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Original poster

Tax credits to UC and savings

104 replies

Ladylilac · 04/10/2023 05:52

We have to move to UC next year , wouldn’t usually qualify for it but on tax credits get a years grace on savings .
Currently have around 35k -38k in the bank between us, 5k of that is children’s accounts ( in children’s names ) which I’ve been told I need to move to a Isa so it’s not counted is this correct ?
we are buying a used car in the next few months before we have to move over , which will then leave us with around 18-20k so over 16k limit .
what would you do , having discussions with my partner whether it’s worth claiming or not because apparently you have to show receipts and declare what spending our own money on etc
would you withdraw the extra money and keep in house in a safe ? Or spend it ? Was going to put some into rent account so that’s covered for a while but we rent with a HA but it seems that’s set up direct debit so only the correct amount goes out each month.
any advice appreciated

OP posts:
ginandtonicwithlimes · 04/10/2023 08:04

Ladylilac · 04/10/2023 07:59

we will already pass the income floor as partner earns over the 1300 required so will be in the light touch group and not needing to up hours etc.

Show quote history

At the moment. They are thinking of changing it soon.

NotABeliever · 04/10/2023 08:10

First things first. Your children's savings don't count. It's their money, not yours and you don't need to worry about that.

Second, UC want to see three months worth of bank statements if you declare that your savings are over a certain amount. If you spent the money wisely 6 months before, there is no issue. Keep receipts just incase.

Third, you may not qualify for UC anyway because your combined income plus some assumed tariff income from your savings under £16,000 may be too high. As previous posters are saying, income and tariff income reduce (taper off) your UC entitlement. You need a benefits calculation. Go to Turn 2 Us or CAB.

Fourthly, OP should not be crucified for having some savings and being able to claim UC or Tax Credits. The rules allow for that.

SecondUsername4me · 04/10/2023 08:11

Surely the simple answer is use the savings to live off, rather than the state?

Noicant · 04/10/2023 08:14

I’m not having a pop at you but OP but I don’t understand how someone could have 35k in the bank whilst also claiming any kind of help. That’s extraordinary to me.

Secondwindplease · 04/10/2023 08:18

Surely the changes to UC are to remove people like you from the benefits system, because it’s a fucking abomination that someone is picking up handouts for years when they have nearly £40k in savings? Why don’t you just accept you’re not actually in need of help from the rest of us and pay your own way in future, like fully grown able bodied adults should seek to do?

ginandtonicwithlimes · 04/10/2023 08:19

I am curious to know what age your children are OP?

greyandwindy · 04/10/2023 08:19

If you're claiming tax credits now with that amount of savings and its ok - what is the savings limit on tax credits?
I assumed 16k was an overall limit for any kind of benefit.

Nonametonight · 04/10/2023 08:19

Your plans to try to hide your capital to get below the 16k threshold are very risky. Deliberately getting rid of capital to increase benefit entitlement is called deprivation of capital. If UC finds out you've done it, they'll work out your benefits as if you still had the capital. There's also a risk of prosecution for fraud. Universal credit is not designed to support people with large amounts of savings, and the expectation is that if your day to day income isn't enough for you to live off, you should spend down your own savings before claiming any benefits. You'll need to keep receipts for all the spending out of your savings if you wish to claim uc once spending on day to day costs has reduced your savings below 16k.

PosterBoy · 04/10/2023 08:22

Noicant · 04/10/2023 08:14

I’m not having a pop at you but OP but I don’t understand how someone could have 35k in the bank whilst also claiming any kind of help. That’s extraordinary to me.

That was entirely the norm with child tax credits - designed for the middle classes and below in order to raise the incomes of most people in the country who had children.

It was a modern version in a way of child benefit - that was a genuinely universal benefit after all for over 50 years.

If the middle classes get nothing back from the state, they begrudge the poor getting anything.

If people inherit small amounts and are thrown off all benefits, as happens now, it creates chaos for little purpose and reduces aspiration.

If people can't save a house deposit then the government has to pay their housing bill for life

PosterBoy · 04/10/2023 08:24

Nonametonight · 04/10/2023 08:19

Your plans to try to hide your capital to get below the 16k threshold are very risky. Deliberately getting rid of capital to increase benefit entitlement is called deprivation of capital. If UC finds out you've done it, they'll work out your benefits as if you still had the capital. There's also a risk of prosecution for fraud. Universal credit is not designed to support people with large amounts of savings, and the expectation is that if your day to day income isn't enough for you to live off, you should spend down your own savings before claiming any benefits. You'll need to keep receipts for all the spending out of your savings if you wish to claim uc once spending on day to day costs has reduced your savings below 16k.

It's not very risky. Op isn't claiming UC and hasn't been asked to move across.

It's prudent financial planning.

NotABeliever · 04/10/2023 08:26

@PosterBoy is spot on.

Noicant · 04/10/2023 08:59

PosterBoy · 04/10/2023 08:22

That was entirely the norm with child tax credits - designed for the middle classes and below in order to raise the incomes of most people in the country who had children.

It was a modern version in a way of child benefit - that was a genuinely universal benefit after all for over 50 years.

If the middle classes get nothing back from the state, they begrudge the poor getting anything.

If people inherit small amounts and are thrown off all benefits, as happens now, it creates chaos for little purpose and reduces aspiration.

If people can't save a house deposit then the government has to pay their housing bill for life

Show quote history

Interesting but wasn’t there a cap on savings? I mean you could have 200k in a savings account and still be claim tax credits otherwise.

Babyroobs · 04/10/2023 09:00

Noicant · 04/10/2023 08:14

I’m not having a pop at you but OP but I don’t understand how someone could have 35k in the bank whilst also claiming any kind of help. That’s extraordinary to me.

Well it's been happening for 20+ years since tax credits were introduced.

Babyroobs · 04/10/2023 09:02

Noicant · 04/10/2023 08:59

Interesting but wasn’t there a cap on savings? I mean you could have 200k in a savings account and still be claim tax credits otherwise.

Show quote history

People on tax credits need to declare any interest on savings above £300 a year and presumably that is counted as income for tax credits. But otherwise there is no cap and with interest rates being so low for the past goodness knows how many years many won't even have been affected by that. Absolutely barmy system.

DyslexicPoster · 04/10/2023 09:06

I have unexpectedly inherited from my mum. I too have to move over. I'm going to pay some of the mortgage off as we have been interest only snd never repaid anything. I will be homeless in 15 years if we don't start paying it down.

Can't you go back onto UC when you qualify again? I don't know when I will get all of the estate share so its not within a year, I will look again once I know my full amount.

PandaPouch · 04/10/2023 09:06

NotABeliever · 04/10/2023 08:26

@PosterBoy is spot on.

Agree.

Babyroobs · 04/10/2023 09:06

DyslexicPoster · 04/10/2023 09:06

I have unexpectedly inherited from my mum. I too have to move over. I'm going to pay some of the mortgage off as we have been interest only snd never repaid anything. I will be homeless in 15 years if we don't start paying it down.

Can't you go back onto UC when you qualify again? I don't know when I will get all of the estate share so its not within a year, I will look again once I know my full amount.

Yes you can claim Uc again as soon a savings drop below 16k.

DyslexicPoster · 04/10/2023 09:22

Thank you @Babyroobs

That would make the most sense. Once I get my transfer date I'm going to get some advice but not sure from who? It's good there's a years grace.

I had no idea my mum was this ill, so inheritance never crossed my mind with UC.

SpaceRaiders · 04/10/2023 10:11

If people can't save a house deposit then the government has to pay their housing bill for life

Absolutely this.

It astounds me how we as a society would begrudge someone for being prudent with their income. People reduce their tax liability by stashing money into their pensions and no one bats an eyelid. It’s ironic that the moment a benefit claimant uses a similar legal loopholes to increase their eligibility people are up in arms.

TigerRag · 04/10/2023 10:34

DyslexicPoster · 04/10/2023 09:22

Thank you @Babyroobs

That would make the most sense. Once I get my transfer date I'm going to get some advice but not sure from who? It's good there's a years grace.

I had no idea my mum was this ill, so inheritance never crossed my mind with UC.

Citizens advice or your local council might have a welfare rights department

winterchills · 04/10/2023 11:00

You have saved your "own" money but spent money in benefits which you shouldn't have been entitled to!! Benefits are meant to help people short term or for genuine reasons due to ill health etc! Absolutely disgusting and this is the reason why the country in failing! Pure greed

SpaceRaiders · 04/10/2023 11:05

@winterchills Tell that to the millions who are stuck in low paid work and can barely survive if it wasn’t for benefits to top up their wages. Again, the country is failing due to greed and corruption from the top not from the bottom!

50lessfat · 04/10/2023 11:06

Just spend a bit more on the family car you get more reliability with automatics in the 15 to 20 k range. This will bring you under the 16k. Start putting money into children’s name for Uni.

I’ve never claimed benefits but so long as you are working within the rules there is nothing to justify to anyone. A 20k family car is not a frivolous expenditure either.

TigerRag · 04/10/2023 12:55

50lessfat · 04/10/2023 11:06

Just spend a bit more on the family car you get more reliability with automatics in the 15 to 20 k range. This will bring you under the 16k. Start putting money into children’s name for Uni.

I’ve never claimed benefits but so long as you are working within the rules there is nothing to justify to anyone. A 20k family car is not a frivolous expenditure either.

Edited

This could be considered deprevation of capital. Nothing to stop someone buying a car though.

Cockapoo1211 · 04/10/2023 13:31

This why people are being moved over . Tax credits are a joke.