HOW
SAVINGS CAN AFFECT YOUR BENEFITS
1. When people claim means-tested
benefits their entitlement will be determined by their income and
capital. The term capital covers such things as savings in a bank
or building society; property; ISA’s; TESSA’s; stocks
and shares and land. The value of the property you occupy as your
home is not taken into account. Personal possessions such as cars,
furniture or jewellery are also, normally, disregarded. The capital
of husbands and wives- or persons living together as husband and
wife- will be aggregated-put together- and counted as belonging
to the claimant. Many people have difficulty understanding how capital
affects benefits. One reason for this is that the rules vary from
benefit to benefit and treat people in different age groups differently.
Persons under 60
2. Persons under 60, who are not in full-time work, may
claim income support or income-based Job Seeker’s Allowance
if their income is below the prescribed levels. For both of these
benefits capital under £6,000 is disregarded altogether. In
other words there is no effect on entitlement. Where people have
capital exceeding £16,000 they are excluded altogether from
these benefits regardless of how low their actual weekly income
is. Where people have capital between these two amounts they are
assumed to have a weekly income of £1 for each block –or
part block- of £250. This is then added to actual income in
the assessment of means. For example, a couple where the wife had
£4,000 in savings and the husband had £8,000 would be
assumed to have a weekly income of £24.
Persons aged 60 or
over
3. For persons aged 60 or over the relevant benefit is the Pension
Credit. Here, the rules are much more generous. The first £6,000
of capital is disregarded and there is no upper limit-no point at
which, regardless of how low your weekly income is, you are excluded.
In addition, where capital exceeds £6,000 people are assumed
to have a weekly income of £1 for each block –or part
block- of £500.
Help with rent and
rates
4. For rent and rates rebates, the rules are different again. Claimants
under 60 will have the first £6,000 disregarded. The upper
limit at which people are excluded altogether from benefit is £16,000.
Capital between these two figures is assumed to generate a weekly
income of £1 for each £250 block (or part-block) of
£250. Claimants aged 60 or over will have all of their capital
is ignored if they qualify for the Guarantee Credit-formerly known
as income support- which is part of the Pension Credit. Where persons
aged 60 or over are not entitled to the guarantee credit, they are
excluded altogether if they have capital exceeding £16,000.
Those with less than £16,000 will have the first £6,000
disregarded. Capital between these two figures is assumed to generate
a weekly income of £1 for each block –or part block-
of £500.
Note
1. The rules differ again for persons in nursing home/ residential
accommodation.
2. Persons who deprive themselves of capital with the intention
of securing a benefit, or an increase in benefit, may be deemed
to still have the capital disposed of.
3. Failure to disclose capital may be deemed to constitute fraud.
At best, this can result in the recovery of the amount which should
not have been paid. At worst persons may be prosecuted.
Fact sheet compiled
for On Your Behalf by Professor Eileen Evason. April 2007
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