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Universal Credits & Help to Buy LISA Savings

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Myself and partner both have a Help to Buy LISA each with £3,300 each in. My partner has recently lost her job and we plan to submit a claim for universal credits.
It works out we will be able to claim around £500 on universal credits which will really help, as I am currently furloughed myself.
Can they reduce our universal allowance if we declare our savings in our help to buy LISA? 
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  • edited 7 July at 6:58PM
    poppy12345poppy12345 Forumite
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    edited 7 July at 6:58PM
    Savings of £6,000 and over will reduce your UC by £4.35 per month for every £250 or part there of over that amount. Yes, your savings will reduce your UC, even though it's for a future mortgage deposit.
    Your earnings will also reduce your UC entitlement by 63% if you don't have the work allowance.
  • Money_Wasting_ExpertMoney_Wasting_Expert Forumite
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    What do you mean, if I don't have the work allowance ?
  • TheShapeTheShape Forumite
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    Myself and partner both have a Help to Buy LISA each with £3,300 each in. My partner has recently lost her job and we plan to submit a claim for universal credits.
    It works out we will be able to claim around £500 on universal credits which will really help, as I am currently furloughed myself.
    Can they reduce our universal allowance 'if' we declare our savings in our help to buy LISA? 
    You presumably meant 'when' you declare your savings.
    Work allowance information here at point 3: https://www.gov.uk/government/publications/universal-credit-work-allowances/universal-credit-work-allowances
  • poppy12345poppy12345 Forumite
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  • calcotticalcotti Forumite
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    In your two LISAs you have a total of £6,600 between you. However there is a 20% charge to access the LISA early and this will be taken into account. The value of your LISAs for UC purposes is therefore £5,280. If these are your only savings this will not affect your UC entitlement as it is less than than £6,000. You must however disclose them. I don’t know whether the application process will identify that these are LISAs. If not you each need to post a note in your journals explaining that they are LISAs and you understand the penalty charge should be taken into account.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • edited 7 July at 7:58PM
    TheShapeTheShape Forumite
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    edited 7 July at 7:58PM
    calcotti said:
    In your two LISAs you have a total of £6,600 between you. However there is a 20% charge to access the LISA early and this will be taken into account. The value of your LISAs for UC purposes is therefore £5,280. If these are your only savings this will not affect your UC entitlement as it is less than than £6,000. You must however disclose them. I don’t know whether the application process will identify that these are LISAs. If not you each need to post a note in your journals explaining that they are LISAs and you understand the penalty charge should be taken into account.
    From my understanding of the new claims process when completing the application you declare the amount of your savings.  If this declaration is for savings in excess of £6000 it generates a 'Verify Capital' to-do.  A claimant should then be contacted to confirm the nature of the savings, whether there are any disregards etc.  I think the usual process does include questions as to whether the savings are accessible and whether there are any penalties for access.  There is a streamlined process in place at the moment which does pose a real possibility that these questions are not adequately addressed.  You may also find that staff other than trained decision makers are making decisions re Capital and may not have an understanding of LISAs.  It's possible that trained decision makers may not understand LISAs (although they should).

    If I had to make a judgement on how to declare your savings it would to be to declare the full amount in the LISA and add an explanatory note in your journal re the withdrawal penalty.  I'd repeat this explanation if required to confirm details of your savings.  I'd then recommend that you check your statement carefully when generated to check that if a deduction is applied for Capital that the calculation has been correctly calculated.


  • Money_Wasting_ExpertMoney_Wasting_Expert Forumite
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    calcotti said:
    In your two LISAs you have a total of £6,600 between you. However there is a 20% charge to access the LISA early and this will be taken into account. The value of your LISAs for UC purposes is therefore £5,280. If these are your only savings this will not affect your UC entitlement as it is less than than £6,000. You must however disclose them. I don’t know whether the application process will identify that these are LISAs. If not you each need to post a note in your journals explaining that they are LISAs and you understand the penalty charge should be taken into account.

    Brilliant! Are you sure the penalty fee is factored into it?
    Pretty wrong how they factor in first time buyers savings anyway, it's hard enough for us to save for a mortgage as it is these days.
  • calcotticalcotti Forumite
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    Money_Wasting_Expert said: Brilliant! Are you sure the penalty fee is factored into it?
    Pretty wrong how they factor in first time buyers savings anyway, it's hard enough for us to save for a mortgage as it is these days.
    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/890315/admh1.pdf
    Lifetime individual savings account
    The Lifetime individual savings account is available for people who are aged 18 to 40 when it is opened. It is similar in many ways to a normal individual savings account with the addition of a government bonus of 25% paid on the contributions made by the saver of up to a limit of £4000 annually. This Lifetime individual savings account should be treated as capital from the outset with a value of
    1. 75% of the surrender value where the person is under age 60 or
    2. 100% of the surrender value where the person is over age 60
    taken into account.
    This is the DWP advice to decision makers. The penalty charge has been reduced from 25% to 20% in response to COVID and I have assumed the current valuation would therefore be 80%.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • tomtom256tomtom256 Forumite
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    Brilliant! Are you sure the penalty fee is factored into it?
    Pretty wrong how they factor in first time buyers savings anyway, it's hard enough for us to save for a mortgage as it is these days.
    But factoring in normal savings is ok? What makes it any different to normal savings, other than it is in a special account. I could have £10k in an account that is saved for a mortgage, but it would still need to be declared and treated as capital.

  • Money_Wasting_ExpertMoney_Wasting_Expert Forumite
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    tomtom256 said:
    Brilliant! Are you sure the penalty fee is factored into it?
    Pretty wrong how they factor in first time buyers savings anyway, it's hard enough for us to save for a mortgage as it is these days.
    But factoring in normal savings is ok? What makes it any different to normal savings, other than it is in a special account. I could have £10k in an account that is saved for a mortgage, but it would still need to be declared and treated as capital.

    Why do you think there is a help to buy scheme for first time buyers? Because it's very difficult for us to get on the property ladder. That's why it's different to a regular savings

    The government pays 25% bonus on the money saved to help first time buyers, so wouldn't it be pointless if you have it taken back of you?
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