The three zones of capital for Universal Credit
Universal Credit uses three capital zones. Below £6,000: no effect. Between £6,000 and £16,000: tariff income reduces your award. Above £16,000: UC stops entirely.
The thresholds apply to the combined capital of a couple. A single claimant's individual savings are assessed alone.
Your main home is always disregarded. Pension funds are always disregarded. Most other assets, savings accounts, ISAs, Premium Bonds, shares, second properties, count in full.
Tariff income: the full calculation explained
For every £250 (or part of £250) above the £6,000 threshold, DWP assumes you receive £4.35 of monthly income. This is called tariff income. It reduces your UC award pound for pound.
A part band counts as a full band. If your savings are £7,100, the excess over £6,000 is £1,100. That is four full £250 bands plus a part band, so five bands. Tariff income is 5 x £4.35 = £21.75 per month.
The tariff income rate has not changed since Universal Credit launched. It remains £4.35 per £250 (or part of £250) above £6,000.
Worked example: savings of £7,000
Capital: £7,000. Excess over £6,000: £1,000. Complete £250 bands: 4. Tariff income: 4 x £4.35 = £17.40 per month.
Your UC award is reduced by £17.40 a month. If your standard calculation gave you £850 a month, you would receive £832.60.
Worked example: savings of £10,000
Capital: £10,000. Excess over £6,000: £4,000. Complete £250 bands: 16. Tariff income: 16 x £4.35 = £69.60 per month.
Your UC award is reduced by £69.60 a month. A household receiving £700 a month in UC would see that fall to £630.40.
Worked example: savings of £14,000
Capital: £14,000. Excess over £6,000: £8,000. Complete £250 bands: 32. Tariff income: 32 x £4.35 = £139.20 per month.
Your UC award is reduced by £139.20 a month. This is a significant reduction. A household receiving £600 a month in UC would see payments fall to £460.80.
The £16,000 cliff edge
Above £16,000 of capital, UC stops. There is no taper above £16,000. The award does not reduce gradually, it ends completely.
This means the difference between £16,000 and £16,001 in savings can be substantial. At £16,000 you still receive reduced UC. One pound more and you receive nothing.
If savings fall back below £16,000, you need to make a new claim. UC does not automatically restart. Report the change and start the process promptly to avoid a gap in payments.
Full tariff income table from £6,000 to £16,000
£6,000: £0 tariff income. £6,000.01–£6,250: £4.35/month (a part band counts as a full band). £6,500: £8.70/month. £6,750: £13.05/month. £7,000: £17.40/month. £7,500: £26.10/month. £8,000: £34.80/month. £9,000: £52.20/month. £10,000: £69.60/month. £11,000: £87.00/month. £12,000: £104.40/month. £13,000: £121.80/month. £14,000: £139.20/month. £15,000: £156.60/month. £15,750: £169.65/month. £16,000: UC stops.