Universal credit transitional protection and over £16,000 in savings

benj111

TLDR: universal credit transitional protection only lasts for a year if you have over £16,000 in savings

I haven't seen this mentioned anywhere, and reading around it doesn't seem widely appreciated.
Essentially you aren't eligible for universal credit if you have savings over £16,000, the transitional protection makes sure those eligible for universal credit aren't worse off. so those with £15,999 will basically stay on their pre UC payments indefinitely (until UC catches up). Those with £16,000 will get their pre UC payments for a year, then get nothing*.

please see
https://www.gov.uk/government/consultations/moving-claimants-to-universal-credit-from-other-working-age-benefits
(legalese hidden in 'The Universal Credit Amendment Regs 2018 pdf)

or more straight forward and explicit in
https://www.gov.uk/government/consultations/moving-claimants-to-universal-credit-from-other-working-age-benefits/questions-put-to-the-dwp-and-hmrc-following-the-committees-meeting-on-20-june-and-responses-received

Question 1 The one year grace period for tax credit claimants with capital in excess of £16,000 raises the spectre of the rules about deprivation of capital. On migration would claimants in this position be advised of the capital rules? And would that include the deprivation rule? Ironically, by advising claimants about the rule, the department would be increasing the prospects of a claimant falling foul of it. What is the department’s assessment of this issue?
Response to question 1

We will be telling people with more than £16,000 capital that their Universal Credit (UC) will terminate after 12 months if their capital remains above that level. The department is considering about how best claimants who will manage migrate can be made aware of the deprivation of capital rules.
But whenever there is a reduction in any UC claimant’s capital it is right that that should be considered under the UC deprivation of capital provisions, which would be applied where appropriate.

Obviously I'm not suggesting you 'deprive' yourself of capital, but if you have a large house deposit, or a large portion of your pension in an ISA plan accordingly.


*there is still consultations on this so it's subject to change.