UKH

I need to apply soon.

Will my savings reduce the amount I get?

Yes, savings between £6k and £16k will reduce what you get. If you have more than £16k you won't be able to claim. You will only be able to apply for Universal Credit as working tax credit is a legacy benefit (ie not open to new claimants).

I'm transferring from tax credits to UC. So likely no more help as my savings are >£16k?

I'm an academic rather than working in welfare rights, but as far as I know it depends whether you have been told that you must now move to UC or if you have been told you can if you choose to (important distinction!).

It's probably worth having a chat with Citizen's Advice Bureau for information specific to your situation.

Migration rules should then apply if you have had a letter and act timeously. See https://www.gov.uk/guidance/tax-credits-and-some-benefits-are-ending-move-t... and the 12 month rule on savings.

you're allowed to own property but no savings of any great worth.  one of the great injustices of the system and a big disincentive to try and protect yourself from destitution.  savings =income (that is the rationale)

I'd disagree, the whole point of savings is to draw on them when the rainy days come. Why should the taxpayer be funding someone who's quite capable of looking after themselves? 

yes, exactly, sell the house and realize the great income from the capital.  Exactly that.  The double standards at the moment do not force property owners to look after themselves

Consider two people in exactly the same situation renting and saving hard to get say £25k for a house deposit.

Person A loses their job just AFTER they complete on their house. Now a home owner entitled to full Universal Credit.

Person B loses their job just BEFORE they complete on their house. Gets no help until they’ve burned through the first £9k of their deposit. Then gets a reduced amount until they have only £6k of their deposit left.

Fair? Not all savings are just sat there for a rainy day.

Its not fair but its almost impossible to design a benefit system that picks this side of things up . You would also need to ask the question as to how many cases a year where your specific scenario. actually happens.

Its also at the moment an academic question anyway , as there is low unemployment and plenty of jobs available ( which is more relevant in the wider scheme of things espcially if you are looking to buy a house etc)

Ah, fair enough. I thought you meant the injustice is the state not paying benefits to people with substantial savings, but it seems we actually agree on that. 

I hadn't actually considered the difference between those with cash savings and those with property equity. I suppose the reason for the different treatment is that if they lose the house it'll then be on the state to pay for housing benefit too meaning it makes financial sense for someone to stay in their own home if they can. Of course, if they have a hefty mortgage and end up on benefits I would suppose they'll end up having to sell up soon enough anyway. 

 

It's trivially easy to design such a system, you just make unemployment benefits non means tested for anyone actively looking for work.

And the cost of that ?

Negligible, compared to the money we'd have saved if the furlough scheme had been means tested? 

How do you define actively looking for work?

Do they have to apply for and take any job that they are physically capable of doing?

The most inconsistent thing though imvho is the situation regarding unmarried couples.

If you are married (or in a civil partnership) you can transfer a portion of your tax free allowance onto your spouse or civil partner - however regardless of your marital status, your live in partners savings and earnings are taken into account when calculating means tested benefits.

Surely the person either counts as your partner or doesn't? The current situation where they acknowledges your partner when paying out, but not when offering tax relief is totally unfair.

There was a lot wrong with the furlough scheme , mainly the scope for fraud and dodgy practices. Even so I am not sure that means testing it would have really been practical across the whole economy. By the time they would have set up that system the pandemic would have been over.  The best thing on the scheme  was it’s very functional simplicity. 

It's not fair, but it's really easy to solve.

Remove the age limit for Lifetime ISA's and exclude LISA's from the UC eligibility rules. Person B would therefore have their savings in the LISA to take advantage of the 25% bonus.

It's a reasonable idea but it may make sense to ithdraw the option to withdraw the money tax free at the age of 60 if it was implemented.

Or perhaps just means test that “benefit “ at that point?

You are assuming that everybody who can saves into LISA's.......what about those who do not, how is that equitable on them.

They would have to put their money in a LISA. If they don't want to, then maybe it's not money assigned for a first house or for retirement, in which case what is it that's so important that tax payers need to cover it?

Thinking about that, I think a fairer system would be to allow anybody to claim their LISA when the retire, but cap tax relief on pension contributions at the basic rate. 

There are people who do not go down the LISA route as they want more flexibility

You also raise the wider question and it goes back to the starting point if somebody has savings of any sort why should taxpayers protect those savings  when people lose their jobs( especially when there are plenty of jobs available).

How many people really use LISAs for retirement? Its more an option for first time buyers for those under 40.

I use a S&S LISA for that purpose. I just view it as a small supplementary 'bonus' income that will kick in for retirement, alongside my pension. I get the sense though that they are not widely used for this purpose, but who knows. I wouldn't use one instead of a pension, but think they can be useful in addition to a pension. 

On a related tangent, looks like Hunt is going to completely overall ISA's in November, talk of all the different types being reduced just to one ISA which will allow you to hold cash and investments within it.

That was roughly what I was thinking, if it is capable of being used as a pension that it eems fair that it should be treated as such.

You can withdraw from a LISA, you just take a 6% hit against what you've put in. 

Hardly any, due to the age limits? 

Montyjohn's suggestion was to remove these. I, like timjones, think if these were removed many people (possibly millions?) close to retirement age would take advantage of a LISA. 

do you mean "savings" or "wealth" as the latter would include property.  Surely fairest and most equitable to treat all alike.

It would cost a few quid, but other countries manage it, and we are one of the richest countries in the world, so we should be able to cope. Especially with unemployment down at four percent.

And for that cost what would we gain?

Hopefully, aside from helping out those who need it, it would reduce the stigmatisation of benefits, encouraging us all to see it as an *actual* universal benefit of living in and contributing to a society. Much like they seem to do in parts of continental Europe. 

Perhaps it could even help us as a nation to start to value paying for better services through taxation.

Personally, I'd start with a period of time where you just have to declare that you're looking for work and you get the benefit. A lot of people will just find a job within their chosen field after a while. If people remain unemployed for quite a while, then your can start looking at what extra help they need. But it should be based around offering help, not trying to catch people out.

Or you could just go down the German route of saying when you become unemployed you get your unemployment benefit no questions asked, but it reduces over time.

No, forcing people to take any job does not lead to a happy and productive workforce. Giving people a safety net and help to make good choices does that.

It’s always a few quid….that is not a real costing though.if you want better services spend the money on that, not on subisidising people with cash in the bank who are capable of getting a job etc. 

It is unfair in some circumstances. When I got divorced I also lost my job. Savings just above threshold of 20k meant I couldn't claim JCA/UC/housing benefit. A good deal of my savings went on rent. If I'd got the family home instead of the savings I could have claimed JSA/ UC- and house owned outright and no rent to pay. To recap- savings of £20,000 and rent of say £1000 a month- no benefits. Own £500,000 house outright with no savings benefit paid.

Just googled and it looks like New Style JSA can be claimed for six months without means testing, providing you have sufficient recent NI contributions. Only about £80/week, but that should cover food whilst you get your finances straight and (hopefully) find alternative employment.

IMVHO the current cap on savings to receive means tested benefits is too low.

But they should also have a cap on assets, so regardless of cash savings they should only allow a certain maximum of assets.

Ok random figures. You are allowed 30k of cash savings as an individual, or 50k as a couple. If you have assets over 1 million (1.5 as a couple) you are not elligable for any means tested benefits, regardless of cash savings.

Yes thats contributionary UC/JSA. There are particular criteria for losing work that you have to prove. Mine was based on ill health but due to complex reasons I didn't fit the criteria and had to resign from my job. The discrepancy  would still be the case  after 6 months even if you could prove it wasn't your fault you lost your job.

Does not match up with social care funding limits on savings  which are lower.

You also have contribution based ESA (more money than JSA and can claim for longer) if you are medically unfit for work.

Doesn't matter how you lost your job, unemployment, dismissed on ill health, or resigned. You do need sick notes though.

First you said it was impossible, I pointed out it was trivially easy, then you moved the goalposts and asked how much it would cost, I conceded that it would cost a bit, but pointed out that I felt society would get something for that cost, now you want a "real costing"?

I doubt anyone anyone on this forum is qualified to provide a "real costing", that would take a team with intimate knowledge of the current system.

But to knock something up on a fag packet, at 4% unemployment rate that means 16 workers paying tax for every unemployed person. With UC running at about £400 per month, that would mean a cost of about an extra £25 per taxpayer per month to have a guaranteed safety net to fall back on.

Of course, some of those people will already be getting UC. I've no idea what percentage. So let's just go for 50% for arguments sake. That means an average of £12.50 per month, per taxpayer, to make coverage universal. 

Which doesn't sound a lot to me. Would you really grudge paying an extra £150 per year to ensure universal unemployment coverage?

My doctor said I was fit for work. My Employer said I wasn't fit for work because of the specific risks of the job and they refused to allow me to go  to work. I resigned to escape this no man's land. It was probably a case of constructive dismissal. 

Oh that's awful, really sorry for your situation. 

It depends...would the NHS not prefer that money for nurses pay/doctors pay? Or could it go to better social care funding? I  would prefer that £150 to go to those options instead of preserving somebodys cash savings......... I can think of a whole list of things that are far more important...which is my point.

Thank you. Quite a while ago now.

The benefit system has now got a lot worse at  helping people cope with the shock of  unemployment or long term sickness. Contributionary ESA or JSA/UC used to be a year - which would protect savings for a reasonable period. And SMI has gone - which helped people pay their mortgage interest in the transition period- now it's a loan. Helping people in this transition period  actually helps them to rebuild a productive life again.

Only a further thought. Of those 16 workers, typically 69% in the U.K. pay no tax( as their income is below the threshold).  So you would need to at least double that cost per person. 

Only 31% of workers pay tax?? 

I was thinking Ciro was skewing his estimate the other way. Yes, average adult savings in the UK are around 16k, but that is heavily skewed so the median is around 6/7k, this is further shewed by age so people over 65 are likely to have 10 times the savings of people in their 20's. I don't know enough to make a reliable estimate, but I think the of number of unemployed people with savings over the threshold would be much, muchlower than 50%

Source?

The problem with that line of thinking is that there aways a "better cause" to spend the money on, and that better cause is dependent on your point of view.

These issues are all interconnected.

As gimmergimmer points out, helping people when they are in a sticky situation makes it easier for them to rebuild a productive life. 

It helps the economy, by ensuring people are employed in jobs that interest them, rather than having to take the first low paid job that comes along, so they are more productive (perhaps allowing us to put more money into social care.)

This has positive mental health outcomes, which will reduce the burden on the NHS (perhaps helping to increase pay for doctors and nurses.)

No man is an island, and neither is a social or fiscal policy.

Significantly, I think this is not at all likely if you look at newly unemployed people.

Fred could have been working hard at the same job for 15 years, not too well paid, paying rent.  However, he is a worthy saver abd lived carefully and perhaps as a result of 15 years being really careful and not giving kids big treats the family has amassed perhaps 6-8 thousand towards rainy day, distant dream of buying a house.  The axe man hired by his employers swings his weapon about and Fred ends up unemployed with statutory minimum redundancy that takes the household over the limit.  Lets say his employment was stressful and the fear of redundancy had been over it for a few weeks  so Fred collapses into depression.   The redundancy and savings will burn away like a sacrificial heatshield.  Finding the family does not qualify for any help will put Fred into further depression and you have an old style lunar lander game where the money (fuel) is burning away on rent and necessaries as they hurtle towards a state where help will be available at last - a crater in the Sea of Destitution.

Then it gets too much for his wife to bear and she leaves taking with her the kids and a small income from part time work.

It isn't too hard to fancy.

You could 'gift' your savings to someone you trust outside of the household, and then claim UC. It's no different to what the right honourable multi-millionaires do with their offshore accounts, and their direct interference in policy decisions further engorging themselves at non-rich UK peoples expense; like Sunaks push to scrap UK inheritance tax which would benefit him an estimated £300 million.

I think the key (if you're single) is to just spend all your savings on something that will hold it's value. Doesn't have to be a house to live in, just anything that brings your savings before the threshold and can be sold to release equity in the future.

But if your partner works full time that's no help, as their income will probably take you over the threshold anyway.

Claim as a single person then if questioned, declare that you've recently separated but still living in the same household due to neither having the finances to move out. Happens all the time.

Quids in.

I hope everyone understands the irony that 'dole-scroungers' and the 'house of lords & chums' are essentially all pulling the same con on the rest of us.

Take it you've been faced with that situation? Yes, good, me too.

Funny that when it comes to it, you lose your job as the firm goes squit, you have 3 kids and no help at all from the state, selling into homelessness doesn't seem that simple. 

...income from the "capital". Right, how much of that exists early in the mortgage term, and after maybe you have taken out enough of a deposit to put down on that flat you can't actually find to squeeze into.

I was just applying the cold logic of the inequality, somewhat ironically, to another post.

The real answer is that people with modest savings (remember that the limits have been frozen for a long time despite inflation over that time) should get some help.  The current system requires people to descend practically into destitution and throw away everything before they get help

The DWP call it deprivation of assets. You have to show you only spend money on everyday things. Otherwise you are accused of deliberately spending it to get benefits and they use the pre spending amount to assess you.

In reply:

Got the application done. Thanks for replies- will see how things work out. Must be many others in similar situation..

Next must attend interview at Job Centre;(

oops- arrived out of breath and was given a grilling for being 5 min late.

ID given, now have 2 further ones to provide bank statements (a pain) and work coach stuff (got more than enough work right now thank you).

apparently if on tax credit there will be 12 months before your savings over>£16k will exclude you from UC. the woman suggested one could buy a new car or somesuch to get it under