Answers · UK 2025/26
What is the Universal Credit savings limit and how does it affect my claim?
If you and your partner (if you have one) have combined savings and capital of £16,000 or more, you are not entitled to Universal Credit at all. Between £6,000 and £16,000, your Universal Credit is reduced by an assumed "tariff income" of £4.35 a month for every £250 (or part of £250) above £6,000, regardless of the interest you actually earn.
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The Universal Credit capital rules mean that having savings can reduce or completely remove your entitlement, even if your income from work or other benefits would otherwise qualify you for a payment. **The upper capital limit -- £16,000** If your (and your partner's, if you have one) combined savings, investments and most other capital total £16,000 or more, you cannot receive Universal Credit at all, regardless of how low your income is otherwise. This is a hard cut-off -- there is no tapering above this point, unlike the tariff income rules that apply below it. **The tariff income band -- £6,000 to £16,000** Between £6,000 and £15,999.99 of capital, Universal Credit assumes you are earning a notional 'tariff income' from your savings, regardless of the interest rate you are actually receiving. For every £250 (or part of £250) of capital you hold above £6,000, £4.35 a month is deducted from your Universal Credit award. This means someone with exactly £6,000 or less has no reduction at all, while someone with £15,999 has the maximum possible tariff income deduction just below the cut-off. **What counts as capital** Capital generally includes cash savings, money in current and savings accounts, most investments and shares, and the value of a second property that is not your main home (though your main home itself is disregarded). Certain assets are disregarded, such as personal possessions, some business assets if you are self-employed, and, for a limited period, the proceeds of selling your home if you intend to buy another. **Worked example** Someone has £10,000 in savings. This is £4,000 above the £6,000 threshold, which rounds up to 16 lots of £250 (since any part of £250 counts as a full lot). This creates a monthly tariff income deduction of 16 × £4.35 = £69.60 from their Universal Credit award, even though their savings account might only actually be paying, say, £20 a month in real interest. **Why this catches redundancy payments and inheritances off guard** A lump sum such as a redundancy payment, inheritance, or compensation award can unexpectedly push someone's capital above £6,000 or even £16,000, reducing or completely stopping their Universal Credit, sometimes without them realising the payment would have this effect until their next assessment period. Certain compensation payments (for example some personal injury awards held in trust) may be disregarded, but this needs to be checked carefully and is not automatic. **Practical tip** If you are due to receive a lump sum while claiming Universal Credit, check in advance how it will be treated for the capital rules, since spending down savings purely to qualify for benefits (known as 'deprivation of capital') can itself be treated by DWP as if you still had the money, so this is not a simple way around the limit -- seek proper advice on your specific situation.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.