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)...

@Suzi888

All of this .. “It's because UC isn't meant to support the betterment of a lifestyle. It's survival money when you can't afford to live.” Otherwise benefit would be being paid to people who had literally thousands in the bank.

Tax credits are still paid to people who have thousands in the bank because they are based on earnings. So in theory you could have thousands in the bank but be earning very little interest, be on a low wage and still getting hundreds a month in tax credits. This is what is unfair when comparing the old system and Universal credit. Someone on tax credits can save for a house with no consequences and someone on UC can't. I agree the system needed to change but we now have a very unfair system until eventually everyone is weaned off tax c redits which could take years the way managed migration is going and even then those on tax credits with savings will be protected.

I'm not sure if it exists under Universal Credit but I also have a "help to save" account in my government gateway account. If you get working tax credits you can put a maximum of £50 away per month and the government will match half of it. So if you put away £50pm you get £25pm from the government. It lasts for 4 years so you can save a maximum of £2400 and the government will give you £1200. It's a good way to save on a low income and doesn't affect benefits.

@Waxonwaxoff0 the money in your help to save account counts towards the £6k/£16k limit. It’s still a very good scheme though.

@AldiAisleofCrap I'm still on old tax credits but I wasn't sure if it counted towards the cap for UC, thanks for clarification

@Waxonwaxoff0 if you are moved to UC via natural migration it won’t matter how much savings you have as there is a 12 month transitional period.

I will just leave this here for those that think UC if for those that have nothing, should be a temporary solution, are entitled etc.
UC for those that work is in essence no different to tax credits.
People forget many middle class earners claimed tax credits whilst saving for or paying a mortgage.
The Tories have been very successful at manipulating and gaslighting people.

I agree with OP actually, if you lose your job you should receive a % of your previous salary. It’s called national INSURANCE after all. Of course, that wouldn’t be money in Tory landlord pockets, so it won’t happen.

“Tax credits, if you’ve earned it, make sure you claim it”.

Having tax credits doesn’t mean you get your rent and council tax covered too AND still have thousands in the bank.

@Suzi888 many thousands of people claiming UC revive no rent or council tax support.

Receive

I’m uncertain what your argument is OP. You seem to be saying why should you be penalised when someone in the exact same position as you who did not save is not penalised?

But most people on universal credit are not in the same position as you. They have ended up on universal credit for a variety of reasons.

I get universal credit because my wages are so low and my rent is so high. I am never going to be able to save money. If my wage increases slightly and I come off universal credit, I am still never going to be able to save money.

I don’t see what the distinction is between someone with say, 8 grand in savings wanting benefits and someone with a yearly income 8 grand higher than the benefit cut off wanting benefits.

There isn’t a straightforward path that says anyone is going to not be on benefits. What if one of you becomes disabled? What if you separate? What if you lose your job?

You seem to be planning on using benefits now on the basis that your life will be loads better in the future and you won’t need them and will have the stability to manage a mortgage, but life doesn’t work that way.

A far better solution would be that the U.K. had far more social housing, so that people had security but we didn’t have to pay these huge sums in rent, then very many people currently claiming benefits wouldn’t need to.

Uc is a top up benefit to ensure people have a decent amount to live on

Lol. Sure it is.

@AldiAisleofCrap I’m well aware, I work in the area.

[quote AldiAisleofCrap]@Suzi888 many thousands of people claiming UC revive no rent or council tax support.[/quote]
Everyone receiving Uc who rents gets a rent element.

If you get £200 a month that's over 2 years of saving every penny before reaching the threshold for it being reduced, or over 6 years to reach the full amount (I think); if you save half of it, so 100 that's over 4 years or over 12 years, by which time things will likely have changed anyway, or in your case, your training surely will have finished? People can save a reasonable amount, £6k and definitely 16 is a lot more than a lot of people have, and it's fair really that a line is drawn somewhere. People aren't penalised for savings, they are penalised for saving a lot of money. I am honestly a lot more concerned about those who don't get enough to live off of and feed their families than those who cannot save thousands.

@Babyroobs Everyone receiving Uc who rents gets a rent element. no they don’t , not if they have a mortgage or are living with parents for example.

@Babyroobs just reread your post, obviously my message to @Suzi888 related to those who do not rent.

If I want to retrain it's perfectly reasonable for me to save up and use my savings to support myself, why should the taxpayer pay? Too many people feel entitled, benefits should be about helping the vulnerable and only for a short time to get them back on their feet

Well that’s the point that is being made. If you’re on UC because you are on a low wage and decide to retrain, (which is great) you can’t save for that without your UC being reduced or cut altogether (depending on how much you save) so at a point, your savings are now being used to house and feed you and suddenly you have none to use to retrain, so no higher paying job, the savings run out and you’re back on UC. Vicious, stupid, cycle.

[quote AldiAisleofCrap]**@Babyroobs* Everyone receiving Uc who rents gets a rent element.* no they don’t , not if they have a mortgage or are living with parents for example.[/quote]
Well people who have mortgage or live with parents don't rent so. You aree both right...

Is that how UC works? Even if you would usually pay your full rent and council tax on WTC?

@Neversayn1

Is that how UC works? Even if you would usually pay your full rent and council tax on WTC?

UC is made up of a number of elements you are entitled to depending on your situation. Then wages reduce this amount on a taper. If people have children on the claim or limited capability to work because they are ill or disabled then a certain amount of wages is disregarded before the deductions start. If people have a rent element on their claim they get a lower amount disregarded than if you have a mortgage. So if you have a mortgage or live with family and don't claim the rent element, it is £512 that is completely disregarded from net earnings before your Uc amount is reduced ( assuming you have kids ). I think this is a pretty good deal really. UC is not good for single people or couples or people who have no earnings, but if you get the work allowance I really don't think it's bad. I am seeing a lot of people better off on UC. Just my opinion though and obviously prepared to be flamed for daring to say it !

[quote MiddlesexGirl]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.

Both those scenarios would quite likely be classed as deprivation of capital - www.entitledto.co.uk/help/Deprivation-of-savings-and-other-capital-Universal-Credit[/quote]
Spending money on a night out/day out/toys/clothing whatever you pick isn’t deprivation of capital at all.

It’s spending your money as you see fit.

Tax credits dont take into account your incomings and outgoings. My mortgage used to be nearly £900 a month but since I downsized considerably (tiny terrace) it's now just over 200. Tax credits have not changed. They also dont take into account any maintanance from non resident parent. So yes,things need to change.
Also,think I'm right in saying 30% of students do not get a c grade in maths. So there alot of young people now on minimum wage. My son for one who works about 40 hours a week for a thousand pounds. It's tough for alot of people.

I think the problems with Uc start when people are private renting and their rent element does not cover their whole rent, this causes all kinds of headaches for people and leaves them with a shortfall. Uc suits some people better than others.