Savings and benefits

jobe1972

HI all just looking for information, I was in a lot of debt for years but between myself and my partner we cleared everything we owed it was hard but we did it.. so then we worked on our credit scores with the hope of one day being able to buy a home so we would have something for to pass on to our kids ..currently get tax credits so not means tested but eventually that will be swapped to universal credits and from what I read.. when that happens we would be up !!!!!! creek without a paddle ..so is there anything that we can do or should I just stop saving now spend what we saved ..as It seems UC isnt designed for anyone to be able to eventually afford a mortgage and buy a home 

themoomins

I believe they will disregard the savings for 12 months providing they are under £16k. If over, you wouldn't even be able to apply for UC at all.

Options are obviously buy the house now, wait until the end of your Tax Credits (could be as late as 2024!) and then live off your savings until they are low enough to claim UC or start stuffing it under the mattress now. 

themoomins

Also I wonder if gold bars would be classed as assets or savings?  You could theoretically buy gold bars and store them.  As long as you didn't do it just before putting in a claim for UC I don't see how it could be classed as spending savings to qualify for benefits.  Morally it is wrong but interesting to think about it.

jobe1972

Thankyou yeah did know about the disregard problem with that if you use 10k in that year lol they would want to know what you did with it so you wasnt hiding it to increase your claim...buying house now is out the question tried last year because I have the preserved right to buy I got a decent discount but lost part of it from floor costs. .which I didnt know about until they told me that runs out in 2025 .. mortgage wise did get agreement in principal but then they changed their minds when we applied for the actual mortgage we had hoped 5 years of saving would net us around 50k in savings then the discount would cover most of the house costs... but that wont happen with UC 

Spoonie_Turtle

themoomins said:

I believe they will disregard the savings for 12 months providing they are under £16k. If over, you wouldn't even be able to apply for UC at all.

Options are obviously buy the house now, wait until the end of your Tax Credits (could be as late as 2024!) and then live off your savings until they are low enough to claim UC or start stuffing it under the mattress now. 

No, there's a disregard for savings over £16k for 12 months so as not to immediately disqualify many Tax Credits claimants.

for Tax Credit claimants who have been moved to Universal Credit via a managed migration, any capital in excess of £16,000 will be disregarded for 12 months for eligibility purposes from the point at which they are moved to Universal Credit

From https://www.gov.uk/hmrc-internal-manuals/help-save-technical/hstm06000

themoomins

Spoonie_Turtle said:

themoomins said:

I believe they will disregard the savings for 12 months providing they are under £16k. If over, you wouldn't even be able to apply for UC at all.

Options are obviously buy the house now, wait until the end of your Tax Credits (could be as late as 2024!) and then live off your savings until they are low enough to claim UC or start stuffing it under the mattress now. 

No, there's a disregard for savings over £16k for 12 months so as not to immediately disqualify many Tax Credits claimants.

for Tax Credit claimants who have been moved to Universal Credit via a managed migration, any capital in excess of £16,000 will be disregarded for 12 months for eligibility purposes from the point at which they are moved to Universal Credit

From https://www.gov.uk/hmrc-internal-manuals/help-save-technical/hstm06000

That's good to hear, thanks for correcting me. I have heard so many people worrying they will just suddenly lose hundreds a month after the letter to move over drops. 

jobe1972

Spoonie_Turtle said:

themoomins said:

I believe they will disregard the savings for 12 months providing they are under £16k. If over, you wouldn't even be able to apply for UC at all.

Options are obviously buy the house now, wait until the end of your Tax Credits (could be as late as 2024!) and then live off your savings until they are low enough to claim UC or start stuffing it under the mattress now. 

No, there's a disregard for savings over £16k for 12 months so as not to immediately disqualify many Tax Credits claimants.

for Tax Credit claimants who have been moved to Universal Credit via a managed migration, any capital in excess of £16,000 will be disregarded for 12 months for eligibility purposes from the point at which they are moved to Universal Credit

From https://www.gov.uk/hmrc-internal-manuals/help-save-technical/hstm06000

I had read this When your moved over ..but I am unsure what happens within that year for example say when I get the letter to move over I have 20k saved so under normal rules wouldnt be able to claim but because I am being moved its ignored for the first year now if i try and get rid of those savings so I am below 6k so I can continue to claim surely they will want a break down of what I spent 14k on 

kaMelo

It's not that simple, the disregard applies to savings over £16000, should savings dip below £16000 within the twelve months then the disregard ends immediately and normal UC rules apply.

The transitional capital disregard

51.—(1) A transitional capital disregard is to apply where, on the migration day, the claimant—

(a)is entitled to an award of a tax credit; and

(b)has capital exceeding £16,000.

(2) Where a transitional capital disregard applies, any capital exceeding £16,000 is to be disregarded for the purposes of—

(a)determining whether the financial condition in section 5(1)(a) or 5(2)(a) of the Act (capital limit) is met; and

(b)calculating the amount of an award of universal credit (including the indicative UC amount).

(3) Where a transitional capital disregard has been applied in the calculation of an award of universal credit but, in any assessment period, the claimant no longer has (or joint claimants no longer have) capital exceeding £16,000, the transitional capital disregard is not to apply in any subsequent assessment period.

(4) A transitional capital disregard is not to apply for more than 12 assessment periods.

Spoonie_Turtle

jobe1972 said:

Spoonie_Turtle said:

themoomins said:

I believe they will disregard the savings for 12 months providing they are under £16k. If over, you wouldn't even be able to apply for UC at all.

Options are obviously buy the house now, wait until the end of your Tax Credits (could be as late as 2024!) and then live off your savings until they are low enough to claim UC or start stuffing it under the mattress now. 

No, there's a disregard for savings over £16k for 12 months so as not to immediately disqualify many Tax Credits claimants.

for Tax Credit claimants who have been moved to Universal Credit via a managed migration, any capital in excess of £16,000 will be disregarded for 12 months for eligibility purposes from the point at which they are moved to Universal Credit

From https://www.gov.uk/hmrc-internal-manuals/help-save-technical/hstm06000

I had read this When your moved over ..but I am unsure what happens within that year for example say when I get the letter to move over I have 20k saved so under normal rules wouldnt be able to claim but because I am being moved its ignored for the first year now if i try and get rid of those savings so I am below 6k so I can continue to claim surely they will want a break down of what I spent 14k on 

The threshold for eligibility is £16,000.

In practice, I don't know how previously disregarded savings will be treated after the 12 months.  Really a disregard is to basically act as if it doesn't exist, and if it effectively didn't exist before then logically they shouldn't need to ask where it went … but as I say, in practice I have no idea.  

Edit: cross-posted, I hadn't read kaMelo's message.

kaMelo said:

It's not that simple, the disregard applies to savings over £16000, should savings dip below £16000 within the twelve months then the disregard ends immediately and normal UC rules apply.

That actually makes sense, as the disregard is to allow people who would otherwise be ineligible for claiming, to be eligible.  If the condition that would normally make them ineligible - having too much capital - no longer applies, then there's no longer a need for the disregard to apply to them.

That could cause complications if people skirt near to the threshold for whatever reason though, if they drop below but then capital goes back above and they can no longer have it disregarded.

Looking back at the wording, it's "capital in excess of £16,000" so does that mean they get the full deduction for capital between £6,000 and £16,000 anyway?

poppy12345

Spoonie_Turtle said:

jobe1972 said:

Spoonie_Turtle said:

themoomins said:

I believe they will disregard the savings for 12 months providing they are under £16k. If over, you wouldn't even be able to apply for UC at all.

Options are obviously buy the house now, wait until the end of your Tax Credits (could be as late as 2024!) and then live off your savings until they are low enough to claim UC or start stuffing it under the mattress now. 

No, there's a disregard for savings over £16k for 12 months so as not to immediately disqualify many Tax Credits claimants.

for Tax Credit claimants who have been moved to Universal Credit via a managed migration, any capital in excess of £16,000 will be disregarded for 12 months for eligibility purposes from the point at which they are moved to Universal Credit

From https://www.gov.uk/hmrc-internal-manuals/help-save-technical/hstm06000

I had read this When your moved over ..but I am unsure what happens within that year for example say when I get the letter to move over I have 20k saved so under normal rules wouldnt be able to claim but because I am being moved its ignored for the first year now if i try and get rid of those savings so I am below 6k so I can continue to claim surely they will want a break down of what I spent 14k on 

Looking back at the wording, it's "capital in excess of £16,000" so does that mean they get the full deduction for capital between £6,000 and £16,000 anyway?

Yes, that's correct.

OP when your savings drop below £16,000 the usual deductions will apply so for every £250 or part there of over £6,000 there's a £4.35 per month deduction in UC.

calcotti

Spoonie_Turtle said: Looking back at the wording, it's "capital in excess of £16,000" so does that mean they get the full deduction for capital between £6,000 and £16,000 anyway?

Yes, but the transitional protection will take that into account.