How Much Savings Can I Have on Disability Benefits in the UK?

For individuals with disabilities, benefits in the UK serve as a financial lifeline to help manage day-to-day living expenses and additional costs related to their condition.

However, understanding how savings affect benefit entitlement can be complex. This article provides a comprehensive guide to the rules surrounding savings, including limits, exemptions, and strategies to manage your finances while remaining eligible for benefits.

What Are Disability Benefits in the UK?

Disability benefits are designed to provide financial assistance to individuals who face challenges due to long-term health conditions or disabilities. These benefits aim to cover extra costs such as mobility aids, caregiving services, or higher living expenses caused by a disability.

The UK offers a range of disability benefits, which can be divided into two main categories:

1. Means-Tested Benefits: These depend on your financial situation, including income and savings. Examples include Universal Credit, Income Support, and Housing Benefit.
2. Non-Means-Tested Benefits: Eligibility is based solely on your disability or care needs, regardless of your financial circumstances. Examples include Attendance Allowance, Personal Independence Payment (PIP), and Disability Living Allowance (DLA).

Scotland’s Adult Disability Payment (ADP), which has replaced PIP for new claimants in Scotland, also follows the non-means-tested model.

It’s essential to understand the type of benefit you are applying for, as this determines whether your savings will affect your eligibility.

How Do Savings Impact Means-Tested Benefits?

Means-tested benefits assess your financial resources to determine the level of support you need. Your savings play a significant role in this calculation.

Universal Credit

• Under £6,000: No impact on entitlement.

• £6,000 – £16,000: Payments reduced. For every £250 (or part of £250) over £6,000, £1 is deducted from your monthly Universal Credit.

• Over £16,000: You are not eligible.

Income Support, Housing Benefit, and Income-Related ESA

Same thresholds apply:

• • Under £6,000: No reduction.

  • £6,000 – £16,000: Reduction applied.

  • Over £16,000: No entitlement.

For ESA and JSA, every £250 above £6,000 counts as £1 per week in assumed income, reducing weekly payments. For Universal Credit, the calculation is monthly (£4.35 per £250).

Do Savings Affect Non-Means-Tested Benefits?

Non-means-tested disability benefits focus solely on the severity of the claimant’s condition or care needs. They are not linked to financial resources.

• PIP: Available to people under pension age with additional living costs due to disability. Savings ignored.

• DLA: Still payable to children under 16. Not savings-based.

• Attendance Allowance: For people over state pension age who need care. Unaffected by savings.

• Adult Disability Payment (Scotland): The Scottish equivalent of PIP. Also non-means-tested.

Even if your savings disqualify you from income-related benefits, you can still receive non-means-tested disability benefits.

What Is the £16,000 Savings Limit for Universal Credit?

The £16,000 savings limit is a crucial threshold for claimants of Universal Credit. If your total savings exceed this amount, you are ineligible for the benefit.

How the £16,000 Savings Cap Works?

1. Savings Under £6,000: No impact on Universal Credit entitlement.
2. Savings Between £6,000 and £16,000: Your Universal Credit payment is reduced by £1 for every £250 of savings over £6,000.
3. Savings Over £16,000: You are no longer eligible for Universal Credit.

It’s important to monitor your savings closely, especially if you are close to the threshold, to avoid losing your entitlement.

What Counts as Savings and Capital?

The DWP defines “savings” broadly, and this includes most forms of money and financial assets.

Counted as savings:

• Bank accounts, building society accounts, or cash

• Stocks, bonds, ISAs, and Premium Bonds

• Additional properties or land (not your main home)

Not counted as savings:

• Your primary home

• Cars, work equipment, or mobility vehicles

• Household goods, jewellery, antiques, or heirlooms

• Private or work pensions (until withdrawn)

• Compensation payments held in trust or under one year old

• Benefits back-pay (if held for less than one year)

If you sell your home, you have 26 weeks to reinvest before proceeds are treated as savings. This can be extended if there are delays, such as legal processes.

How Can You Manage Savings While Claiming Benefits?

Managing your savings effectively is crucial for maintaining eligibility for means-tested benefits. Here are some tips:

1. Monitor Your Balance Regularly: Keep track of your total savings to ensure they do not exceed thresholds.
2. Spend on Necessary Expenses: Use savings for essential items such as medical equipment or home adaptations to support your disability.
3. Consider Trust Funds: A trust fund may allow you to safeguard your savings without affecting your eligibility for certain benefits.
4. Seek Professional Advice: Financial advisors or charities can provide tailored guidance to help you manage your finances.

What Other Factors Can Impact Your Disability Benefits?

Besides savings, several other factors can affect your benefits:

• Income: Additional income from employment, pensions, or other sources may reduce the amount you can claim for means-tested benefits.
• Assets: High-value assets, such as a second home or investments, can also impact your entitlement.
• Changes in Circumstances: Any changes, such as a new job, an inheritance, or a change in living arrangements, must be reported to the DWP.

Are There Exceptions to Savings Rules for Disability Benefits?

Some exceptions allow individuals to retain higher savings without losing benefit eligibility:

1. Trust Funds: If savings are held in a discretionary trust, they may not be counted towards the savings limit.
2. Compensation Payments: Personal injury compensation, when placed in a special trust, is often disregarded during benefit calculations.
3. Certain Savings Accounts: Money saved in specific accounts, such as those intended for disability-related expenses, may be exempt.

Conclusion

The link between savings and disability benefits in the UK can be complicated. Each benefit has its own rules, thresholds, and exceptions.

While means-tested benefits such as Universal Credit, ESA, and Housing Benefit are capped at £16,000, non-means-tested benefits like PIP and Attendance Allowance are not affected at all.

To maintain entitlement, monitor your finances, declare changes, and seek professional advice when dealing with large sums such as inheritance or compensation. By understanding the rules clearly, you can avoid mistakes and ensure you continue receiving the support you need.

Frequently Asked Questions

How much savings can I have before it affects my disability benefits?

For means-tested benefits, savings above £6,000 reduce payments, and savings over £16,000 disqualify you. Non-means-tested benefits are not affected.

Do joint savings affect my eligibility for benefits?

Yes, joint savings with a partner are included in the calculation for means-tested benefits.

What are exempt savings categories?

Exempt categories include pensions, trust funds, and personal injury compensation.

Can I still receive Attendance Allowance with high savings?

Yes, Attendance Allowance is non-means-tested, so savings do not impact your entitlement.

Does having a house affect my savings limit?

Your primary residence is excluded, but additional properties are considered.

What benefits are not impacted by savings?

Non-means-tested benefits like PIP, Attendance Allowance, and DLA are not affected.

Is there a way to protect my savings while claiming benefits?

Yes, placing savings in a trust or spending on disability-related needs can help.

Read Next:

• What Illnesses Qualify for Disability Living Allowance for Adults?
• Disability Living Allowance for Children | Eligibility, Rates, and How to Apply
• Why Has My Severe Disability Premium Stopped?
• What Are the Severe Disability Premium Living Alone Exceptions?