Universal Credit and Savings

eadieb

Under the current child tax credit rules, I believe it is interest on savings that count and depending on the amounts of interest you will have a reduction in your payments. We temporarily had 20k in our coffers when we remortgaged our home to fund a loft conversion and had to wait for planning etc etc. we ended up sticking the money in premium bonds until we needed it as tax credits told us it did not count because you dont get interest from it.

Usually benefits make people live on their savings until they reach below a certain threshold.

atlantis187

Can I pay most of the savings into my offset mortgage account as we currently get no interest on the savings anyway as its linked to the mortgage.
This way bringing the savings total down to under £6000.

Also how do they actually check how many savings u actually have if u have loads of different accounts with different banks?

SkyeKnight

atlantis187 wrote: »

Can I pay most of the savings into my offset mortgage account as we currently get no interest on the savings anyway as its linked to the mortgage.
This way bringing the savings total down to under £6000.

Also how do they actually check how many savings u actually have if u have loads of different accounts with different banks?

I don't think that works if you have two separate accounts, i.e. a savings account which is offset against a mortgage account. If it is just one account but you can take out your overpayments then I think that might work. Paying any savings over £6k off your mortgage is obviously the simplest solution but means you lose access to the money.

annie1975_2

You can put all your savings into your offset mortgage,because you can take it out of your offset as and when you need it?

SkyeKnight

eadieb wrote: »

Under the current child tax credit rules, I believe it is interest on savings that count and depending on the amounts of interest you will have a reduction in your payments. We temporarily had 20k in our coffers when we remortgaged our home to fund a loft conversion and had to wait for planning etc etc. we ended up sticking the money in premium bonds until we needed it as tax credits told us it did not count because you dont get interest from it.

Usually benefits make people live on their savings until they reach below a certain threshold.

This is why the whole system is going to be a nightmare. Current means tested benefits such as Income support or Council tax benefit are usually only available at a very low income which wouldn't allow saving. Tax credits go much higher up the income scale where people have savings, take out loans and mortgages for home improvements and spend money on "luxuries".

If they follow the current rules then presumably that £20k loan would count as savings making you ineligible for UC. If you blew the lot on a loft conversion then that should count as deprivation of capital and you would be treated as though you still had the money for years afterwards. I'm not sure this is going to work very well...

Sixer

SkyeKnight wrote: »

This is why the whole system is going to be a nightmare. Current means tested benefits such as Income support or Council tax benefit are usually only available at a very low income which wouldn't allow saving. Tax credits go much higher up the income scale where people have savings, take out loans and mortgages for home improvements and spend money on "luxuries".

If they follow the current rules then presumably that £20k loan would count as savings making you ineligible for UC. If you blew the lot on a loft conversion then that should count as deprivation of capital and you would be treated as though you still had the money for years afterwards. I'm not sure this is going to work very well...

But it won't be deprivation for existing tax credits claimants due to transitional protection?

SkyeKnight

Sixer wrote: »

But it won't be deprivation for existing tax credits claimants due to transitional protection?

I don't think it's been announced yet what the rules are for transitional protection. I haven't seen anything that makes it certain to me that people with savings will get protection - it could be read that if you have over £16k in savings then you aren't eligible for UC so transitional funding doesn't apply... or has it been made more clear?

Anyway, if you get the loan out for £20k after the start of UC then that may well be a significant change of circumstance (which hasn't been defined yet either).

Sixer

SkyeKnight wrote: »

I don't think it's been announced yet what the rules are for transitional protection. I haven't seen anything that makes it certain to me that people with savings will get protection - it could be read that if you have over £16k in savings then you aren't eligible for UC so transitional funding doesn't apply... or has it been made more clear?

Anyway, if you get the loan out for £20k after the start of UC then that may well be a significant change of circumstance (which hasn't been defined yet either).

I've posted the link and pasted some of it already on this thread. I don't think you can be clearer than:

There will be no cash losers directly as a result of the migration to Universal Credit where circumstances remain the same.

People who have an entitlement under the old system will receive transitional protection, plain and simple. There's no exception to say that those with savings will be the only group not to receive transitional protection. NEW claimants with savings or those whose circumstances change SIGNIFICANTLY will lose entitlement.

atlantis187

I really need to get summat done to these saving as soon as possible

tagq2

The original aim of the National Insurance Act 1911 was to encourage people to contribute toward their safety net. I just looked up some stuff on contributory ESA (other thread) and it seems that it the rules are quite complex for people to get help on the basis of actually having contributed.

I don't understand the philosophy behind Universal Credit: it seems to allow employers to pay below-market and below-living wages while discouraging saving, so setting a poverty trap. Have I misunderstood this new law, or is it following the Tax Credits idea that the government de facto subsidise employers so they can pay lower wages? Even with my self-employed hat on, it seems implausible that the government would actually continue with that. But it seems that this is indeed the plan?