Below £6,000: no effect on UC
Savings and capital below £6,000 are completely disregarded for Universal Credit. Whether you have £500 or £5,999 in savings, it makes no difference to your UC award. You must still declare your savings accurately, but DWP will not apply any reduction for amounts below this threshold. This applies to the combined savings of a couple.
Between £6,000 and £16,000: tariff income
Once savings reach £6,000, tariff income begins on the first complete £250 above the threshold. Each £250 band over £6,000 adds £4.35 per month to your assumed income, which reduces UC by the same amount. Savings of £8,000 are £2,000 over the threshold: eight bands at £4.35 = £34.80 per month reduction. Savings of £12,000 are £6,000 over: 24 bands at £4.35 = £104.40 per month reduction.
Worked example: £10,000 in savings
Sarah claims UC and has £10,000 in savings. That is £4,000 above the £6,000 threshold. Sixteen complete £250 bands x £4.35 = £69.60 per month in tariff income. Her UC award is reduced by £69.60 per month. If her standard UC award would be £800 per month, the savings deduction brings it to £730.40. She still receives UC, just less of it. Report the savings and DWP calculates the deduction automatically.
At £16,000: UC stops
At £16,000 or above in total capital, you are not entitled to Universal Credit at all. This is a hard stopping point. At £15,999 you still receive reduced UC. At £16,000 the entitlement returns nil. If you are over the limit, you are not expected to spend savings down artificially to qualify. But once savings naturally fall below £16,000, you can make a new UC claim.
What counts as capital for UC?
Capital includes cash savings, current and savings accounts, ISAs, stocks and shares, premium bonds, and property you do not live in. It does not include the home you live in, personal possessions, the surrender value of a life insurance policy (though proceeds do count), or business assets if you are self-employed. Jointly held assets are split equally between partners for the purposes of the means test.
Reporting savings changes
You must report any change in savings via your UC journal. If savings go over £6,000, report it. If they drop back below, report that too. DWP will recalculate from the date of the change. Undeclared savings that come to light can create overpayments which DWP will recover from future payments or through a debt repayment plan.