UC denied due to savings for upcoming tax bill. Advice?

mindthegap76

Help. I seem to have fallen into a bit of a gap. 

Last year I got a big share payout and sold my shares to pay for a deposit on my house. This generated a large Capital Gain Tax bill that is due to be paid in January 2026. Following advice I put £20k into an ISA and £10k into Premium Bonds which will cover the bill when due.

Unfortunately I then fell ill and left my job at the start of this year. I didn't claim any benefits for most of the year but recently my savings have dropped below £5k and I went to apply for UC to see what help I could get due to them running out.

The advisor said that due to the £20k savings I had he would close my claim without going looking further. I explained it was due to an outstanding tax bill and he wouldn't even look at the proof. I asked what was I meant to do when my savings ran out and he told me to use the £20k and not pay the tax bill! 

I'm now worried that come end of January and the bill has been paid I'm going to end up in debt and start claiming with no money. Is there any point in appealing and getting them to take into account the outstanding tax bill into my finance? With that taken into account I am well below the required £16k limit.  

Ayr_Rage

Not being a benefits expert but having had plenty of dealings with HMRC, not paying your tax bill on time can result in penalties and the advice to not pay it is absolutely bonkers.

The Premium Bonds also count as savings so don't disregard those in your calculations.

mindthegap76

Thanks. That was my thinking too. Couldn't belive it when he suggested it. 

The PB will be used to cover the tax bill as well. Just didn't go into it for simplification but ISA + PB = Tax. 

born_again

Savings are savings. No matter what they are for.

Why could you not pay the tax at the time?

Can I use the real time CGT service?

Yes, anyone can use the real time CGT service. It’s particularly helpful for people who don’t need to complete a Self-Assessment Tax Return. This is because you only have to report your CGT gain.

mindthegap76

The advice I was given at the time was not to pay and invest the money to one side, hence the ISA and PB. If I remove the money from the ISA before January I will lose all interest. 

born_again

While the advice is good, at the time, given you were not claiming benefits. When you are claiming means tested benefits, I'm afraid it's not.

To anyone not on means tested benefits, it's like a interest free loan from HMRC. You get to invest what you owe them & make a bit more money.
On means tested benefits, you have savings that are counted.

I would see if you can pay the owed amount now, & then claim again. Paying a tax bill should not be counted as DOA.

saajan_12

mindthegap76 said:

The advice I was given at the time was not to pay and invest the money to one side, hence the ISA and PB. If I remove the money from the ISA before January I will lose all interest. 

Surely just pay the tax now, ergo no savings, ergo UC. The investment return was a nice bonus while it wasn't costing you anything, but now it is. 

If just paying part of the tax bill which is currently in the PBs brings you below the UC threshold, that may be sufficient and then extract the ISA money when you can. 

Grumpy_chap

Pay the CGT now.
Job done.
Simples.

The tax must be paid by the January deadline.  It is a deadline - latest date to pay, not earliest date to pay.  You can pay at any time.

A bit like a speed limit.  You cannot go any faster but you can go slower.

TELLIT01

As born_again said, with a very few exceptions, savings are savings for benefit purposes.  You can't set money aside for xyz and expect DWP to ignore it.   When I worked on benefit processing I actually saw comments against savings along the lines of 'for the grandchildren when I die' and 'saving for a car'.  Neither make any difference to the total.

Grumpy_chap

For anyone's reference, there is a disallow available for money for tax bills, but only for the self-employed:

https://www.gov.uk/guidance/universal-credit-money-savings-and-investments#whats-notcountedas-money-savings-and-investments

For everyone else the solution is to pay the tax bill so not holding the savings.

Altior

Have you considered New Style ESA, OP. That can be contributions based for up to a year, so savings ignored.