Sami
When applying for certain Department for Work and Pensions (DWP) benefits, your savings and assets can directly influence whether you qualify and how much support you receive.
These types of benefits are known as means-tested benefits, which assess your financial resources to determine eligibility.
What Are Means-Tested Benefits?
Means-tested benefits require applicants to have savings below a specified threshold. Exceeding these limits can reduce the amount you’re eligible to receive—or disqualify you entirely.
Savings Limits by Benefit Type
| Benefit | Savings Threshold |
|---|---|
| Universal Credit | £16,000 |
| Pension Credit | £10,000 |
| Council Tax Support | Varies by local council |
| Income-related Employment and Support Allowance (ESA) | £16,000 |
| Housing Benefit | £16,000 |
Your total capital plays a key role in how much support you’re entitled to. It’s important to understand that the savings figure is not limited to cash alone.
What Counts Towards Your Savings?
The DWP considers a wide range of financial assets when calculating your savings, not just the money in your bank account. In some cases, your partner’s finances will also be assessed, although your children’s assets are excluded.
Savings That Are Considered
- Balances in bank and building society accounts, regardless of interest
- National Savings & Investments (NS&I) accounts
- Premium Bonds
- Stocks, shares, and investments
- Inheritance received
- Value of any property not considered your main home
- Accessed pension pots
- Redundancy payments and compensation awards
(except special exclusions like the Infected Blood Compensation Scheme)
Savings and Assets That Are Disregarded
Not all possessions or funds count towards your savings total. The DWP disregards certain types of assets, which won’t impact your benefit eligibility.
Examples of Disregarded Assets
- Personal items such as jewellery, vehicles, and furniture
- Unused pension savings
- Prepaid funeral plans
- Uncashed life insurance policies
- Insurance payouts used for repairs or replacements
What Is Deprivation of Assets?
Trying to reduce your savings deliberately to qualify for benefits—by gifting money, transferring property, or purchasing exempt assets—can backfire. This is called deprivation of assets.
The DWP investigates such actions and may consider them intentional if they believe you acted to manipulate eligibility. This could include:
- Giving away large sums of money
- Buying non-countable items (e.g., an expensive car)
- Transferring ownership of valuable property
Using your savings to pay for essentials like food or debt repayment usually does not count as deprivation.
What Is Notional Capital?
If the DWP determines you intentionally disposed of assets, they may still treat that money as if you have it—this is known as notional capital. In such cases, your benefits may be reduced or denied, even though you no longer have access to the funds.
You may be asked to provide receipts and documentation to prove that your spending was genuine and not meant to increase benefit eligibility.
Understanding how savings affect DWP means-tested benefits is essential to avoid unexpected disqualification or reduced payouts. Always keep records of financial decisions, especially when dealing with large sums.
Be cautious about how you manage your savings, as any move that appears to be strategic in lowering your assets can trigger a DWP investigation and lead to the application of notional capital rules. For more guidance, visit the official Gov.uk website or speak with a financial advisor.
FAQs
What happens if my savings temporarily exceed the benefit threshold?
If your savings go over the limit, you may become ineligible for the benefit until your capital drops below the threshold again.
Will the DWP include my spouse’s savings when assessing my eligibility?
Yes, if you’re part of a couple, your partner’s savings are typically considered, but your child’s assets are not.
Can I still qualify for benefits if I spend my savings on essential needs?
Yes. Spending on necessities like food, rent, or debt is not considered deprivation of assets, and it usually won’t affect your eligibility.