Universal Credit & Savings

whizzywoo

richt5a said:

Related question I can't find an answer to if anyone knows please ....  My daughter is self employed has some savings but a large proportion of that is to pay her income tax bill.  If she doesn't/can't pay that when it comes round she'll be penalised by HMRC.
Does she need to declare the amount she has saved to her tax bill as part of her savings for Universal Credit?

Yes she does but you can also use it to pay off debts.  So maybe pay the tax bill up front now to reduce her savings.
Savings over £16,000 will exclude you completely from Universal Credit.
Savings between £6,000 and £16,000 will reduce on a pro-rata basis.
Savings under £6,000 do not count.

[Deleted User]

That was my plan if they don't remove the savings limit. Pay my tax early to get under it.

huckster

What the media may have picked up on in regard to Government removing the £16k savings limit rule for UC, is the information in guides such as Money Advice Service.  This relates to what the Government might do when going through the 'managed migration' process of moving people from Tax Credits to UC. 

The 'managed migration' process is Government moving claimants and will be subject to transitional protection legislation.  At the moment, this is totally irrelevant.  If you are claiming UC at the moment, there are no such transitional protections and people are subject to current legislation.
https://www.moneyadviceservice.org.uk/en/articles/how-do-savings-and-lump-sum-pay-outs-affect-benefits
The above guide states

"How your savings are affected if you move from Tax Credits to Universal Credit

The government is proposing if you have over £16,000 in savings, you would normally not qualify for Universal Credit. But, if you’re moving from Tax Credits to Universal Credit, anything you have over the £16,000 limit will be disregarded for 12 months from the point you move to Universal Credit. After 12 months, the normal rules apply. Final details are yet to be confirmed."

Guides such as Money Advice Service are I guess trying to be helpful in providing as much information as possible, but this is likely to cause problems. Even though it says "proposing" and "Final details are yet to be confirmed.", some people will believe that such a change is going to happen soon. When in reality this debate about 'managed migration' processes has been going on for months, if not years.

sparky0138

Does anyone know please, if money that is currently in an ISA was placed into a SIPP, would it be classed as notional capital when applying for Universal Credit?

poppy12345

sparky0138 said:

Does anyone know please, if money that is currently in an ISA was placed into a SIPP, would it be classed as notional capital when applying for Universal Credit?

Have i got this right? The money is currently in an ISA and you want to place it into a SIPP and then claim UC? Is the money more than maximum amount allowed? £16,000?

sparky0138

poppy12345 said:

sparky0138 said:

Does anyone know please, if money that is currently in an ISA was placed into a SIPP, would it be classed as notional capital when applying for Universal Credit?

Have i got this right? The money is currently in an ISA and you want to place it into a SIPP and then claim UC? Is the money more than maximum amount allowed? £16,000?

No, the ISA's currently worth £7,900. The remaining savings would be between the £6,000 and £16,000 threshold.

calcotti

sparky0138 said:

Does anyone know please, if money that is currently in an ISA was placed into a SIPP, would it be classed as notional capital when applying for Universal Credit?

That is a difficult one. Money in a SIPP would be ignored. Money in an ISA is taken into account. However if you are thought to have moved money from an ISA to a SIPP in order to be eligible for more benefit I think this could be considered deprivation of capital (even though you still have it). A DWP Decision Maker would have to decide, I don't think there is a definite answer.

poppy12345

calcotti said:

sparky0138 said:

Does anyone know please, if money that is currently in an ISA was placed into a SIPP, would it be classed as notional capital when applying for Universal Credit?

That is a difficult one. Money in a SIPP would be ignored. Money in an ISA is taken into account. However if you are thought to have moved money from an ISA to a SIPP in order to be eligible for more benefit I think this could be considered deprivation of capital (even though you still have it). A DWP Decision Maker would have to decide, I don't think there is a definite answer.

That's exactly what i was thinking of.

Jeremy535897

See https://www.rightsnet.org.uk/pdfs/rsb/40_85.pdf
Deprivation is given its usual meaning, so changing capital from one form to another can be deprivation of the original capital. Where the new capital is valued in the same way as the original capital for UC purposes, the deprivation would not be to gain UC, as it wouldn't result in a gain of UC. In the case of a SIPP contribution, it could result in an increase in UC if the savings before the contribution would have resulted in UC being reduced.

The DM would have to show that the claimant knew that the SIPP contribution would increase their UC, and that the UC increase was a significant reason for making the SIPP contribution (ADM H1 paragraph 1825 et seq).

calcotti

Jeremy535897 said:

See https://www.rightsnet.org.uk/pdfs/rsb/40_85.pdf
Deprivation is given its usual meaning, so changing capital from one form to another can be deprivation of the original capital. Where the new capital is valued in the same way as the original capital for UC purposes, the deprivation would not be to gain UC, as it wouldn't result in a gain of UC. In the case of a SIPP contribution, it could result in an increase in UC if the savings before the contribution would have resulted in UC being reduced.

The DM would have to show that the claimant knew that the SIPP contribution would increase their UC, and that the UC increase was a significant reason for making the SIPP contribution (ADM H1 paragraph 1825 et seq).

Things that might be considered are that making this transfer just before claiming benefit might be indicative that benefit entitlement is a motivating factor. I think if the SIPP is newly set up that might also raise questions as the amount of money involved is quite small in SIPP terms. Making your savings less accessible at a time when your income has just dropped (if that is the case) is not all that logical unless increasing benefit is a motivation. I’m sure counter arguments can be made too but as I said it will fall to a DM to decide. The risk therefore is that the transfer is made and the money is therefore no longer accessible (unless over 55) but it is still taken into account when assessing benefit entitlement.
[Edited to remove auto correct nonsense!]