Migration from benefits to UC questions? Saving etc?

peteuk

blackstar said:

Thinking about this 12 months protection transition period for people who have savings over 16k migrating over to UC. What's the point? Say someone has 19k when they migrate over and it's protected for 12 months and they manage to save upto 20k then at the end of the 12 months their benefits still stop and will have to then live on what they saved and in 2 or 3 months will be back OK UC?

Without being rude, the transition period is to stop people that are in your situation from turning round and saying you’re stopping my benefits.  There are people who are in the position of owning two houses with more than £16K that would never fall back into the under £16K .   The transition period is just that and a year is generous.   It allows you to get your house in order so that you might just maybe not require to claim UC again. 

TC system has allowed people with savings. Second homes etc to claim benefits, thats the way the system has been.  UC is now saying NO!  But as I have said several times wherever you draw that line in the sand, you will always get someone who is the wrong side of it.   So let’s say they decide £20K is the upper limit.  Then if youve got £20K and have a transition period and manage to save another £1K.  Once your TP UC stops then you spend the money until you’re back under £20K. And claim UC again.   Or we set the limit to £30K… or we say £10K.  

Let’s not forget that anything above £6K and below £16K tapers off your UC payment.  So what you will be claiming is minimal once you’re under £16K.  And if your in transition period and drop below £16K this is a change in circumstance and so stops your transitional period, So if you were then to go back above £16K it will stop your claim.  Eg Claim starts Jan 24 with £16K, and a 12 month transition, April you dip under the £16K triggers a change and then should you go above £16K in August, your claim will stop. 

Spoonie_Turtle

blackstar said:

Thinking about this 12 months protection transition period for people who have savings over 16k migrating over to UC. What's the point? Say someone has 19k when they migrate over and it's protected for 12 months and they manage to save upto 20k then at the end of the 12 months their benefits still stop and will have to then live on what they saved and in 2 or 3 months will be back OK UC?

Presumably so that they're not just dropped off all means-tested help straight away when Tax Credits end with only three months' warning.

It gives people over a year's grace, time to plan, time to budget, with an actual end date in mind - and in the cases where their capital is in property that they don't live in or land they can do without, time to sell if they're going to need the money to live off.  Otherwise they'd be leaving people with income too low to survive and without access to their savings. 

Similar for accessing savings locked away (which at over £16,000 it's financially astute that they should be) although accessing those should be quicker than selling property.

Due to the vast differences in eligibility requirements and the two benefits are calculated, it's likely there are people who won't qualify for UC again even if their savings drop below the threshold with being used for living expenses, because their income is too high.  The government's ultimate aim is to save money, i.e. pay less in benefits and ideally (to them) to fewer people - which is why it's fully means-tested and has stricter requirements overall than any of the legacy benefits but especially Tax Credits. 

If people do become entitled to UC again after living off some of their savings, the point will have been the government not having to pay them UC for however many months/years it took for that to happen.  But it's not going to be the case that everyone over the £16,000 threshold is just slightly over - people claim Tax Credits whilst owning second properties that they rent out, for instance.  Or they have inheritances of tens, maybe hundreds of thousands of pounds.  Those sorts of people will almost certainly not become eligible again any time soon.

Also, having said all that, just a reminder that this board is for entitlement not discussing policy - although I'm sure the mods understand that sometimes some discussion is needed for people to get their heads round how the benefits work.

blackstar

Good points. There are some benefits in the 12 months grace. How kind of them.

Also wondering, you know if you have say 18k when the transition period starts and your 18k is protected. What if you go down to 17k? I presume you are still protected from the deductions of every £250 but the protected amount is now 17k? What if you then go back up 18k I presume that the protected amount will now be set at 17k? And anything above 17k now is subject to the £250 deductions? 

Also if you go above 18k in savings and reach 19k then you are subject to the £250 deductions correct? It's only the 18k that is protected as that was the amount you had in savings on the day you switched over?

poppy12345

blackstar said:

Good points. There are some benefits in the 12 months grace. How kind of them.

Lets be honest here, this forum is for help with benefits entitlement and not about benefits policy, which it says at the top of the forum. https://forums.moneysavingexpert.com/discussion/365935/its-about-helping-people-get-their-entitlement-not-about-benefits-policy#latest

blackstar said:

Also wondering, you know if you have say 18k when the transition period starts and your 18k is protected. What if you go down to 17k? I presume you are still protected from the deductions of every £250 but the protected amount is now 17k? What if you then go back up 18k I presume that the protected amount will now be set at 17k? And anything above 17k now is subject to the £250 deductions? 

Also if you go above 18k in savings and reach 19k then you are subject to the £250 deductions correct? It's only the 18k that is protected as that was the amount you had in savings on the day you switched over?

If you remain above £16k then that is still disregarded for 12 months, which has been advised several times in the thread, which is now 9 pages long. 

What you need to be aware of is if you drop below £16k and then go back above it again because if this happens your UC will then end.

I feel we are now continuing to go round in circles and you just keep asking the same questions.

toomuchinfo

Even during the transition period the sum between £6000 and £15000 will be subject to the each £250 notional deductions, whilst the sum over £15000 is not. Transitional protection might then make up the amount to what you had on tax credits.

poppy12345

toomuchinfo said:

Even during the transition period the sum between £6000 and £15000 will be subject to the each £250 notional deductions, whilst the sum over £15000 is not.

That's not correct. The deduction for UC is £4.35/month for everyone £250 or part thereof over £6,000, up to £16,000. They shouldn't be worse off with TP in place. For savings of more than £16,000 then as has been advised several times in the thread, TP means they can claim UC for a maximum of 12 months because the savings will be disregarded. The disregard applies to managed migration only.

toomuchinfo

poppy12345 said:

toomuchinfo said:

Even during the transition period the sum between £6000 and £15000 will be subject to the each £250 notional deductions, whilst the sum over £15000 is not.

That's not correct. The deduction for UC is £4.35/month for everyone £250 or part thereof over £6,000, up to £16,000. They shouldn't be worse off with TP in place. For savings of more than £16,000 then as has been advised several times in the thread, TP means they can claim UC for a maximum of 12 months because the savings will be disregarded. The disregard applies to managed migration only.

I think you misunderstood what I said, which is exactly the same as you have said except I mistakenly put £15000 instead of £16000. I apologise that you weren’t able to understand what I meant regarding notional deductions on each £250.

peteuk

blackstar said:

Good points. There are some benefits in the 12 months grace. How kind of them.

Also wondering, you know if you have say 18k when the transition period starts and your 18k is protected. What if you go down to 17k? I presume you are still protected from the deductions of every £250 but the protected amount is now 17k? What if you then go back up 18k I presume that the protected amount will now be set at 17k? And anything above 17k now is subject to the £250 deductions? 

Also if you go above 18k in savings and reach 19k then you are subject to the £250 deductions correct? It's only the 18k that is protected as that was the amount you had in savings on the day you switched over?

Pete uk said: 

Let’s not forget that anything above £6K and below £16K tapers off your UC payment.  So what you will be claiming is minimal once you’re under £16K.  And if your in transition period and drop below £16K this is a change in circumstance and so stops your transitional period, So if you were then to go back above £16K it will stop your claim.  Eg Claim starts Jan 24 with £16K, and a 12 month transition, April you dip under the £16K triggers a change and then should you go above £16K in August, your claim will stop. 

As previously answered.  I believe you’re either skim reading the responses or rephrasing questions.  If you don’t understand the advice given then ask for clarification, rather than rehash the same question.  Equally please be mindful of others, whilst you sit on £16K others who actually need UC dont.  Equally there are others on the board and forum that get no help, who are struggling.  So don’t forget the added bonuses that come with UC that are designed to help those in need, which you will also receive whilst on a years transition and in some cases beyond your UC claim.

ElwoodBlues

poppy12345 said:

toomuchinfo said:

Even during the transition period the sum between £6000 and £15000 will be subject to the each £250 notional deductions, whilst the sum over £15000 is not.

That's not correct. The deduction for UC is £4.35/month for everyone £250 or part thereof over £6,000, up to £16,000. They shouldn't be worse off with TP in place. For savings of more than £16,000 then as has been advised several times in the thread, TP means they can claim UC for a maximum of 12 months because the savings will be disregarded. The disregard applies to managed migration only.

Yes, it's only the savings over 16k that are ignored during TP 12 months - the savings between 6k and 16k still cause the £4.35/month/£250 deduction to be applied. In theory the TP element is supposed to include an amount to to the entitlement back up/compensate for the deduction. But as Yamor said in another thread 'you might have to push for it'.

https://forums.moneysavingexpert.com/discussion/comment/80465352#Comment_80465352

I know myself how frustrating the capital limits can be for UC claimants - I was saving for an extension so my kids could have a bedroom, but when got migrated I had to abandon that idea as I'd never have reached the goal and completed and paid for the extension within 12 months. And then DWP could still have argued that spending my saving that way was DoC. I'd scrimped and saved for 5 years to get to where I had, made lots of compromises (my kids have never been away on holiday, 2nd hand clothes, 20 year old car, no luxuries at all). That was our choice to make sacrifices and save instead, and now we're being penalised for trying to.

I guess you could argue that TC must be too generous if we were able to live on it and be able to accumulate savings, but most people would agree that the entitlements only just keep people above the poverty line. But the way UC works is that it encourages people to live hand to mouth and spend everything as soon as they receive it (or buy things on credit, because that's not taken into account for UC).

And the really crazy thing is that all the time UC prevents claimants from saving to get on the property ladder, the state is paying their housing rent instead. Even worse that when they hit retirement they won't have bought their house and be mortgage free, so the state will be paying their rent throughout retirement as well.

At the very least, UC should have a disregard for cash saved into a LISA. 

blackstar said:

I also read this but don't know if theres been any progress with it.

https://www.insidehousing.co.uk/news/government-to-change-universal-credit-rules-to-allow-recipients-to-save-for-a-deposit-76026

I think that idea probably died with BoJo's presidency unfortunately. Whatever people say about him, he was far more in touch with real people than his successor is.

jojaca said:

First of all I am lucky that I bought my house while on tax credits and got lucky with catching the golden period of Tax Credits because kids are starting to come off our hands in a few years. But on Universal Credit how you are meant to save for a house and big ticket items like cars on Universal Credit, you are just punishing the working poor.

With these savings limits on Universal Credit, you are just encouraging the population to be poorer because most people will the play the system and basically spend or redistribute their savings to try to get the maximum Universal Credit. I have not had my migration notice, but planed for these changes years in advanced and started paying off my mortgage, buying gold etc to make sure when my migration period is over that I claim the full maximum Universal Credit. 

I just think governments have no right to see what sum is in one bank account, but there needs a minimum sum for basic people to live on. What they do with that money is not of anyone's business. 

Sounds like your gold is an investment rather than a personal possession, so you'd need to declare that as capital when the time comes...

peteuk

ElwoodBlues said:. 

Sounds like your gold is an investment rather than a personal possession, so you'd need to declare that as capital when the time comes...

Capital held in a house that you live in is disregarded.   Its second homes, that are often rented out, which then are classed as capital.