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Savings rules in working age benefits

Capital limits

If you (and your partner) have total savings of £6,000 or less you do not need to enter an amount, as the first £6,000 of savings is ignored, this is called the lower capital limit. This applies to those claiming working age benefits.

If you (and your partner) have total savings over £6,000 you should enter the total amount of savings you and your partner have on the savings page without taking off the £6,000 ignored by the government. The calculator will automatically work out how much of it will count as income.

You cannot get any of the means-tested benefits (income-related Employment and Support Allowance, income-based Jobseeker's Allowance, Income Support, Housing Benefit or Universal Credit) if your capital is over £16,000, this is called the upper capital limit.

The capital limits for Council Tax Support for working age customers depend on your local scheme. If we ask if you have capital below £6000 it will be because your local scheme has a lower capital limit for Council Tax Support. We will still use the limits explained above when calculating other benefits.

What to include as savings

You should enter as savings any money that you can access relatively easily or financial products that can be sold on. The definition of savings for the means test in benefits includes:

  • cash;
  • money in bank or building society accounts, including current accounts that don’t pay interest;
  • money in a Tax Free Childcare account (enter 80% of value)
  • National Savings accounts and certificates;
  • income bonds;
  • stocks and shares;
  • property (other than your own home);
  • Premium Bonds
  • Lump sum taken from a pension fund
  • Lump sum payments on finishing work such as redundancy pay or employment tribunal awards

How capital is valued

Your capital is generally valued at its current market or surrender value less 10% if there would be costs involved in selling and less any debt secured on a property.

Jointly owned capital

If you own capital jointly with other people you would normally be assessed as having an equal share.

What not to include as savings

The following do not count as savings when calculating benefits, they are ignored or disregarded so should not be entered in this calculator:

  • the value of any property occupied by someone who is a 'close relative' if they have reached pension credit qualifying age or are 'incapacitated'
  • the value of a property for up to 26 weeks if you have acquired it to live there, you are trying to sell it, you are carrying out essential repairs or alterations in order to live there, or you are taking legal advice so that you can live there
  • the value of a former home for up to 26 weeks if you have left because of a relationship breakdown (or indefinitely if your former partner lives there and is a lone parent)
  • sale proceeds of your home for up to six months if you intend to buy another home
  • money from insurance claims for up to six months if used to replace or repair
  • money such as a loan or grant to pay for essential repairs or improvements
  • capital derived from an award of damages received in respect of an injury which is held either under the Supervision of Court or within a Personal Injury Trust
  • your personal possessions such as jewellery, furniture or a car
  • your business assets
  • any life insurance policy which has not been cashed in
  • any charge for currency conversion if your capital is not held in sterling
  • any Social Fund grant payments
  • arrears of certain state benefits
  • certain compensation payments
  • the value of a pre-paid funeral plan (for some working age means tested benefits)
  • the value of a pension fund you choose not to access (working age only)

This list is not exhaustive, if you have any doubts about whether capital you have affects benefit entitlement please seek advice from a specialist benefits adviser.

Notional capital

If you deprive yourself of savings or capital in order to increase the amount of benefit you get, you can be treated as if you still had that capital, this is called ‘notional capital’. This might happen if you give money away to members of your family or buy expensive items in order to reduce your capital.

You will not be considered to have deprived yourself of capital if you have paid off debts or used money for ‘reasonable’ spending on goods and services.

If you are refused benefit because of notional capital you should seek advice and consider appealing against the decision.

The government's formula for working out interest

The calculator works out the weekly income, or tariff income, that the government assumes you get on these savings when assessing your benefit entitlement (this is shown by the box 'Assumed weekly income from savings'). 

PLEASE NOTE THAT THE CALCULATOR USES THE GOVERNMENT'S FORMULA FOR CALCULATING INCOME FROM SAVINGS. The amount we calculate is not meant to represent the amount of income you actually receive from your savings. 

If you are working age the government assumes you receive £1 per week for every £250 (or part of £250) of savings you have above £6,000 and any actual income these assets generate is ignored.