Universal credit

moneytroll

I got a letter saying that Universal Credit will be replacing working tax credits. But it’s not really a replacement, is it. Working tax credits never took into account your savings/investments but universal credit seems to.

I am curious, is there a way to work out how much savings will be too much to bother with UC? As a rough guide.

I read somewhere that for every £250 (above £6,000), your entitlement is reduced by £4.35. How much savings do you need for the entitlement to be effectively reduced to 0? (I don’t know what the maximum amount is).

It seems to be becoming more like benefits? Don’t get me wrong, I don’t criticise the change, I think maybe it’s a good thing however I don’t like the fact when they make it sound like it’s a replacement, when it’s clearly not! And many people are likely to get caught out.

marcia_

moneytroll said:

I got a letter saying that Universal Credit will be replacing working tax credits. But it’s not really a replacement, is it. Working tax credits never took into account your savings/investments but universal credit seems to.

I am curious, is there a way to work out how much savings will be too much to bother with UC? As a rough guide.

I read somewhere that for every £250 (above £6,000), your entitlement is reduced by £4.35. How much savings do you need for the entitlement to be effectively reduced to 0? (I don’t know what the maximum amount is).

It seems to be becoming more like benefits? Don’t get me wrong, I don’t criticise the change, I think maybe it’s a good thing however I don’t like the fact when they make it sound like it’s a replacement, when it’s clearly not! And many people are likely to get caught out.

 Thats the point, they are trying to catch people out. Those people with thousands in savings or multiple properties and even people claiming to be self employed but with very low or even 0!earnings maximising the benefits they get.  Many people have been receiving a lot in benefits aka tax credits when they don't actually need them. Means testing them with universal credit means benefits are paid only to those who have no assets savings etc 

moneytroll

marcia_ said:

moneytroll said:

I got a letter saying that Universal Credit will be replacing working tax credits. But it’s not really a replacement, is it. Working tax credits never took into account your savings/investments but universal credit seems to.

I am curious, is there a way to work out how much savings will be too much to bother with UC? As a rough guide.

I read somewhere that for every £250 (above £6,000), your entitlement is reduced by £4.35. How much savings do you need for the entitlement to be effectively reduced to 0? (I don’t know what the maximum amount is).

It seems to be becoming more like benefits? Don’t get me wrong, I don’t criticise the change, I think maybe it’s a good thing however I don’t like the fact when they make it sound like it’s a replacement, when it’s clearly not! And many people are likely to get caught out.

 Thats the point, they are trying to catch people out. Those people with thousands in savings or multiple properties and even people claiming to be self employed but with very low or even 0!earnings maximising the benefits they get.  Many people have been receiving a lot in benefits aka tax credits when they don't actually need them. Means testing them with universal credit means benefits are paid only to those who have no assets savings etc 

Erm, ok but that wasn’t my question. I think I understand why they are doing it.

marcia_

moneytroll said:

marcia_ said:

moneytroll said:

I got a letter saying that Universal Credit will be replacing working tax credits. But it’s not really a replacement, is it. Working tax credits never took into account your savings/investments but universal credit seems to.

I am curious, is there a way to work out how much savings will be too much to bother with UC? As a rough guide.

I read somewhere that for every £250 (above £6,000), your entitlement is reduced by £4.35. How much savings do you need for the entitlement to be effectively reduced to 0? (I don’t know what the maximum amount is).

It seems to be becoming more like benefits? Don’t get me wrong, I don’t criticise the change, I think maybe it’s a good thing however I don’t like the fact when they make it sound like it’s a replacement, when it’s clearly not! And many people are likely to get caught out.

 Thats the point, they are trying to catch people out. Those people with thousands in savings or multiple properties and even people claiming to be self employed but with very low or even 0!earnings maximising the benefits they get.  Many people have been receiving a lot in benefits aka tax credits when they don't actually need them. Means testing them with universal credit means benefits are paid only to those who have no assets savings etc 

Erm, ok but that wasn’t my question. I think I understand why they are doing it.

 Yes it was 
"It seems to be becoming more like benefits?" 

kaMelo

As to how much savings would cancel out UC, there is no set figure as the amount of UC someone qualifies for is dependant upon their circumstances. There is a maximum capital limit of £16,000, once you reach that figure entitlement to UC ends however those migrating from tax credits are protected for twelve months if they have capital in excess of £16,000 (and maintain that level for twelve months) at the time of migration. There will be a deduction applied for any amount of capital between £6,000 and £16,000. The maximum deduction would be £174 for those with transitional protection for capital in excess of £16,000.

On your wider point, it's not looking like a benefit it is a benefit, a means tested one in the same way Tax Credits is. UC replaces six legacy means tested benefits and incorporates them all under one benefit. Like all means tested benefits it has it's own eligibility criteria which may mean a different outcome for some people who were previously claiming a legacy means tested benefit.

moneytroll

kaMelo said:

As to how much savings would cancel out UC, there is no set figure as the amount of UC someone qualifies for is dependant upon their circumstances. There is a maximum capital limit of £16,000, once you reach that figure entitlement to UC ends however those migrating from tax credits are protected for twelve months if they have capital in excess of £16,000 (and maintain that level for twelve months) at the time of migration. There will be a deduction applied for any amount of capital between £6,000 and £16,000. The maximum deduction would be £174 for those with transitional protection for capital in excess of £16,000.

On your wider point, it's not looking like a benefit it is a benefit, a means tested one and the same way Tax Credits is. UC replaces six legacy means tested benefits and incorporates them all under one benefit. Like all means tested benefits it has it's own eligibility criteria which may mean a different outcome for some people who were previously claiming a legacy means tested benefit.

Thanks. Do you know if you have to register for UC in order to be protected for these 12 months? Or is it automatically applied regardless.

peteuk

Transition Period (TP) will only protect you for savings above £16K - this is for a year. However if you do have over £16K anything from £6K to £16 will affect your UC in reductions of £4.35 for each £250 or part of there in.

Should your capital reduce below £16K this will end your TP protection for capital. 

Depending on your circumstances your deduction can mean you will receive less of a payment than TC, and then if you still have £16K in capital after the year, your claim will end.

Spoonie_Turtle

peteuk said:

Transition Period (TP) will only protect you for savings above £16K - this is for a year. However if you do have over £16K anything from £6K to £16 will affect your UC in reductions of £4.35 for each £250 or part of there in.

Should your capital reduce below £16K this will end your TP protection for capital. 

Depending on your circumstances your deduction can mean you will receive less of a payment than TC, and then if you still have £16K in capital after the year, your claim will end.

Although that is supposed to be negated by the transitional element topping up a UC award if it's lower than the existing TC award according to the notional calculation at the point of migrating.

poppy12345

moneytroll said:

kaMelo said:

As to how much savings would cancel out UC, there is no set figure as the amount of UC someone qualifies for is dependant upon their circumstances. There is a maximum capital limit of £16,000, once you reach that figure entitlement to UC ends however those migrating from tax credits are protected for twelve months if they have capital in excess of £16,000 (and maintain that level for twelve months) at the time of migration. There will be a deduction applied for any amount of capital between £6,000 and £16,000. The maximum deduction would be £174 for those with transitional protection for capital in excess of £16,000.

On your wider point, it's not looking like a benefit it is a benefit, a means tested one and the same way Tax Credits is. UC replaces six legacy means tested benefits and incorporates them all under one benefit. Like all means tested benefits it has it's own eligibility criteria which may mean a different outcome for some people who were previously claiming a legacy means tested benefit.

Thanks. Do you know if you have to register for UC in order to be protected for these 12 months? Or is it automatically applied regardless.

You will need to claim it when you receive the letter. No one is automatically moved across. If you don't claim UC then the TP can't apply because there will be no claim. 

moneytroll

kaMelo said:

As to how much savings would cancel out UC, there is no set figure as the amount of UC someone qualifies for is dependant upon their circumstances. There is a maximum capital limit of £16,000, once you reach that figure entitlement to UC ends however those migrating from tax credits are protected for twelve months if they have capital in excess of £16,000 (and maintain that level for twelve months) at the time of migration. There will be a deduction applied for any amount of capital between £6,000 and £16,000. The maximum deduction would be £174 for those with transitional protection for capital in excess of £16,000.

On your wider point, it's not looking like a benefit it is a benefit, a means tested one and the same way Tax Credits is. UC replaces six legacy means tested benefits and incorporates them all under one benefit. Like all means tested benefits it has it's own eligibility criteria which may mean a different outcome for some people who were previously claiming a legacy means tested benefit.

On my wider point, I meant that to receive, what are termed, “benefits”, they’d look at your income as well as savings. While with working tax credits, capital didn’t come into play. This is obviously now very different. I wonder why they were giving tax credit awards to people with capital in the first place then? I mean what was the rationale?

Muttleythefrog

moneytroll said:

kaMelo said:

As to how much savings would cancel out UC, there is no set figure as the amount of UC someone qualifies for is dependant upon their circumstances. There is a maximum capital limit of £16,000, once you reach that figure entitlement to UC ends however those migrating from tax credits are protected for twelve months if they have capital in excess of £16,000 (and maintain that level for twelve months) at the time of migration. There will be a deduction applied for any amount of capital between £6,000 and £16,000. The maximum deduction would be £174 for those with transitional protection for capital in excess of £16,000.

On your wider point, it's not looking like a benefit it is a benefit, a means tested one and the same way Tax Credits is. UC replaces six legacy means tested benefits and incorporates them all under one benefit. Like all means tested benefits it has it's own eligibility criteria which may mean a different outcome for some people who were previously claiming a legacy means tested benefit.

On my wider point, I meant that to receive, what are termed, “benefits”, they’d look at your income as well as savings. While with working tax credits, capital didn’t come into play. This is obviously now very different. I wonder why they were giving tax credit awards to people with capital in the first place then? I mean what was the rationale?

Most benefits don't look at income and savings.. most I would assume (given there's well over 10 million pensioners)  look at contributions including state pension, ESA & JSA (New style/contribution based) and then there is PIP (and its still existent predecessor DLA).. things like CA consider earned income but not savings

Not necessarily yourself.. but definitely out there there's a lot of people picking and choosing what they consider benefits to be so as to exclude their own claims. Tax credits may not come from the DWP unlike most benefits... but then Council Tax Support doesn't either.

On your question I wonder if clues can be found in here https://revenuebenefits.org.uk/tax-credits/policy/research/where-it-all-started/
Interestingly back at the beginning of the millennia language used (in design of tax credits) regarding 'making work pay' is near identical to the same arguments in later years and to this day for Universal Credit and some of the considerations looks the same. On the face of it... in Universal Credit replacing several legacy benefits tax credits may be a quite natural fit along with (Income related) JSA.