What is the Universal Credit savings limit?

Key takeaways

• Your Universal Credit payments can reduce once your savings exceed £6,000, and stop entirely at £16,000

• Not all assets count toward the limit, so it’s important to understand what is and isn’t included

• Reporting your savings accurately helps ensure you receive the correct Universal Credit amount and avoid unexpected payment changes

People’s financial situations can be complicated, and Universal Credit exists to provide essential support when you need it. However, the amount you have saved can affect how much you receive, which makes understanding the rules especially important.

Knowing where you stand with your savings and eligibility helps you avoid any unexpected reductions or shocks in your monthly payments, ensuring you can plan confidently and access the right level of support.

What is Universal Credit?

Universal Credit is a means-tested benefit designed to support people on a low income or out of work. It combines several older benefits into a single monthly payment, simplifying the system and making it easier to manage finances.

Universal Credit can help with living costs, housing support, and children’s needs, providing a safety net for individuals and families during periods of financial difficulty.

The scheme replaced six previous benefits: Jobseeker’s Allowance (income-based), Income Support, Employment and Support Allowance (income-related), Housing Benefit, Working Tax Credit, and Child Tax Credit.

By combining these into one payment, Universal Credit aims to reduce complexity, improve transparency, and encourage claimants to work, as payments adjust according to income changes.

Universal Credit is generally suitable for working-age people, whether employed, self-employed, or unemployed. Couples and single parents can also claim, with allowances adjusted based on household circumstances.

It’s intended to be flexible, so as earnings increase, payments gradually taper off rather than stopping abruptly, avoiding sudden financial shocks. While it offers support to many, some claimants find the online application process and monthly payment structure challenging, making careful budgeting important.

How will my savings affect my Universal Credit?

Savings can affect your Universal Credit entitlement because the benefit is means-tested.

If you have savings over £6,000, your monthly Universal Credit payment may start to reduce, and once savings reach £16,000 or more, you will generally no longer qualify. This includes money in bank accounts, ISAs, or other easily accessible funds.

Some assets, such as a home you live in, personal possessions, or certain pensions, aren’t counted towards this limit. When calculating entitlement, Universal Credit considers both your savings and any income you receive, including wages or benefits.

It’s important to factor in your savings when applying, as exceeding thresholds can temporarily reduce payments. Planning withdrawals or contributions carefully can help maximise support while staying within the rules.

The table shows assets that do and don’t count towards the savings limit.

How do I report my savings to the DWP?

If you’re on Universal Credit, you must report your savings to the Department for Work and Pensions (DWP) to ensure you receive the correct payment.

You can update your savings through your online Universal Credit account by adding the total amount you and your partner have in bank accounts, cash, investments, or other assets.

If your savings change – for example, you receive a bonus, inheritance, or your balance rises above £6,000 – you should report it as soon as possible. Staying transparent helps avoid overpayments, underpayments, or potential penalties, and ensures your Universal Credit entitlement is calculated accurately.

What happens if your savings go over the limit?

If your savings rise above £6,000, your Universal Credit payments may be reduced.

The Department for Work and Pensions assumes a ‘tariff income’ of £4.35 for every £250 (or part of £250) you have over £6,000, which lowers your monthly award.

If your savings reach £16,000 or more, you will no longer be eligible for Universal Credit. It’s important to report changes promptly so you’re paid the correct amount.

Can you reduce your savings to qualify for Universal Credit?

You can spend your savings, but only on reasonable, necessary expenses – such as rent, bills, essential household items, or paying off debts.

If the DWP believes you have deliberately reduced your savings to qualify for benefits (known as “deprivation of capital”), they may treat you as still having that money and refuse or reduce your Universal Credit. Always keep receipts and make sure spending is clearly justifiable.

What other benefits can I get if I am over the savings limit?

If your savings are above the Universal Credit limit, you may still qualify for other benefits that either have no savings cap or apply different financial rules. Here are some of the main ones:

• New-Style Jobseeker’s Allowance (JSA). Based on your National Insurance contributions from the past two years, not your savings or income.

• New-Style Employment and Support Allowance (ESA). For people with a health condition or disability that affects their ability to work; savings do not affect eligibility.

• Personal Independence Payment (PIP). Helps with the extra costs of a long-term health condition or disability; completely unrelated to savings or income.

• Disability Living Allowance (for children). A non-means-tested benefit for children with disabilities.

• Carer’s Allowance. For people providing regular care; savings and capital do not matter.

• Council Tax Reduction. Some local councils assess savings differently, so you may still receive support even with higher amounts saved.

• Child Benefit. Paid to people responsible for a child; not affected by savings, though high earners may pay a tax charge.

• Attendance Allowance. For people over State Pension age with care needs; not affected by savings.

For more information on how your financial situation may affect your Universal Credit claim, it’s worth visiting the Government website.