Savings and benefits

This information applies to England and Wales.

Savings affect some benefits and not others. You can have savings and still claim means-tested benefits. But you must stay within the saving limits set by the Department for Work and Pensions (DWP).

An increase in savings can affect how much you receive in benefits. An increase could be because you are not spending as much or because someone gave you a large amount, such as an inheritance or a lump sum payment

Inheritance and benefits

Lump sum payments and benefits

How savings affect your benefits depends on:

  • your age
  • the type of benefits you claim
  • how much in savings you have

Use a benefits calculator to see if your savings affect your benefits.

What counts as savings

Savings include different types of ‘capital’ such as:

  • cash
  • money in any bank or building society account
  • National Savings and Investments accounts, such as Premium Bonds or Income Bonds
  • stocks, bonds and Individual Savings Accounts (ISAs)
  • property that is not your main home

Savings do not include things such as:

  • work or private pensions (if not cashed in)
  • jewellery, antiques or family heirlooms
  • your car or business
  • personal injury compensation payments held for less than 1 year
  • your home

Savings rules and what counts as savings (entitledto)

When property counts as savings

The home you live in does not count as savings.

If you sell your house, you have 26 weeks to buy another before the DWP will consider money from the sale as savings. The DWP considers money left over from selling your home in assessing your benefits.

There are some situations where the value of a property does not count as savings. This is called ‘disregarded property’.

When property does not count as savings (Turn2us)

Inheriting a house or property

Benefits affected by savings

The amount of savings you and your partner have may affect the money you receive if you jointly claim means-tested benefits. These are benefits based on your savings and income.

Benefits affected by savings are:

Use the Turn2us benefits calculator to find out what you can claim.

Benefits not affected by savings

Savings do not affect New Style Jobseeker’s Allowance or benefits linked to disability, such as:

Non means-tested benefits (Turn2us)

To check what type of benefit you receive, call the Jobcentre Plus on 0800 169 0310.

Work and claiming benefits

Savings limits

The DWP sets a limit of £16,000 in savings to be eligible for:

  • Universal Credit
  • Income-based JSA
  • Income-related ESA
  • Income Support
  • Housing Benefit if you’re under State Pension age

If your savings are:

  • under £6,000, your benefit claim is not affected by your savings
  • between £6,000 and £16,000, you lose some of your benefit payment
  • more than £16,000, you’re not eligible

Every £250 over £6,000 counts as if you had:

  • £4.35 of monthly income for Universal Credit
  • £1 of weekly income for Income-based JSA, Income-related ESA, Income Support and Housing Benefit

For example, you claim Income-related ESA and have £7,000 in savings.

The first £6,000 is ignored. Every £250 of the remaining £1,000 counts as £1 of weekly income.

This means £4 comes off your weekly ESA payment.

If you live in a care home

The rules are different if you live in a care home and claim:

  • Income-based JSA
  • Income-related ESA
  • Income Support

You can have up to £10,000 in savings before it affects your claim.

Housing Benefit

The rules for Housing Benefit are different if you’re over State Pension age.

You can have up to £10,000 in savings before it affects your claim. Every £500 over that amount counts as £1 of weekly income.

If you get Pension Credit guarantee credit, you can have more than £16,000 in savings without it affecting your Housing Benefit.

If you claim Housing Benefit jointly with someone who is below State Pension age, the working age savings limit of £6,000 applies before it affects your claim.

Housing Benefit

Tax credits

These limits do not apply to tax credits.

What you’re entitled to is based on your income last year, which includes interest on savings.

What counts as income for tax credits (GOV.UK)

Check if a change affects your tax credits (Citizens Advice)

Pension Credit

The rules are different for Pension Credit. The first £10,000 does not count. Every £500 over that amount counts as £1 of weekly income. There is no upper savings limit for Pension Credit.

Use the Pension Credit calculator to see if you’re eligible.

Warning Get free pensions advice

Pension Wise is a government service that offers free, impartial pensions guidance about your defined contribution pension options.

Pension Wise

If your savings increase

Your savings may increase for many reasons. You could:

  • receive a compensation payment or inheritance as property or cash
  • move in with someone who has savings
  • have shares or bonds that go up in value and pay dividends
  • get a lump sum from a private or work pension
  • receive more in benefits than you’re spending

You need to let the relevant benefits office know if your savings increase.

Lump sum payments and benefits

If you do not, you could be:

  • fined
  • paid too much in benefits which you may have to pay back

How to report a change in your circumstances (GOV.UK)

If someone in your household has savings

Only you and your partner’s savings will affect your benefits. Other people in the house can have savings without it affecting your benefits. This includes your children and other adults.

For example, your partner’s savings count if you claim Housing Benefit together. If you have a lodger who is not a part of your claim, their savings do not count.

Using your savings and deprivation of capital

It’s likely that your benefits will be affected once you and your partner’s savings are over £6,000.

Reducing savings so that it does not affect your benefits is sometimes called ‘deprivation of capital’. If you try to reduce your savings by spending or giving money to your family or friends, the DWP may still count it as part of your savings. This is called ‘notional capital’ and it may reduce your benefit payments.

If you use your savings, the DWP may ask you for receipts and bank statements.

Deprivation of savings and other capital (entitledto)

Find a benefits adviser (Turn2us)

Last reviewed by Scope on: 31/01/2024

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