The government has announced proposed changes to Universal Credit in the UK. While Universal Credit can help to relieve the stress of affording living costs if you are on a low income, claiming the government benefit could put a limit on your savings potential.
Many credit claimants don’t realise that savings play a huge role in their eligibility! In fact, those who are currently on Universal Credit could lose their benefit by going over the savings threshold! So, how much can you save whilst receiving Universal Credit?
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What’s the maximum you can have in savings on Universal Credit?
Building savings is a great way to secure your financial future and prepare for unexpected expenses. However, those who are seeking to access Universal Credit may need to be aware of limits around the amount of savings they can have.
The current Universal Credit guidelines state that claimants cannot hold more than £16,000 in savings. If you’re submitting a joint application, this means that both you and your partner must have no more than £16,000 stored away.
Because of this, those wishing to claim Universal Credit need to be wary of the amount they have in savings. Those with savings of more than £16,000 as a single claimant or as a couple will not be entitled to Universal Credit.
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Can you get Universal Credit with savings under £16,000?
If you have savings under £16,000, you may still be eligible for Universal Credit.
Any savings up to £6,000 are not calculated into your monthly income. This means they will not affect your eligibility. However, any savings between £6,000 and £16,000 will affect how much you can receive.
Savings of more than £6,000 are counted as part of your monthly income. For every £250 in savings that you have (over £6,000), £4.35 will be added to your total monthly income.
Therefore, if you have £7,000 in savings, £1,000 of this would be calculated into your income, which would give you an additional monthly income of £17.40 (£4.35 x 4). Those with savings of £16,000 would have £435 added to their monthly wage.
Will savings reduce my Universal Credit allowance?
Savings of between £6,000 and £16,000 will reduce the amount of Universal Credit you can receive. Savings are calculated into your monthly earnings and for every extra £1 that you earn, your allowance will be deducted by £0.55p.
As a result, if your savings add £100 to your monthly earnings, your credit allowance will be reduced by £55 per month.
However, those who qualify for Work Allowance may be able to avoid this reduction. Work Allowance is a government benefit that limits the amount that your universal Credit can be reduced.
How else can Universal Credit claimants save?
If you are on Universal Credit and want to increase your savings, you may want to consider opening a Help To Save account. Help To Save is a government-run savings account for anyone who is entitled to Working Tax Credit or Universal Credit.
Through the savings account, savers can receive a bonus of 50p for every £2 that they save. You can use the account for up to four years and can save between £1 and £50 every calendar month. Savers can pay into the account as many times as they like, as long as they don’t exceed their £50 per month limit.
Money that is saved into a Help To Save can be withdrawn into your bank account after the four-year period.
