3001 wrote: »

Any other ideas?

Yes. Do a Google search for "Deprivation of Capital"