AIBU to question whether UC rules create incentives to limit earnings?

[Justwonderingum]

Unpopular topic, I know. But I'm trying to understand how UC works. It looks to me like there is a huge gap where you are much better off limiting the hours you work, paying yourself less from your company, or even over paying into your pension as you can claim the difference in UC. Also claiming UC means you pay less for many other things, and will include free school meals soon too. So AIBU to wonder if this really is the case or are these loopholes closed? A quick play seems to suggest that even on a household income of £70000 can claim over £1000 a month, assuming 2 plus kids,including one with lower rate DLA

So the big takeaway from this thread is that people should be able to get universal credit with savings over 6k? Resulting in a greater number
of people on universal credit.

If the changes suggested need to be sustainable under our groaning benefits system it’s back to the drawing board I’m afraid. In reply to one poster why should people be saving up a house deposit from taxpayers money?

I'd very much like to see that calculation too. In a high rent area, it could conceivably be correct.

Their total allowances without housing costs come to close to £1,700 a month, so if they're in a high rent area their maximum UC entitlement could easily be over £3k.

They can. The savings limit is £16k, not £6k

I think that the fact that British people want to buy and sustain their own home is one of the few remaining reasons to try and remain independent of benefits. If benefits can be used to save a house deposit, buy a house and pay a mortgage then this reason to stay off benefits disappears and our economy is truly sunk.

We already know that if you become ill and unable to work you are much better off to be renting than paying a mortgage as benefits will be a safety net for you if renting but not for a mortgage, yet still we want to buy and own.

The upper limit for savings is £16k, that's when entitlement to means-tested benefits stops completely. A deduction is made for savings above £6k but below £16k.

Those limits have been unchanged for years. I did welfare rights work for 20 years until l retired last year, and I can't remember when they were last changed.

How long will £6k last someone if they have no income? A few months? Lowering the savings threshold for claiming UC down to £6k would not mean less people on benefits really. it would just mean a few months delay in being able to apply.

Uc pays rent for many

they will never be able to save enough for a mortgage if lose uc over 16k

and tbh as tapers down not a lot of uc would be given anyway

so will always get rent paid for forever b saving for say 5years into a lisa etc if still exist then get a chance to ow home and pay a mortgage

no onechecks what people spend their uc on so isn’t it better to try and save a little than drink /smoke it to better theirselves

im just pondering. Makes no difference to me. I don’t have my rent paid for by uc

I would love to know how much of the money paid out in UC ends up in landlords' pockets.

More social housing would reduce the amount paid in UC by quite a chunk, I reckon. A friend pays £160 a week for her 3-bed council house, the average private rent for a 3-bed in the same area is £1500 a month.

Precisely! It would hugely reduce the benefits bill without hurting anyone at claimant level. You see posts about things like people saying the taxpayer is paying people’s UC, or enabling them to get super cheap days out when in actual fact the taxpayers are lining the pockets of greedy landlords and enabling them to have days out at the full cost which they can easily afford!

My UC entitlement is £2184.66.

The rent portion of that is £800 (although this increased for the first time in years in 2024, it doesn’t resemble rents in our area at all).

My UC award after deductions is £1257

My rent is £1400.

So all of my UC (and more) goes to my landlord. Which means the money the government deems necessary for me to live on, never reaches my pocket.

if I could access social housing in my area, it would likely be around £550/month.

Actually spending is audited by UC. If chosen for audit they go through three months of your bank statements and question spending on anything unusual. If you are found to be deliberately spending money unnecessarily to go under the savings threshold you can be treated as though you still have that money. I've been audited twice so far, and as its random you never know when you'll be checked again.

People can get UC with savings over 6k. The cut off is 16K which i think is reasonable. There is some deduction on what you get each month with savings between 6k and 16k.

Odd way of looking at things. You clearly have earnings and earnings and UC make up your household income out of which you pay your rent. Not sure what you mean by the money the government deems what you need to live on doesn't reach your pocket? You are getting £1257 towards your living costs of which part of that is rent? Do you expect everything to be paid for?
Agree a lot more social housing needs to be built to stop money going into the pockets of greedy landlords though.

It’s not an odd way of looking at it at all. UC is made up of components - some for rent, some as a personal allowance for an adult, some for my children.

They deem £800 a month a reasonable amount to pay for rent for a 3 bed house in my area. But the fact remains that there is no housing anywhere close to that here. If I was in social housing, they’d cover the amount I full whether it was £500 or £2000. As a result of not being able to access social housing, I am more dependent on welfare and worse off financially.

someone with the exact same earnings as me, but living in a socially rented home with a rent of £550, would have £1007.36 paid to them in UC. But would only have to spend £550 of that on their rent, leaving them with a surplus from UC of £457.36 to add to their wages to live on.

It doesn’t make me less grateful of the help I get, but it is a poor use of welfare that doesn’t help me work my way out of poverty and doesn’t help to reduce the welfare bill.

i clearly don’t expect everything to be paid for - which is why I work full time. My point is I cannot afford to stand on my own two feet without welfare assistance because my private rent is so high and there are no alternatives for me.

Isn't there a shortage of midwife jobs also?

They should be thanking their lucky stars they don't have a disabled child. Stupid idiots.

Just wondering eh OP? Really? Didn't notice the dozen of other similar thread?

Yes and no.

Im a single parent, I own my house mortgage free and have a mortgage free rental too (inherited). I would be better off selling the rental, getting rid of the money and claiming UC but I would lose the guarantee of income (UC rules may change) and there’s not investment.

That said, I believe I keep savings in DC bank accounts that I can access for spending on them and they wouldn’t be classed as MY savings.

The only savings accounts that are disregarded are junior ISAs, where you can pay money into but you can’t draw it out. Any other accounts that you can draw money from would count towards your capital.

Thank you, I didn’t realise that…it’s still something to consider though.

You would not be able to give away proceeds of the rental sale to your kids in order to claim UC if that's what you mean? Look up the deprivation of capital rules.

Just to add that not only would UC be more than the rent I would get FSM and free music lessons for DC too (no financial support from exDH)

If you can access them they’d be counted. If you sold a rental and they didn’t deem the spending to be necessary, you’d be treated as if you still had it and not eligible for UC.

also as you own your home mortgage free, the amount of UC you’d be entitled to would likely not be much. Seems daft to go through all that to be financially worse off, but whatever floats your boat I guess

Making yourself worse off both financially and with long term stability would be worth considering? Wow.

Bonkers idea to get FSM and music lessons for a few years ! Not sure why anyone would go through the hassle of UC, bank accounts being scrutinised, at the whim of government changes constantly, limited on what you can save etc !