Will universal Credit automatically stop after I reach 16k?

aintbrokenwontfixit

Hi everyone, 
pretty much the title of the post. If UC doesn't have direct access to my bank account, how can they tell whether I reached the threshold?
What if I make some payments and go back to under 16k, like bills and rent for instance. Just wondering how this all works. 
Thank you all in advance. 

Spoonie_Turtle

aintbrokenwontfixit said:

Hi everyone, 
pretty much the title of the post. If UC doesn't have direct access to my bank account, how can they tell whether I reached the threshold?
What if I make some payments and go back to under 16k, like bills and rent for instance. Just wondering how this all works. 
Thank you all in advance. 

Generally speaking you have to tell them otherwise they will find out eventually anyway, I believe they do data matching exercises with various institutions periodically.

However, UC entitlement is calculated based on your circumstances on the last day of your assessment period.  If your bank balance goes over a threshold but within the same month you use some money for reasonable purposes - rent and bills most certainly count as reasonable spending! - then you will still be entitled. 

Others will be better placed to advise whether you should inform UC that your total savings went over the threshold (after you've paid the bills) just so it's on record, just in case, but technically income shouldn't be included in capital until the next month anyway, whatever's left of it after you've used your income for living expenses.  Otherwise that would be doubly deducting for it, the initial 55% deduction plus whatever increase in deduction for capital it would cause. 

calcotti

As spoonie has advised, the critical date is the last day of each of your monthly assessment periods. If you are over £16,00 on that day you are not entitled to UC for that month. You can discount normal income you have received in that month (such as UC itself).

In the short term UC will not know if you don't tell them but different government departments do data matching and if any irregularities are found an investigation can be carried out and if it turns out you have been overpaid you will be required to pay this back and may incur an administrative penalty.

xxxxxxxx

Your absolute limit is £16,000  +£xxx    

£xxx is the amount of all benefits and income that you receive,  if you get PIP and UC then you add the amounts together. Each Benefit amount is disregarded for the period it was paid for going forward.  

UC will be disregarded for the next month
PIP will be disregarded for the next 4 weeks
Carer's Allowance will be disregarded for the next week or 4 weeks (depending if you are paid weekly or 4 weekly. 
Earnings are disregarded (going forward) for the period they cover.  (1 week, 2 weeks 4 weeks month etc) 
If you have previously had large arrears of benefit these are disregarded for 1 year or for longer if they were more than £5000 and due to DWP error. 

Generally your benefits will be pretty constant unless you are working with varying earnings. 
(But you cannot be general, you must be exact when it comes to the calculation)

Example, Fred gets UC £634 every month PIP £320 every 4 weeks and no other income.

Total benefits = £954

If Fred's bank balance goes above £16,954 on  the last day of the assessment period then Fred will have lost entitlement to UC for that month. 

The DWP use data from HMRC which can help them to identify suspicious bank accounts they will then ask you for bank statements.   

Spoonie_Turtle

xxxxxxxx said:

Your absolute limit is £16,000  +£xxx    

£xxx is the amount of all benefits and income that you receive,  if you get PIP and UC then you add the amounts together. Each Benefit amount is disregarded for the period it was paid for going forward.  

UC will be disregarded for the next month
PIP will be disregarded for the next 4 weeks
Carer's Allowance will be disregarded for the next week or 4 weeks (depending if you are paid weekly or 4 weekly. 
Earnings are disregarded (going forward) for the period they cover.  (1 week, 2 weeks 4 weeks month etc) 
If you have previously had large arrears of benefit these are disregarded for 1 year or for longer if they were more than £5000 and due to DWP error. 

Generally your benefits will be pretty constant unless you are working with varying earnings. 

Example, Fred gets UC £634 every month PIP £320 every 4 weeks and no other income.

Total benefits = £954

If Fred's bank balance goes above £16,954 on  the last day of the assessment period then Fred will have lost entitlement to UC for that month. 

The DWP use data from HMRC which can help them to identify suspicious bank accounts they will then ask you for bank statements.   

That all sounds very sensible, do you have a source please?

calcotti

Spoonie_Turtle said:

That all sounds very sensible, do you have a source please?

It is because income only becomes capital if there is money left over after the end of the period the income is paid for. See Advice for Decision Makers

When income becomes capital

H1050 Income becomes capital if it has not been spent by the end of the assessment period after the one in which it was received.

Example

Pearl makes a claim for UC on 6 February. She declares savings in a bank account of £5,973.00. On 24 February, her earnings of £250.00 are paid into that account. Her assessment period is calculated as 6 Feb to 5 March and the earnings are taken into account as part of her income for that assessment period. When the next assessment period begins on 6 March, Pearl still has some of the unspent earnings so the bank account balance is now £6,105.00. In the assessment period from 6 March to 5 April she will therefore be treated as having an assumed yield from that capital of £4.35.

calcotti

OP, you should note that if your capital is over £6,000 you should be reporting this to UC so that they can calculate the appropriate deduction from your monthly UC payment.