If you have more than £16,000 you cannot claim Universal Credit.
If you have more than £6,000 your capital will affect the amount of Universal Credit that you get.
Your capital might be money, property or other savings or investments but it does not include the value of your personal property.
If you have money in a discretionary trust fund, where you can only access it with the permission of your trustees, this will not count as part of your capital.
If you have a non-discretionary trust, where you have access to the money, this will be taken into account, unless it’s money from a personal injury compensation payment.
For couples the limits apply jointly.
If you jointly own capital with someone other than your partner you are treated as owning an equal share with the other person(s) unless there is evidence to show that is not the case.
If you deprive yourself of capital so that you get extra Universal Credit, the DWP can treat you as though you still have it. They call this notional capital
Some capital is ignored, or disregarded, by Universal Credit.
Disregarded Capital
The law of Universal Credit includes a list of Capital To Be Disregarded including:
- Your home.
- The home of a close relative who is over Pension Age or who has Limited Capability for Work.
- A property that you intend to live in:
- That you have bought within the last six months, or,
- Where you have begun steps to obtain possession of the property within the last six months, or,
- You are carrying out essential repairs to make the property fit for occupation that began within the last six months
- A property that you used to live in with your ex-partner where your ex-partner who is a lone parent still lives in it.
- A property that you used to live in with your ex-partner that you have left within the last six months.
- A property that you are talking reasonable steps to dispose of, where you began those steps in the last six months.
- Proceeds of the sale of a property within the last six months, that you intend to use to buy another property.
- An insurance payout received in the last six months for loss or damage to your home or possessions.
- A backdated payment of some social security benefits made within the last 12 months.
- Payments that you get because you are the holder of a Victoria Cross.
- A personal injury compensation payment that is held in trust, or administered by the court, or that can only be disposed of by direction of the court.
- Any other personal injury compensation payment made within the last 12 months – unless it has been used to buy an annuity
- Capital over £16,000 for one year, if you have moved from Tax Credit to Universal Credit under managed migration.
Where these rules include a six month time limit, this can be extended where it is reasonable.
Deprivation of Capital
If you deprive yourself of capital to get benefit you will be treated as though you still have it. This is known as notional capital.
The law of Universal Credit says that this should not apply if you use your capital to reduce or pay your debts, or, you buy goods or services if the spending is ‘reasonable in the circumstances’
Unfortunately it is not possible to get clearance from DWP before you spend your money. You might spend part of your savings, thinking that it is reasonable to do so, but then have DWP treat you as though you still have the money.
The DWP can treat you as though you still have your savings if one of your reasons for spending money was to get extra benefit. Getting more benefit does not have to be the main reason, just part of your thinking.
If the DWP knows that you are aware of the capital rules they will tend to assume the worst when looking at your spending