Universal credit and the £6000 threshold

borderline6000

Hi MSE Forum.  1st-time poster here, but I am familiar with forums.

Since 2010, I am a single working tax credits claimant, working 30 hours a week.  I also have the disability element including the extra given from PIP's enhanced rate.  I've finally had the letter to convert to universal credit, and my understanding is that UC is based on capital.  That's my current and savings accounts added together.

With bills/mortgage and day-to-day living going out and wages/PIP going in, I'm always between £5000 and £7000 in capital.  This cycle repeats every month like a sine wave, me being above £6000 for some of the month.  So when I'm over £6000, do I need to report daily to the DWP on what the ever-changing over-£6000 figure is?  Or will it be easier to just declare as £7000 at all times?  I know I'll take a slight hit on my UC award, but then I'll only need to report £7000 once a year on the annual statement.

Thanks for any advice everyone :-)

P.S. I did search the forum first and found a more extreme example of my query where the poster was paying his rent every 6 months instead of the usual monthly.  This caused his capital to go way over £6000 but then drop back below £6000 twice a year when he paid his rent.  The responses in that thread were mixed, but I think the outcome was that he had to declare his rent build-up, even though it eventually went to his landlord.

Indie_Kid

Your pip isn't counted as capital for the period it's paid for. 

Newcad

The cycle that you describe of £5k to £7k each month sounds to me that you have about £5k in savings, plus about £2k in regular income/outgoings.

If that is case then only the £5k is savings which doesn't affect UC. The rest is income that you get each month to live on and spend over the month (and then get the income again and spend it again).

UC are used to working that out, and seeing what is savings and what is income - but it can often help (not least for yourself) if you can seperate which is which by putting the £5k savings into a seperate account so that 'my-savings' account stays roughly the same while your monthly income/spending goes up and down in a different 'my- income and spending' account.

teaselMay

I'd suggest same as Newcad. I'm in a similar position, although without the savings until very recently. Especially as PIP moves through the month because it's paid 4 weekly I was struggling to figure how much I actually had 'saved' as I started trying to actively save very hard. It helps at the moment that PIP is in it's phase of being paid a few days either side of UC, but what is really helping is that I've moved everything but what I need for essentials out of my current account into a savings account as each PIP or UC payment comes in.

Spoonie_Turtle

For UC it's actually relatively simple.

Add together everything you have at the end of an assessment period
Total up all the income you've received in that period (including wages and benefits)
Minus the income from the overall total
What you're left with is capital.

You only need to do that once a month at the end of each assessment period, because that's what UC is based on, your circumstances on the last day of the AP.

Also if you've received and not spent any Cost of Living Payments, those are disregarded indefinitely and can be subtracted from your capital total.

borderline6000

Many thanks for all of the replies!  That's really helpful and it looks like I'll always fall lower than £6000 after all.

@Newcad - yes not far off.  I'm £2.5k / £4.5k split.  Same bank but one is current account and the other is an ISA.

@Spoonie_Turtle - that formula looks pretty easy to calculate.  Off the top of my head, I'll be working with around £4500 to £4800 capital, so I'm well within £6000 limits.

My payslips come as PDF files and I got paid yesterday, so I can now get the notorious UC letter out and sort applying for it :-)

Time2count

If you got paid yesterday I'd hold off applying for UC for a few more days.
What is your usual payday? Is it always 28th?
I personally would do the application around the middle of next week if so, that way the possibility of you being paid early/ late or your work reporting your wages late is diminished considerably.

peteuk

UC is based on your situation - and part of that is your capital.  The amount you get is affected by your capital but to a degree UC is not solely based on your capital (unless you have over £16K which then ends your eligibility to claim UC) 

Having over £6K in capital will reduce your UC payment, by £4.35 per £250 or part thereof over the £6K.  This continues until you reach the £16K limit. 

I would say it slightly different from the above but the outcome is the same.  Any wages/benefits you receive during an assessment period is the amount you are expected to live off during that assessment period. Anything that you have from a previous assessment period is then classed as capital.  This is not restricted to savings/monies but includes things like a second property you’re not living in. 

At the next assessment period what was left over the wage/benefits from the previous assesment period then becomes capital, and the cycle continues. It is also important to remember that it is the amount of capital at the end of the assessment period that needs looking at, unless you are over the £6K, then UC may look at spending habits.  Normal spending habits that bring you below the £6K threshold are fine.  Eg a replacement fridge, paying debt.   

borderline6000

Thanks again everyone.

@Time2count - yes my payday is on the 28th unless it falls on a weekend or bank holiday, meaning that it can be 1-3 days earlier.  I'm on holiday until next Thursday, so I'll hold off my application until Thursday 7th November when I'm back.