As compiled by Professor Eileen Evason for BBC Radio Ulster’s On Your Behalf Programme

How savings and other capital can affect your benefits - June 2015

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, 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 couples-married, cohabiting or civil partners- 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 pensionable age

2. Persons under pensionable age (that is the age at which the state pension is payable to women), who are not in full-time work, may claim income support or Income-based jobseeker’s allowance or the income- related employment and support allowance if their income is below the prescribed levels. For all 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 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 £3,000 in savings and the husband had £7,000 would have excess capital of £4,000 which would be assumed to produce a weekly income of £16.

Persons over pensionable age.

3. For persons over pensionable age the relevant benefit is state pension credit. Here, the rules are much more generous. The first £10,000 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, the tariff is more generous inasmuch as where capital exceeds £10,000 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 pensionable age 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 over pensionable age will have all of their capital ignored if they qualify for the guarantee credit which is part of pension credit. Where persons over pensionable age 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 £10,000 disregarded. Capital between these two figures is assumed to generate a weekly income of £1 for each block –or part block- of £500.

The rules differ again for persons in nursing home/ residential accommodation.
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.

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.