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Inheritance, lump sums and benefits

The savings you have might affect means-tested benefits you receive. Your savings could increase if you inherit:

  • cash
  • property
  • stocks and shares

Or they could increase because you get a lump sum from:

  • a compensation payment or insurance claim
  • dividends from shares or bonds
  • a private or work pension
  • redundancy pay

How savings affect your benefits depends on:

  • if you are under or over State Pension age
  • the type of benefits you claim
  • how much you have in savings

What counts as savings

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

Benefits affected by savings

Your savings affect means-tested benefits. These are benefits based on your savings and income. These include:

  • Universal Credit
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Income Support
  • Pension Credit
  • tax credits (Child Tax Credit and Working Tax Credit)
  • Housing Benefit
  • Council Tax Support

Benefits not affected by savings

You need to let the relevant benefits office know if your savings increase. If you do not, you could be:

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

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

Saving 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

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 claim.

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.

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. But every £500 over that amount counts as £1 of income. There is no upper savings limit for Pension Credit.

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

Backdated benefits

If you get a lump sum in backdated benefits, this does not count as savings for 1 year.

You may have longer with backdated benefits of £5,000 or more if they were compensation for an official error or point of law. If you are unsure, seek advice.

Backdated lump sum payments from DWP (MoneyHelper)

Find a local benefits adviser (Turn2us)

Inheriting a house or property

Inheriting a property like a flat or house may count towards your savings. It’s likely that it will take you over the £16,000 savings limit and affect any means-tested benefits you receive. This includes Housing Benefit.

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

When property does not count as savings (Turn2us)

Dealing with the financial affairs of someone who has died (Citizens Advice)

Get free advice about your money (MoneyHelper)

Last reviewed by Scope on: 19/01/2022

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