Page 4 | Tax credits to UC and savings

Ladylilac · 2023-10-04T04:52:18+00:00

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

FawltyTower · 04/10/2023 13:46

That’s how much they are nowadays we have been looking for months and originally wanted to spend 10k but for anything decent it’s around 15k for a family car

Don't be absurd.

If you WANT to spend £15k (or £50k) on a car and that's your thing, good for you. If you have really high standards and won't accept anything older than 3 years, or only want a certain make, good for you. Spend what you want.

But no, £15k absolutely isn't 'what they are now' for 'anything decent' 😂

I've just spend £2k on an 11 year old Vauxhall Zafira. Pristine inside, runs like a dream, decent bodywork, 85k miles (diesal so fine), 12 months mot, no serious advisories,
one owner and full service history.

It's not new, it's not posh, but it's certainly a 'decent' car. Obviously there are no guarantees but our last two similar age and condition Zafiras did us a solid 5 years or so with decent reliability - and I've no reason to think this one will be different.

Babyroobs · 04/10/2023 13:54

Cockapoo1211 · 04/10/2023 13:31

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

It just seems so unfair that for years on end ( think UC became full service in 2017 ) there have been people on the old system able to save for a house, have endless savings/ work minimal hours/ get full student loan on top of full tax credits etc and then the other half on UC - penalized for having savings over 6k, student maintenance loans deducted in full and work requirements much harsher. This massive inequality has been going on for years while the government have fannyed around trying to implement UC, putting it back and back multiple times. It will be something like 2028 before everyone is finally moved over. I'd be furious if I were a young person today trying to save for a property and seeing others on the same income able to do so for years on end.

JobMatch3000 · 04/10/2023 14:09

As PP, I suggest you spend less on your new car. The UC payment between £15k and £20k of savings is going to be minimal and you are going to need all the savings you have moving forward.

LookingForPurpose · 04/10/2023 14:33

@littlebirdieblu

"Hmm the only reason you could save though was because you were getting tax credits. You don't need UC if you have all that money in the bank."

So what if a woman is in an abusive relationship and move back in with her parents. They don't have to pay full bills as the parents insist that she keeps her part time wage and universal credit. She shouldn't be allowed to save for her own house? Or for a car? Or for a course that isn't covered by student loans?

Behave yourselves. You lot must froth at the mouth when you learn how much some disabled households get a month on benefits. I know a single mum who gets £34k a year and her rent is only £400 a month. She goes on holiday abroad twice a year and is at the top of the threshold for Savings. Which is why she goes away on two cheap holidays a year. If you are unhappy , take it up with the government. Me, I'm not going to whine about a lone mum of disabled kids with additional needs having a a bit of spare money and 15k in a savings account. She will also very likely never own a house or have anything in teens off a private pension to write home about. It's all swings and round about a.

Justhereforthebabynames · 04/10/2023 14:43

Posters saying they couldn't possibly save 16k and don't claim anything probably own their own houses and cars worth considerably more than 16k. If people aren't allowed to save more than 6k before losing benefits they will always be stuck renting which means they will cost tax payers much more than if they had just been allowed to save a deposit for a small home. It's helping the poor poor at the expense of everyone else. For what gain? Ideology?

allhellcantstopusnow · 04/10/2023 14:51

All of this squabbling while rich people get away with pissing away our money while not paying taxes. Lord of the flies cometh.

Cockapoo1211 · 04/10/2023 14:55

allhellcantstopusnow · 04/10/2023 14:51

All of this squabbling while rich people get away with pissing away our money while not paying taxes. Lord of the flies cometh.

They aren’t relevant to this though . Tax credits were / are incredibly generous to people lucky enough to be on them . It is unfair those on uc can not have savings , therefore can’t save for a house etc . Tax credits have been highly abused , it is one of the reasons they are stopping . They allowed people to work less and top up their income . The fact these people saved shows they didn’t need the money. There should be some kind of middle ground .

ginandtonicwithlimes · 04/10/2023 14:58

OP isn't single. No idea if her children are disabled though.

Fink · 04/10/2023 15:00

Pigeonqueen · 04/10/2023 07:07

Just to provide another experience of someone switching from tax credits to UC - we’re a family of 4, dh works full time but in a fairly low income job (he’d love to earn more, and tries to) and I am disabled on PIP on the highest rates long term and cannot work, we have Ds aged 11 who is also disabled and attends complex needs school. We are absolutely bricking it about how we are going to manage to switch because at the moment we rely on the tax credits we get weekly to buy our food, dhs wages and the disability benefits we get just about cover our bills. When the tax credits switch to UC they’ll move to a monthly payment and this is going to be really hard for us to cope with initially. We have zero savings. And a lot of debt (£9k) caused by essential house repairs - we own due to me previously being able to work, we can’t downsize. What I would give to have the amount in savings that op does!

It was really hard for me to switch over and took 3 months to sort out, after the initial application. During which time I wasn't eligible for an advance payment and my tax credits had automatically stopped.

I have no advice for you, but sympathy. All they could suggest for me was a foodbank! Luckily I was able to borrow money to get me through until the UC was eventually sorted, and use credit cards, but I know that that's not an option for many people.

Secondwindplease · 04/10/2023 16:16

Justhereforthebabynames · 04/10/2023 14:43

Posters saying they couldn't possibly save 16k and don't claim anything probably own their own houses and cars worth considerably more than 16k. If people aren't allowed to save more than 6k before losing benefits they will always be stuck renting which means they will cost tax payers much more than if they had just been allowed to save a deposit for a small home. It's helping the poor poor at the expense of everyone else. For what gain? Ideology?

The OP already has a house deposit saved and she’s spending it on a bloody car and trying to hide the rest under the mattress. She’s no intention of buying a house - either because she’s disinclined to or their household wouldn’t pass affordability for the monthly payments. Presumably you think she should just stay on tax credits until she’s got a couple of hundred grand saved and can buy a house outright? And meanwhile we can all be grateful to her for eventually relieving the taxpayer of paying her rent?

There are two adults in her household with one low paying job between them. In all the years they’ve been collecting tax credits they could have found a way to become a bit more economically productive. That was her way out of renting and into home ownership, if she’d been so inclined.

caerdydd12 · 04/10/2023 16:28

OP I think you've got the wrong end of the stick here and I don't forsee you actually getting any, or maybe a small amount, of UC once you transition.

Capital is disregarded over 16k for the first 12 months, that's your transitional protection, yes. But all that means is that you are still allowed to claim as under normal circumstances you aren't entitled to claim UC at all with savings over 16k.

Even in the first 12 months your award will be reduced for any savings between 6-16k. This is called tariff income, so I'd be very surprised if you received anything. The protection whereby you are awarded the same on UC as on tax credits is misunderstood, it means if your tax credit award is 1,000 per month then your UC award won't be less than that, however the reduction due to savings comes AFTER the award amount so it could still be reduced to nil.

The relevant info from revenuebenefits is this:

"The transitional capital disregard for tax credit claimants. This means that tax credit claimants who migrate over to universal credit under the formal managed migration exercise will have any capital over £16,000 disregarded for up to 12 months from their date of universal credit claim. Capital between £6000 and £16000 will still attract tariff income."

And tariff income is explained here from Shelter:

"Capital between £6,000 and £16,000 is subject to a 'tariff income'. This means that the claimant's universal credit award will be reduced."

Babyroobs · 04/10/2023 16:32

caerdydd12 · 04/10/2023 16:28

OP I think you've got the wrong end of the stick here and I don't forsee you actually getting any, or maybe a small amount, of UC once you transition.

Capital is disregarded over 16k for the first 12 months, that's your transitional protection, yes. But all that means is that you are still allowed to claim as under normal circumstances you aren't entitled to claim UC at all with savings over 16k.

Even in the first 12 months your award will be reduced for any savings between 6-16k. This is called tariff income, so I'd be very surprised if you received anything. The protection whereby you are awarded the same on UC as on tax credits is misunderstood, it means if your tax credit award is 1,000 per month then your UC award won't be less than that, however the reduction due to savings comes AFTER the award amount so it could still be reduced to nil.

The relevant info from revenuebenefits is this:

"The transitional capital disregard for tax credit claimants. This means that tax credit claimants who migrate over to universal credit under the formal managed migration exercise will have any capital over £16,000 disregarded for up to 12 months from their date of universal credit claim. Capital between £6000 and £16000 will still attract tariff income."

And tariff income is explained here from Shelter:

"Capital between £6,000 and £16,000 is subject to a 'tariff income'. This means that the claimant's universal credit award will be reduced."

It works out at a deduction of around £170 a month in tariff income if someone had the full 16 k or over.

caerdydd12 · 04/10/2023 16:35

Babyroobs · 04/10/2023 16:32

It works out at a deduction of around £170 a month in tariff income if someone had the full 16 k or over.

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I'd worked it out initially as the OP keeping the full 38k savings without purchasing the car, I'd missed that it was happening before the migration!

fivelilducks · 04/10/2023 18:08

You're mental to dare to ask for advice on here and not expect any back lash. Btw people know how much cars cost, why try to fool them saying you have to spend minimum 15k? You could get an automatic for 3k if you wanted to.

LakieLady · 04/10/2023 20:28

I don't think spending £15k on a car would be seen as excessively extravagant, tbh. It's not like spending £60k on a Tesla or something.

I work in welfare rights and some years ago I had a client whose HB was suspended because she'd got a £25k death in service payout from her late husband's employer and not declared it. She'd bought a fairly new 2nd hand car for £11k, explained that she needed something that wasn't going to be a money pit and they were fine with that, also with her giving £1k to each of her 4 adult kids, which she'd promised her husband she would do.

Important caveats though: this was HB, so the council and not the DWP, and it's something of a judgment call.

catskittens · 05/10/2023 04:13

Pigeonqueen · 04/10/2023 07:07

Just to provide another experience of someone switching from tax credits to UC - we’re a family of 4, dh works full time but in a fairly low income job (he’d love to earn more, and tries to) and I am disabled on PIP on the highest rates long term and cannot work, we have Ds aged 11 who is also disabled and attends complex needs school. We are absolutely bricking it about how we are going to manage to switch because at the moment we rely on the tax credits we get weekly to buy our food, dhs wages and the disability benefits we get just about cover our bills. When the tax credits switch to UC they’ll move to a monthly payment and this is going to be really hard for us to cope with initially. We have zero savings. And a lot of debt (£9k) caused by essential house repairs - we own due to me previously being able to work, we can’t downsize. What I would give to have the amount in savings that op does!

but im sure your aware you will get trans relief and with your husbands wage full pip/dla your childs disability you will be getting a good income already and on UC when you change over

atleast your not at the mercy 100% of the DWP as your husband works and wont be impacted as if all income is from the DWP and i think you can get a loan on application of UC which will help and you will have your husbands wage which will be a huge help also CB and pip payments scattered through the month so i really dont think its a huge problem tbh

Pigeonqueen · 05/10/2023 08:16

catskittens · 05/10/2023 04:13

but im sure your aware you will get trans relief and with your husbands wage full pip/dla your childs disability you will be getting a good income already and on UC when you change over

atleast your not at the mercy 100% of the DWP as your husband works and wont be impacted as if all income is from the DWP and i think you can get a loan on application of UC which will help and you will have your husbands wage which will be a huge help also CB and pip payments scattered through the month so i really dont think its a huge problem tbh

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Your reply shows a lack of understanding to be honest. We don’t have a good income and our disability payments are already earmarked for other things - things that make life easier for us from a disability point of view. I can’t just suddenly shuffle the money around to use it when I need to use it for something else. I do, however appreciate that we are in a better situation than those solely reliant on benefits, but there are a whole lot of people like us whose lives have been decimated by disability trying to manage when you’ve previously been on a decent income. Op is extremely lucky to have that amount in savings. It isn’t the norm for people on UC etc. Most families are like us, living month to month trying to make the money stretch.

catskittens · 05/10/2023 08:54

Pigeonqueen · 05/10/2023 08:16

Your reply shows a lack of understanding to be honest. We don’t have a good income and our disability payments are already earmarked for other things - things that make life easier for us from a disability point of view. I can’t just suddenly shuffle the money around to use it when I need to use it for something else. I do, however appreciate that we are in a better situation than those solely reliant on benefits, but there are a whole lot of people like us whose lives have been decimated by disability trying to manage when you’ve previously been on a decent income. Op is extremely lucky to have that amount in savings. It isn’t the norm for people on UC etc. Most families are like us, living month to month trying to make the money stretch.

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i take your point and do agree that to have that amount of savings i would think is unusual but it seems after reading threads its not hugely unusual but i also appreciate MN is not really representative in general

i do have some experience of disability/benefits (bipolar and other longterm) and think some can be pretty generous against a basic claim and think those will and do experience real problems with a pretty much one stop payment,i can see its a big change im the same waiting for the letter but now i know a little more im more positive but yes in the long run will be worse of but also found finding out more about UC has settled some mis givings and getting a advance will help us all in the short term i just think many people are worse of especially when on the basic and get their income mostly from UC

regarding someone saying £15k is not alot for a car and dont think DWP wont have a problem,i think they may see the cost as a problem and £15k on 1 car is alot when you are claiming means tested benefits of sorts that really is not a normal occurrence

if that was me and had a mortgage i would look longterm and buy a cheap-ish car say £5-7k then do some longterm things to the house maintanance wise as it will improve the living conditions,maybe add value and will not have to be re done for hopefully a good while,DWP will deffo not have a problem with essential and longterm repairs and sensible purchases

Babyroobs · 05/10/2023 13:02

catskittens · 05/10/2023 08:54

i take your point and do agree that to have that amount of savings i would think is unusual but it seems after reading threads its not hugely unusual but i also appreciate MN is not really representative in general

i do have some experience of disability/benefits (bipolar and other longterm) and think some can be pretty generous against a basic claim and think those will and do experience real problems with a pretty much one stop payment,i can see its a big change im the same waiting for the letter but now i know a little more im more positive but yes in the long run will be worse of but also found finding out more about UC has settled some mis givings and getting a advance will help us all in the short term i just think many people are worse of especially when on the basic and get their income mostly from UC

regarding someone saying £15k is not alot for a car and dont think DWP wont have a problem,i think they may see the cost as a problem and £15k on 1 car is alot when you are claiming means tested benefits of sorts that really is not a normal occurrence

if that was me and had a mortgage i would look longterm and buy a cheap-ish car say £5-7k then do some longterm things to the house maintanance wise as it will improve the living conditions,maybe add value and will not have to be re done for hopefully a good while,DWP will deffo not have a problem with essential and longterm repairs and sensible purchases

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Just seen someone on another thread with 2 rental properties claiming tax credits !

catskittens · 05/10/2023 13:50

LakieLady · 04/10/2023 20:28

I don't think spending £15k on a car would be seen as excessively extravagant, tbh. It's not like spending £60k on a Tesla or something.

I work in welfare rights and some years ago I had a client whose HB was suspended because she'd got a £25k death in service payout from her late husband's employer and not declared it. She'd bought a fairly new 2nd hand car for £11k, explained that she needed something that wasn't going to be a money pit and they were fine with that, also with her giving £1k to each of her 4 adult kids, which she'd promised her husband she would do.

Important caveats though: this was HB, so the council and not the DWP, and it's something of a judgment call.

deleted

catskittens · 05/10/2023 13:55

Babyroobs · 05/10/2023 13:02

Just seen someone on another thread with 2 rental properties claiming tax credits !

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Blimey,woulnt surprise me if william and kate were claiming lol

8dayweek · 06/10/2023 00:18

@Babyroobs The other day I handled a Managed Migration case with a cool 2.6 million in the bank...

Dotcheck · 06/10/2023 00:24

Ladylilac · 04/10/2023 06:33

Not sure how we are milking the system when worked all life and not claimed anything other than child benefit and tax credits . Leaflet tells us to claim so they want everyone on tax credits to claim and have the years protection . During that first year we will probably spend the 2k/4K so then will be under 16k for the following year , I was asking for advice on the first year but nevermind I’ll find other forums which will actually give advice rather than be angry someone worked and saved without luxuries all there life.
The car itself will change our life no more cold rainy school runs and struggle with shopping etc , our children will be much happier as they also have recent health issues which makes walking long distance harder, cars may be less than 15k where you are but we live quite rurally so prices are high on used cars . Thanks anyway

If cars are more expensive ‘rurally’, then look further afield. It’s a pretty small country.

And yes, you can get something decent for far less than 15 grand

Babyroobs · 06/10/2023 00:33

8dayweek · 06/10/2023 00:18

@Babyroobs The other day I handled a Managed Migration case with a cool 2.6 million in the bank...

no way ? surely interest would wipe out any tax credit entitlement?

OnlyOpenMouthToChangeFeet · 06/10/2023 06:22

Pigeonqueen · 05/10/2023 08:16

Your reply shows a lack of understanding to be honest. We don’t have a good income and our disability payments are already earmarked for other things - things that make life easier for us from a disability point of view. I can’t just suddenly shuffle the money around to use it when I need to use it for something else. I do, however appreciate that we are in a better situation than those solely reliant on benefits, but there are a whole lot of people like us whose lives have been decimated by disability trying to manage when you’ve previously been on a decent income. Op is extremely lucky to have that amount in savings. It isn’t the norm for people on UC etc. Most families are like us, living month to month trying to make the money stretch.

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I'm not sure if you're aware, but you can get your UC paid twice monthly.

As soon as you have made your application, request twice monthly payment on your journal, and explain this is necessary due to low income therefore difficulty budgeting if paid monthly.

I'm disabled and can't work, and absolutely no way I'd manage monthly.