Pension Lump Sum effecting Universal Credit

saintscouple

Hello,

I posted this thread in the Pension board as next year when i turn 55 i want to draw a lump sum from one of my pensions. 

https://forums.moneysavingexpert.com/discussion/6586192/lump-sum-when-on-benefits#latest

From there it was advised to draw from my Aviva pension, which would mean after tax i would be aprox £800+ over the £6k savings limit for UC.

I have no current savings.

Can anyone advise how this would effect my UC and how the process works?

I will inform UC of the savings once they hit my account as per my obligations, but how do the deductions work, and do i inform UC monthly of the savings amount?

Anything else i should be aware of?

Next year is my wifes and I 20th Wedding Anniversary and i would like to do something special for that, hence the reason to draw a lump sum.

Thank you. 

HillStreetBlues

Saving and capital are different. When you say you will have about £6.8k is that monies or is that capital  (monies minus income).
If it's monies, how much  wages and UC do you get in a Assessment Period?

TELLIT01

£6k isn't the limit on savings for UC.  It is the point at which you need to inform UC.  The limit for savings is £16k.

kaMelo

HillStreetBlues said:

Saving and capital are different. When you say you will have about £6.8k is that monies or is that capital  (monies minus income).
If it's monies, how much  wages and UC do you get in a Assessment Period?

Going off the other thread, £6800 is what the OP would receive from their Scottish Widows pension after tax.

saintscouple said:

Hello,

I posted this thread in the Pension board as next year when i turn 55 i want to draw a lump sum from one of my pensions. 

https://forums.moneysavingexpert.com/discussion/6586192/lump-sum-when-on-benefits#latest

From there it was advised to draw from my Aviva pension, which would mean after tax i would be aprox £800+ over the £6k savings limit for UC.

I have no current savings.

Can anyone advise how this would effect my UC and how the process works?

I will inform UC of the savings once they hit my account as per my obligations, but how do the deductions work, and do i inform UC monthly of the savings amount?

Anything else i should be aware of?

Next year is my wifes and I 20th Wedding Anniversary and i would like to do something special for that, hence the reason to draw a lump sum.

Thank you. 

Do you have any other taxable income?

If not, or not much, then you will receive the £1200 back as a tax rebate at some point. 

Tax rebates are normally classed as income however I'm unsure what this would be classed as for UC purposes given the circumstances.

Newcad

saintscouple said:

Can anyone advise how this would effect my UC and how the process works?

I will inform UC of the savings once they hit my account as per my obligations, but how do the deductions work, and do i inform UC monthly of the savings amount?

Anything else i should be aware of?

If/when you have between £6k and £16k savings/capital* then £4.35 is deducted from UC for every £250 or part of £250 above £6K.

eg, £6000.01 to £6250.00 = £4.35 deduction, £6250.01 to £6500.00 = £8.70 deduction, and so on.

Once you have declared above £6k in savings/capital* then they usually ask you to inform them of savings/capital monthly so that they can check if you cross a £250 threshold.

*As pointed aout above "savings" is not necessarilay all the monies that you have in the bank.
It does not include your regular income and outgoings, the money in the bank for those goes up and down all the time, only what is unspent is savings.
eg Wages (or benefits) are income to spend on outgoings, but if not spent by the time you get your next wages (or same benefits) then the unspent money left over becomes savings.

(Capital refers more to property and other investments that are not readily acessible).

saintscouple

Thank you all,

So it will be approx £6.8k i recieve. 
It's good to know i will get a tax rebate at some point, I take it that would be automatic and not something I need to claim myself.?

My wife and I have a joint uc claim, she is my carer and I claim LCWRA.
The only other income we have is PiP.

We have 2 current bank accounts (joint) 1 our payments go into and we spend from, 2nd is for paying bills only. We do have a savings account but has a zero balance. 

HillStreetBlues

kaMelo said:

Tax rebates are normally classed as income however I'm unsure what this would be classed as for UC purposes given the circumstances.

If OP was in paid work then it will be treated as earnings.it not it isn't.
H3022 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/935544/admh3.pdf

Dazed_and_C0nfused

saintscouple said:

Thank you all,

So it will be approx £6.8k i recieve. 
It's good to know i will get a tax rebate at some point, I take it that would be automatic and not something I need to claim myself.?

My wife and I have a joint uc claim, she is my carer and I claim LCWRA.
The only other income we have is PiP.

We have 2 current bank accounts (joint) 1 our payments go into and we spend from, 2nd is for paying bills only. We do have a savings account but has a zero balance. 

I'm not convinced it will be £6.8k that you receive.

For some reason you have knocked ~£500 of the value of the pension fund.

If you took it under the "small pots" rules then from £8.5k you would receive £7.2k.

And if you don't use the "small pots" rules you would receive more like £7k because of the 40% tax payable when the pension is paid.

All tax subsequently been refunded by HMRC from what you have posted.