Migrated from tax credits - savings question

[ThatBluntSeal]

Hello has anyone moved across from tax credits with savings above 16k ?

We have just moved over so don’t know what we will receive until may , however I’ve read the rent may get paid which would help a lot as never was entitled to housing help before.
My main question is what can I spend money on without being penalised , they count everything as savings even current account for food shopping so as we’ve migrated we get a year with over 16k ok , but a deduction of £174 a month
we have a total of around 18k which needs to be under 16k after 12 months to continue to claim . This will go up and down due to bills etc but is it ok to spend on days out a big clothing or furniture shop etc nearer the end of 12 months.
if they pay the rent it will help us so much

thank you any help and advice

It's hard to say. No element of UC is protected. All the elements you are eligible for are added together to give a total amount. Deductions are then made for earnings, other relevant income, tariff income (savings over 6K), advance repayments etc to give you a monthly payment. A separate assessment will be done each and every month.

I thought benefits were a safety net, meant for people with no money. Obviously not in your case.

I'm not sure the money that ebbs and flows in your current account counts as capital. Excess income capitalises after a period of time which I think is in the regs somewhere.

As to getting some of your £18k out of the door the fist question should always be to ask if you have debt you could pay off? A car loan? Stuff on HP?

Other spend has to be 'reasonable in the circumstances'. Doing up the house is one possibility, replacing stuff like a car or furniture another. A reasonable holiday even.

As @trickortrickier says what you get starts with Max UC; the amount the law says you need to live on. An amount for a couple, more for your children, something towards the rent - not necessarily the full amount - are the main ones. There might be more if one of you has a long term health problem, are a carer for a parent or disable child/adult or pay for childcare.

That's reduced for earnings, some other benefits and tariff income from capital between £6k and £16k.

There are online tools like turn2us or entitledto that will give you an estimate.

Or the ever helpful people on Help to Claim 0800 144 8 444 can do it for you.

What value do you think comments like that bring to the thread?

For some reason Tax Credits, a legacy benefit being replaced by UC, didn't have a capital limit. HMG decided to let people moving to UC get it for a year before the capital rules were full applied.

When income becomes capital H1050

"Income becomes capital if it has not been spent by the end of the assessment period after the one in which it was received.

Example Pearl makes a claim for UC on 6 February. She declares savings in a bank account of £5,973.00. On 24 February, her earnings of £250.00 are paid into that account. Her assessment period is calculated as 6 Feb to 5 March and the earnings are taken into account as part of her income for that assessment period. When the next assessment period begins on 6 March, Pearl still has some of the unspent earnings so the bank account balance is now £6,105.00. In the assessment period from 6 March to 5 April she will therefore be treated as having an assumed yield from that capital of £4.35"

https://assets.publishing.service.gov.uk/media/65d336b3e1bdec2be1322238/admh1.pdf

I had just over the 16k threshold when I had to migrate. It was equity taken from a house move in order to do up my new house. Money was spent within 6 weeks. I updated it. No one asked what it was spent on.
A month later an aunt sent me 10k which was for further work to be done (patio and drive). I updated it again, and 2 months later it was spent. Again, no one asked what it was spent on.
No issues at all. Which surprised me as I've read lots of scaremongering.

Spending it is not, of itself, an issue.

To show deprivation DWP have to prove on balance of probability that you did so with the intention of qualifying for, or increasing title to, benefit.

A former colleague of mine who was an expert in the area said an alcoholic who peed his savings up a wall (to use a phrase of my late father in law's) would not be guilty of deprivation.

You can spend it on what you want. Keep receipts for big purchases ( anything over a couple of hundred) just in case they ask you for it, and I definitely wouldn't spend it all just before the 12 month mark as that would definitely be looked at as intentional deprivation. You're allowed to spend savings, what they look for is more hiding money, so if you took out large quantities of cash they may want to know where it's gone. As far as current account being counted as savings, they disregard benefits /wages for the period they're paid for, so one month wage is ignored for one month, it's only added to savings if it's left after that month.

I don't see how someone with 18k in savings is looking for ways to spend it so they're under the limit and hoping to get their rent paid by the UC.

@tillytoodles1

I am also surprised that people can have those savings and get rent paid. We have no savings at all. Overdrawn everywhere! I suppose it might have been set at a time when that would be enough for a house deposit? Long term it's probably better that people get onto the property ladder - rent is way more expensive.

So you'd have people at starvation levels of deprivation then, would you? As in No Money?

"Are there no workhouses? Are there no prisons" Ebenezer Scrooge.

Having £18k in savings is hardly starving is it?

Nope

Dont be ridiculous! They do have money, 18k. The starved and the deprived are who it's for, not someone trying to spend their savings on days out, clothes and furniture so they can get UC and their rent paid

The starved and deprived, is absolutely not what Universal Credit is about.

Yes it replaces older income based benefits for the unemployed and sick. It also tops up low pay and gives help with Childcare or for those caring for people with severe disabilities.

As a matter of principle I agree that the year's hold before the £16k cut off applies to those moving from Tax Credits shouldn't be there but that it is was a political judgement, perhaps needed to get it through Parliament.

I'm also more relaxed about a degree of latitude for people with £18k than I am for those with B2L homes worth hundreds of thousands.

Savings at the sort of level the OP describes might perfectly well have been accumulated for things like doing up the house or replacing a car.

Can't you see what I'm getting at? If it was for the purposes you said then it wouldn't be a problem, but OP was happy to hang onto it until she found out that she wouldn't get UC with that much in savings, so now she wants to spend it and asking what she can buy so she ll get UC and hopefully the rent paid too.

18 k is nothing. There have been threads on here with people on tax credits with second homes asking what will happen to their Uc after the 12 months. Disgusting that people on benefits can own second homes and still be given benefits, whilst many of those tax payers paying for those benefits can't even own one. Not sure how we have come to this situation but I for one am very glad it's changing. It can't come soon enough.

@Lougle This link is SO helpful. Thank you.

I have spent so long trying to find the answer to questions around savings I hold for my children derived from child maintenance in terms of them not being counted as my capital. As I didn't earn the money & I'm not the beneficiary. My work coach, her colleagues, her managers... no one could give me clear guidance or policy. You just have, along with the terminology I will probably need to express myself clearly with a DM at switch from migration to regular UC.

Thank you so much.