Savings and other capital can reduce or stop your Universal Credit. Here’s how the £6,000 and £16,000 limits work, what counts and what’s ignored.
Read more: See our Universal Credit guide for a complete overview of this topic.
UC Capital Limits at a Glance
Savings up to £6,000 don't affect Universal Credit; between £6,000 and £16,000 your payment is reduced by £4.35 a month for every £250 (or part of £250), and over £16,000 you can't get it. In full:
- Money, savings and investments of £6,000 or less don't reduce your payment.
- Between £6,000 and £16,000, your payment goes down by £4.35 for every £250, and by another £4.35 for any amount left that isn't a whole £250.
- Over £16,000 you can't get Universal Credit.
- For a couple, both partners' savings count.
How Savings Reduce Your UC
DWP calls the reduction “tariff income”: income it assumes your capital gives you. Between £6,000 and £16,000, your payment goes down by £4.35 for every £250, and by another £4.35 for any amount left that isn't a whole £250.
Tariff Income Calculation
| Rule | Amount |
|---|
| For every £250 (or part) over £6,000 | £4.35 assumed monthly income |
| This reduces your UC by | £4.35 per £250 |
Tariff Income Examples
Worked examples on this page use 2026/27 rates.
| Total Savings | Amount Over £6,000 | Number of £250s | Monthly Tariff Income | Annual Reduction |
|---|
| £6,000 | £0 | 0 | £0 | £0 |
| £7,000 | £1,000 | 4 | £17.40 | £209 |
| £8,000 | £2,000 | 8 | £34.80 | £418 |
| £10,000 | £4,000 | 16 | £69.60 | £835 |
| £12,000 | £6,000 | 24 | £104.40 | £1,253 |
| £14,000 | £8,000 | 32 | £139.20 | £1,670 |
| £16,000 | £10,000 | 40 | £174.00 | £2,088 |
| Over £16,000 | N/A | N/A | No UC | No UC |
How Tariff Income Works in Practice
| Monthly UC Entitlement | Savings | Tariff Income | UC Payment |
|---|
| £800 | £5,000 | £0 | £800 |
| £800 | £8,000 | £34.80 | £765.20 |
| £800 | £12,000 | £104.40 | £695.60 |
| £800 | £15,500 | £165.30 | £634.70 |
What Counts as Capital
| Asset Type | Counted? | Notes |
|---|
| Bank current accounts | Yes | Balance at assessment date |
| Savings accounts | Yes | Including fixed-term |
| Cash ISAs | Yes | Despite being tax-free |
| Stocks and shares ISAs | Yes | Current value |
| Premium Bonds | Yes | Full value (not just winnings) |
| National Savings certificates | Yes | Including index-linked |
| Individual shares | Yes | Current market value |
| Investment funds/unit trusts | Yes | Current value |
| Cryptocurrency | Yes | Market value at assessment |
| Cash | Yes | Physical money held |
| Money owed to you | Sometimes | If you could get it back |
| Life insurance cash value | Sometimes | Surrender value if accessible |
| Trust funds | Depends | If you can access |
| Business assets | Usually no | If used for work |
What Is NOT Counted as Capital
| Asset Type | Why It’s Ignored |
|---|
| Your main home | Primary residence exempt |
| Personal possessions | Furniture, clothes, car (reasonable value) |
| Money left in a pension pot | Pension funds are ignored until you take money out |
| Personal injury compensation | For 52 weeks, or indefinitely if held in a trust |
| Life insurance policy (not surrendered) | Only counts if cashed in |
| Funeral plan | Pre-paid plans ignored |
| Business premises | If used for self-employment |
| Business stock | Working capital |
Property and UC
Your Main Home
| Situation | Counted? |
|---|
| Home you live in | No |
| Home you’re trying to sell | No (for 6 months) |
| Home your partner lives in | No |
| Home you’ve moved out of temporarily | Usually no |
Second Properties
| Property Situation | Counted? |
|---|
| Buy-to-let property | Yes — equity value |
| Holiday home | Yes — market value less 10% and any mortgage |
| Inherited property | Yes (usually) |
| Property abroad | Yes — market value |
| Land you own | Yes — market value |
Property Valuation
| Factor | Detail |
|---|
| Value used | Current market value |
| Minus | Any outstanding mortgage |
| Minus | 10% for the cost of selling |
| Timing | Value at each assessment period |
Example: Second Property
| Item | Amount |
|---|
| Market value of property | £150,000 |
| Less 10% selling costs | £15,000 |
| Outstanding mortgage | £80,000 |
| Value for UC | £55,000 |
| Effect on UC | Cannot claim (over £16,000) |
Joint Claims and Savings
For couples claiming UC together:
| Rule | Detail |
|---|
| Both partners’ capital | Added together |
| £16,000 limit | Applies to joint capital |
| £6,000 threshold | Also applies jointly |
| Combined capital over £16,000 | No UC for either of you |
Joint Capital Examples
| Partner 1 Savings | Partner 2 Savings | Combined | UC Effect |
|---|
| £5,000 | £3,000 | £8,000 | Tariff income applies |
| £8,000 | £6,000 | £14,000 | Significant reduction |
| £10,000 | £7,000 | £17,000 | No UC for either |
| £15,000 | £1,500 | £16,500 | No UC for either |
Children’s Savings
| Situation | Counted? |
|---|
| Child’s bank account (their money) | No |
| Money you hold for child | No (if clearly theirs) |
| Child Trust Fund/Junior ISA | No |
| Money held in your name for child | Depends — may be disputed |
| Savings earmarked for child’s education | Usually your capital |
Capital from Specific Sources
Compensation Payments
| Type | How It’s Treated |
|---|
| Personal injury compensation | Ignored for 52 weeks (longer if held in a trust) |
| May be ignored longer | If set aside for care needs |
Inheritance
| Timeline | Treatment |
|---|
| When received | Becomes your capital immediately |
| Property inherited | Market value minus mortgage |
| Your share of an estate not yet paid out | Can count as capital: get advice |
Redundancy Payments
| Component | Treatment |
|---|
| Statutory redundancy | Capital from day received |
| Notice pay | Income (affects UC) |
| Pay in lieu of notice | Income |
| Ex gratia payment | Capital |
Spending Your Savings
What’s Acceptable
| Spending | DWP View |
|---|
| Living expenses | Acceptable |
| Paying debts | Acceptable |
| Essential purchases | Acceptable |
| Home repairs | Acceptable |
| Medical costs | Acceptable |
| Legal fees | Acceptable |
What’s Not Acceptable (Deprivation of Capital)
| Action | DWP View |
|---|
| Gifting large sums before claiming | Deprivation |
| Transferring property to family | Deprivation |
| Putting assets in someone else’s name | Deprivation |
| Deliberately overpaying debts | May be questioned |
| Buying luxury items suddenly | May be questioned |
Deprivation of Capital Rules
| Rule | Detail |
|---|
| Applies if | You dispose of capital to get/increase UC |
| DWP can | Treat you as still having the capital |
| Called | Notional capital |
| How long | Until you would have used it naturally |
When Capital Changes
Reporting Requirements
| Change | Must Report? |
|---|
| Savings go over £6,000 | Yes |
| Savings go over £16,000 | Yes (claim stops) |
| Significant windfall | Yes |
| Inheritance | Yes |
| Selling property | Yes |
| Opening new account | No (but balance matters) |
When You Fall Below £16,000
| Situation | What Happens |
|---|
| Savings drop below £16,000 | Can claim UC again |
| New claim required? | Depends how long above limit |
| How quickly? | Same assessment period if possible |
Strategies to Manage Capital
Legitimate Approaches
| Strategy | Notes |
|---|
| Pay off debts | Reduces capital, improves finances |
| Essential purchases | New boiler, roof repairs, etc. |
| Pension contributions | Money in a pension is ignored, but DWP can question it if the main aim was to get UC |
| Pay off debts early | Usually acceptable, but large one-off repayments may be questioned |
| ISA won’t help | Still counted for UC |
What Won’t Work
| Strategy | Why It Fails |
|---|
| Giving money away | Deprivation of capital |
| Joint account with family | Still your money |
| Hiding cash | Fraud |
| “Lending” to family | Still your capital |
Assessment Process
| Stage | What Happens |
|---|
| Initial claim | Declare all capital |
| Each assessment period | Capital rechecked (usually via declaration) |
| Change of circumstances | Report capital changes |
| Compliance interview | DWP may request bank statements |
| Suspected fraud | Full investigation |
If DWP Asks for Bank Statements
| What They’re Looking For | Implication |
|---|
| Large unexplained deposits | Undeclared income/capital |
| Regular payments in | Unreported earnings |
| Pattern of savings | Checking declared capital |
| Large withdrawals before claim | Deprivation of capital |
Special Circumstances
Self-Employment
| Asset | Treatment |
|---|
| Business bank account | Working capital — may be ignored |
| Stock and inventory | Usually ignored |
| Tools and equipment | Ignored if used for work |
| Business property | Usually ignored |
| Business debts | May reduce capital value |
Students
| Capital | Treatment |
|---|
| Student loan | Income, not capital |
| Bursaries/grants | Depends on purpose |
| Savings for tuition | Still your capital |
What Happens When You Go Over £16,000 While on UC
If your capital increases above £16,000 while you are receiving UC, you must report the change in your UC journal immediately. Your UC will stop from the assessment period in which your capital exceeded the limit.
Common triggers:
- Inheritance received
- Sale of a property
- Maturing savings bond or investment
- Redundancy lump sum
If your capital later drops below £16,000 — through spending, investment losses, or other means — you can make a new UC claim. The tariff income rules then apply to capital between £6,000 and £16,000.
Cars and Universal Credit
How UC Treats Car Ownership
Under Universal Credit, your eligibility depends partly on your capital — savings, investments, and assets. Capital below £6,000 is ignored. Capital between £6,000 and £16,000 reduces your award via tariff income. Capital over £16,000 means you cannot claim UC.
However, the following are always disregarded from capital:
- Your main home
- Personal possessions — including cars, motorbikes, and other vehicles
- Household furniture and equipment
- Business assets if you are self-employed
A car is explicitly a personal possession, so no matter how much it is worth, it does not count towards your capital limits.
Multiple Cars
If you own two or more vehicles, the same disregard generally applies. Vehicles registered for personal use — insured, taxed, and in your possession — are personal possessions. DWP is unlikely to argue that a claimant’s second car is a capital asset unless it is clearly being held as an investment (e.g. a classic car collection alongside other significant wealth).
For the vast majority of claimants, owning a second car (for example, a family with two drivers) will not cause any issue with a UC claim.
Self-Employed Claimants with Work Vehicles
If you are self-employed and own a van, truck, or other work vehicle:
- The vehicle is a business asset, which is disregarded under UC capital rules
- You declare business assets separately as part of your self-employment reporting
- The net value of your business (turnover minus expenses) is what affects your UC — not individual business assets like vehicles
See our starting a business on Universal Credit guide for how self-employment income is treated.
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