To think that universal credit wrongly penalises...

[User78890]

Posted a while ago about universal credit and savings... I can't get my head around it.

The rules are that above 6k you get deductions to your claim. The more you save, the more that gets deducted. 16k or above means that you cannot claim.

I am (hopefully) going to be training for a profession for a few years which will be a low wage. I'll have to rely on universal credit as my wage wouldn't cover childcare costs on top of everything else. But where does this leave those who want to save for a mortgage?

Surely anyone who saves will be in a constant cycle as you will then need to use your savings to live on, claim again, and repeat.

Before anyone jumps on me, I know benefits are for those who need it, and if you have savings, yes, you are obviously not in the priority of those who need it. But, those who spunk their money or use it wrongly are unaffected. Those who are trying to better their situation and are sensible, however, are in a constant trap. We are both equally entitled to the same financial help, but one is penalised and the other isn't.

So surely you would be best of spending your money, and you will never get a mortgage (unless obviously you was to secure a higher paid job)...

There are so many problems with this. You put it in your grandma's savings account, what happens if she has to go into care and they think she has more money than she does ? You put it in your dads bank account but he loses his job and needs to claim UC himself but can't as he has 20k of your savings in there ? very problematic unless you can find someone who is very loaded and you know will never need to claim benefits themselves !

That’s why you look at who you know and trust. Did I say put it in granny’s account who needs to go in a care home as she’s really old ? No, as that would be stupid.

I know more then one person who I would
Trust to look after my money and who has a high paying job.

I didn’t say go and put it in someone’s account who’s unreliable. Just because you don’t know anyone who could look after money for you doesn’t mean others don’t.

If the OP withdrew the money and spent it all on a night out then it wouldn’t matter so it’s no different to give it to a family member as a gift.

@Potterpotterpotter

There are so many problems with this. You put it in your grandma's savings account, what happens if she has to go into care and they think she has more money than she does ? You put it in your dads bank account but he loses his job and needs to claim UC himself but can't as he has 20k of your savings in there ? very problematic unless you can find someone who is very loaded and you know will never need to claim benefits themselves !

That’s why you look at who you know and trust. Did I say put it in granny’s account who needs to go in a care home as she’s really old ? No, as that would be stupid.

I know more then one person who I would
Trust to look after my money and who has a high paying job.

I didn’t say go and put it in someone’s account who’s unreliable. Just because you don’t know anyone who could look after money for you doesn’t mean others don’t.

If the OP withdrew the money and spent it all on a night out then it wouldn’t matter so it’s no different to give it to a family member as a gift.

Do you think if you were doing this and claiming UC and you suddenly stopped claiming the rent element because you had bought a house and the DWP investigated, they might think it strange that a well off friend has gifted you thousands of pounds for a house deposit ?? they do look into fraud you know !

@AnneLovesGilbert

So where would you put the cap? Should someone on a low wage with a million in the bank be eligible to claim state support, which let’s not forget is paid for by everyone, it’s not the government’s money.

Under tax credits, that person with a million in the bank would have to declare the interest on that million as income.

I really think money specifically saved in some kind of help to buy ISA ( if they still exist ??) should be ringfenced.

I agree. I think help to buy ISAs closed for new accounts in November last year. I managed to open one with days to spare. But there should be some sort of housing savings vehicle that is exempt from the savings rules of UC. Something like the help to buy would be perfect as it can only be used as a house deposit. This would benefit the government as it would remove the need for housing element of universal credit for those who saved enough to be able to buy.

@Babyroobs

YABU. Uc is a top up benefit to ensure people have a decent amount to live on and provide basics. It isn't designed to enable people to save for a mortgage. The problem is that tax credits allowed virtually any amount of savings and only looked at interest on savings so people in the current climate with extremely low interest rates could potentially have 100k in savings ( assuming their earnings were still low enough ) and still get tax credits which most people would agreed is completely ludicrous. The system needed to change. The problem now though is that you still have some lucky people on tax credits where they can save for a house deposit and not be penalised, or can go to University and still basically get their student loan and keep all their tax credits , then you have those forced to claim UC whose student loans will mostly wipe out their UC entitlement and they are penalised for saving. I'm surprised there isn't more uproar about the unfairness of it all.

There’s constant uproar. Your view is very dim. It’s nobody else’s business what someone chooses to spend or save.

I’m sure the majority of people on TC are not saving for a house deposit don’t be so dim. The real issue is that even on a decent hourly rate and you have a child living costs and childcare expenses are so much it’s literally (wage alone without TC/UC) it’s not doable.

@Smallsteps88

I really think money specifically saved in some kind of help to buy ISA ( if they still exist ??) should be ringfenced.

I agree. I think help to buy ISAs closed for new accounts in November last year. I managed to open one with days to spare. But there should be some sort of housing savings vehicle that is exempt from the savings rules of UC. Something like the help to buy would be perfect as it can only be used as a house deposit. This would benefit the government as it would remove the need for housing element of universal credit for those who saved enough to be able to buy.

I think the limit was 3000 for HTB ISA.

The government know full well what they are doing targeting the poor and people who lack good money management skills.... other wise they would invent something where you can have an account to save for a house because it will all go back in the pot at some point. It’s not in the governments interest to do so though.

YANBU OP!!
Me & DH both work
Him full time, me part time & we have 2 pre-schoolers. Our income is subsidised with UC to the tune of just under £800 per month.

A family member of DH’s unfortunately died recently & he is looking to receive an inheritance of around 20k.

We were planning on using that to get onto the property ladder, but have since found out as soon as that money is his we will lose the entire £800pm.

So what do we do? Live off the 20k & then claim again when it runs out? So we’ll never be able to buy, because anytime we came close to having a deposit we’d lose our UC.

It’s either that or start earning an extra £800pm between us. Easy on MN apparently, not so easy in reality.

It’s deliberately designed (by people who knew they would never have to live on it) to be uncomfortable to live on UC because those that designed it think poor people just need the right incentive to stop being poor. That if its unpleasant you’ll get off your lazy arse and make your own money. Rather than the reality that a great many on it simply can’t earn more than they are and will always be reliant on state top ups for all sorts of valid reasons.

^ this

@Eatyourbanana

YANBU OP!! Me & DH both work Him full time, me part time & we have 2 pre-schoolers. Our income is subsidised with UC to the tune of just under £800 per month.

A family member of DH’s unfortunately died recently & he is looking to receive an inheritance of around 20k.

We were planning on using that to get onto the property ladder, but have since found out as soon as that money is his we will lose the entire £800pm.

So what do we do? Live off the 20k & then claim again when it runs out? So we’ll never be able to buy, because anytime we came close to having a deposit we’d lose our UC.

It’s either that or start earning an extra £800pm between us. Easy on MN apparently, not so easy in reality.

No you can claim again as soon as it falls to 16k but you will lose some of the £800 as your Uc amount will reduce by about £17 a month for each £1000 over 6k.

Gosh OP, some harsh responses on here.
If you can save while on UC by cutting out all luxuries and keeping spending to a minimum then fair play to you for trying to build a better life for yourself by doing so.
I suspect many of the more smug comments on this post will be from people who bought 15 or more years ago when property was half the price and there were self cert mortgages, with 5% deposit.
My thought would be for you to save your 16k, then look into a shared ownership property, which will get you on the property ladder - you would mortgage only your share (anything between 20-60% of overall value) and you can then overpay on the mortgage part or look at extending your share as you start coming near the 16k limit.

@MrsTerryPratchett

The issue isn't UC. the issue is low wages, high rent and high childcare costs. Deliberately. It's a policy.

Finally the penny has dropped

@TinyTornado

Gosh OP, some harsh responses on here. If you can save while on UC by cutting out all luxuries and keeping spending to a minimum then fair play to you for trying to build a better life for yourself by doing so. I suspect many of the more smug comments on this post will be from people who bought 15 or more years ago when property was half the price and there were self cert mortgages, with 5% deposit. My thought would be for you to save your 16k, then look into a shared ownership property, which will get you on the property ladder - you would mortgage only your share (anything between 20-60% of overall value) and you can then overpay on the mortgage part or look at extending your share as you start coming near the 16k limit.

The problem is though any savings over 6k would reduce the amount of Uc someone gets so if they rose up to 16k, the monthly Uc would reduce by about £170 a month. You can't win really, penalised at every turn.

If you have over sixteen grand in savings, you don't need public money to prop you up

Exactly. Why should people who work and struggle to save for a deposit to buy a house have to fork out to help those who have savings - and think the World owes them?

If you have £16,000 saved you can live off your savings. Why would you expect those less well off than you to fund your lifestyle?

I’m not on UC but on legacy benefits; I have some savings, but under the £6k limit. I now need to file for divorce from my ex (long story, been separated for years, but it now needs sorted). But because I’ve been frugal, and put some money away, although my income entitles me to legal aid, my rainy day fund rules it out. So yes, I do feel that the system penalises trying to be responsible and put some money away

Why should people who work and struggle to save for a deposit to buy a house have to fork out to help those who have savings

Umm, UC isn’t just for unemployed people. Many people in receipt of it work!

Why should people who work and struggle to save for a deposit to buy a house have to fork out to help those who have savings

Umm, UC isn’t just for unemployed people. Many people in receipt of it work!

^ Yep. If you think unemployed people on UC have a hope in hell of ever saving to buy a property you're mad 😂 Most UC claimants DO work!

But as a PP has said
Shit wages
High child care costs
High housing costs
= Universal credit entitlement.

To be honest I think the system is more fucked due to extortionate child care fees. Basically paying the equivalent of home care fees for care that isn't 24/7, and is mostly facillitated by 17/18yr olds on very low wages, but at sky high prices. If the government implemented pre school child care at a cost effective rate for working parents/lone working parents it'd probably ease the financial burden across the board to allow those who want/can work to not be put in the position they have to fall back on top ups/benefits in the first place. That would also enable parents to not need to claim benefits so much out of the universal benefits pot, and enable extra individual cash flow. It really doesn't benefit anyone having children to stay/get back into paid employment (and generate taxes). Essentially it puts a lot of people into the catchment of 'if you can't afford to have children, then you shouldn't have them'.

Yep. If you think unemployed people on UC have a hope in hell of ever saving to buy a property you're mad 😂 Most UC claimants DO work

Many people who work don’t have £16,000 in savings! Why do you think that’s funny?

Many people who work don’t have £16,000 in savings! Why do you think that’s funny?

Not sure what point you think you’re making. Many of those working that you refer to will be in receipt of UC. And she wasn’t laughing at people not having £16k savings. She was laughing at the idea that someone who is unemployed and in receipt of UC would have any chance of saving for a house deposit.

So you think it’s justified that someone with £16,000 in savings is complaining they cannot claim UC??

Why do you think they should?

As others have sad, there are people not on benefits or tax credits who also struggle to get a mortgage or get on the property ladder. That’s life unfortunately.

@MarleyTheDog

So you think it’s justified that someone with £16,000 in savings is complaining they cannot claim UC??

Why do you think they should?

UC was designed to keep people poor.

@MarleyTheDog - yeah you’ve lost me, I don’t have 16k in savings so why would i laugh at people you lemon?

^So you think it’s justified that someone with £16,000 in savings is complaining they cannot claim UC??

Why do you think they should?^

Because other wise you are denying these people the right to ever own their own home. Remember we are talking about working people here, not ‘benefit scroungers’ which seems to pop into peoples heads as soon as you hear the words ‘universal credit.’

I agree there should be an account where the savings can only be used for a house deposit & it doesn’t effect your UC. It’s the only way.

Most people aren’t going to ever own their own home.

It isn’t something particularly awful being done to universal credit claimants.