HOW MUCH CAN I HAVE IN SAVINGS ON HOUSING BENEFIT?

How Much Can I Have In Savings On Housing Benefit? | April 2024

Housing Benefit is a form of financial assistance to help those on a low income with their housing costs. In the UK, the amount of savings you have can impact your eligibility for this benefit, as well as how much you can receive. 

In order to claim Housing Benefit, it’s essential to understand the impact that your savings can have on your ability to claim this support.

In this article, you will learn:

– Why it’s essential to recognise the savings threshold for Housing Benefit.

– The essential information on how savings can impact your Housing Benefit.

– Discussions on eligibility criteria, savings’ impact, and maximising entitlement.

– The advantages of being informed about Housing Benefit rules.

– Steps to take for those who need to apply for or adjust their Housing Benefit claim.

Table of Contents

How Much Can I Have in Savings on Housing Benefit?

Housing Benefit helps with rent for those on a low income or claiming benefits, with the amount of savings you can have while receiving Housing Benefit being capped. If you have savings over a certain amount, you may be ineligible or your benefits might be reduced.

When calculating your Housing Benefit it is important to note that savings under £16,000 are not usually taken into account. Alternatively, you will not usually get Housing Benefit If you have over £16,000 in savings. However, some exceptions may apply in certain cases.

When making a housing benefit claim, it is essential to declare all of your savings. This includes any cash, investments, and actual savings in bank accounts. This is because failing to accurately report your savings could result in a claim being denied or a requirement to repay the benefit.

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Eligibility Criteria for Housing Benefit

In order to receive Housing Benefit, you usually need to either:

  • Get other income-related benefits such as Universal Credit, Income Support, income-based Jobseeker’s Allowance or income-related Employment and Support Allowance
  • Be on a low income

To see if you are entitled to this benefit, your income, savings and other circumstances are checked.

If you pay rent, are on a low income or claiming other benefits, and if your savings are below a certain level, it is important to note that you could qualify for Housing Benefit. People of working age, those receiving pension credit, and claimants of employment support allowance may also qualify.

Depending on whether you’re of working age, a pensioner, a full-time student, or living in temporary accommodation, the exact criteria can vary. 

Remember to check the specific eligibility conditions that apply to your situation, which can be found on the government’s website or through Citizens Advice.

Impact of Savings on Housing Benefit Amount

Your savings can significantly impact the amount of Housing Benefit you receive. The more savings you have, the less you may be entitled to. This is because the government assumes that your savings can contribute towards your rent, ensuring that the benefit goes to the most vulnerable.

For every £250, or part thereof, between £6,000 and £16,000, the government assumes you have a weekly income of £1. This ‘tariff income’ is added to any other income you have, consequently reducing the amount of Housing Benefit you’re eligible for.

It is essential to recognise the relationship between savings and Housing Benefit.  For those approaching the upper savings limit, it’s important to know how this could impact your future entitlements and housing cost support.

Tips to Maximise Housing Benefit

Tips to Maximise Housing Benefit Entitlement

If you’re looking to maximise your Housing Benefit entitlement, it’s important to be aware of what counts as income and savings. 

In order to receive the maximum benefit which you’re entitled to, it is essential to regularly review your circumstances and ensure that any changes are reported.

You should also make sure that you’re claiming all the benefits you qualify for, such as council tax support, pension credit, or disability living allowance. This can impact your Housing Benefit, as some benefits can increase your entitlement. Alternatively, others may be counted as income.

If your savings are approaching £16,000, think about whether you have any essential costs you need to pay for, such as home repairs or reducing debts. However, it is vital to seek advice before spending your savings, as well as checking how it might impact your benefit claims.

"Remember to check the specific eligibility conditions that apply to your situation, which can be found on the government's website or through Citizens Advice."

Advantages and Disadvantages of Savings on Housing Benefit

When considering how much savings you can have on Housing Benefit, it’s important to weigh up the advantages and disadvantages. 

In this section, we will explore some of the key advantages and disadvantages of having a certain level of savings, as well as how this interacts with your eligibility for Housing Benefit.

Advantages of Savings on Housing Benefit

It is essential to recognise that savings can impact your Housing Benefit in a variety of different ways. Below are seven advantages of having savings while receiving Housing Benefit, with an explanation of how each can impact your situation.

1) Financial Security

– Having savings can provide a sense of financial security. This means that in times of unexpected expenses, you have funds to fall back on without necessarily affecting your housing benefit immediately.

– If your savings are below the £16,000 threshold, you can still maintain a level of financial independence, as well as claiming Housing Benefit.

2) Eligibility for Other Benefits

– Savings can affect your eligibility for other means-tested benefits. For example, if you have savings but also claim guarantee pension credit, your housing benefit may not be impacted by your savings level.

– For older adults who have reached pension age, this can prove especially advantageous. This is because guarantee pension credit can help to secure maximum housing benefit entitlement.

Discretionary Housing Payments

3) Discretionary Housing Payments

– If you face a shortfall in housing costs, having some savings might position you to access discretionary housing payments provided by the local council.

– These payments are designed to help people who need extra support on top of their Housing Benefit, and you can still receive this support with a modest level of savings.

4) Council Tax Reduction

– Savings below a certain amount can still allow you to qualify for council tax reduction schemes, which can dramatically reduce your overall living costs.

– By effectively managing your savings and remaining within the eligible limits, you can benefit from reduced council tax and still receive Housing Benefit.

5) Support During Transition to Universal Credit

– If you are moving from Housing Benefit to Universal Credit due to a change in circumstance, savings can offer necessary support during this transition period.

– This is particularly relevant as Universal Credit payments can take several weeks to begin after you claim.

6) Leveraging Savings for Better Housing

– With some savings, you might have the option to use a portion as a deposit for more suitable housing. This could potentially reduce your weekly rent.

– This can be advantageous if it means moving to a property with lower housing costs, consequently reducing the amount of Housing Benefit you need to claim.

7) Flexibility in Rent Payments

– Tenants with savings might find more flexibility in negotiating rent payment schedules with private landlords or housing associations.

– This can be beneficial in managing cash flow, especially for those who receive income from a job or other sources as well as Housing Benefit.

Disadvantages of Savings on Housing Benefit

Disadvantages of Savings on Housing Benefit

However, having savings can present some drawbacks in relation to your Housing Benefit. 

1) Reduction in Benefit Amount

– Accumulating savings above the lower threshold (£6,000) can lead to a reduction in the amount of Housing Benefit you’re entitled to due to the tariff income rule.

– This essentially means that the more savings you have, the more reduced your Housing Benefit will be.

2) Risk of Ineligibility

– If your savings exceed £16,000, you might not be entitled to Housing Benefit. This can lead to significant financial strain if you rely on this support for your housing costs.

– For those who have just reached the threshold, this can prove especially challenging. This is because they may not have sufficient income to cover rent without the benefit.

3) Complications with Pension Credit

– For those on state pension credit, savings can complicate the calculation of housing benefit entitlement.

– There may be a need to constantly review and report changes in savings to ensure correct entitlement, which can sometimes prove challenging.

4) Impact on Other Means-Tested Benefits

– Savings can also impact your entitlement to other means-tested benefits, such as council tax support or income-based jobseeker’s allowance.

– An increase in savings might lead to a decrease in these benefits, potentially impacting your overall financial situation.

5) Difficulty with Sudden Expenses

– If you spend a large portion of your savings on an unexpected expense, it could inadvertently affect your Housing Benefit if your savings drop below the lower limit. However, you are still assumed to provide income.

– This can create a difficult situation where you may have less cash available, yet your Housing Benefit is not immediately increased.

6) Barrier to Receiving Full Benefit

– Having savings can act as a barrier to receiving the full Housing Benefit payment you may need, as any amount over the lower threshold is used to calculate your benefit entitlement.

– This can limit the support you receive and may not accurately reflect your actual financial situation. This is especially relevant if your savings are not readily accessible or are allocated for specific future needs.

7) Complex Reporting Requirements

– Maintaining the right level of savings while claiming housing benefit often requires regular reporting and record-keeping.

– The complexity of these requirements can be a disadvantage, as you will have to repay potential overpayments.

Impact of National Insurance on Benefit Claims

Impact of National Insurance on Benefit Claims

National Insurance contributions are a vital part of the UK’s welfare system, impacting eligibility for certain benefits. It is important to note that those with a full national insurance record may have increased access to means-tested benefits, such as Housing Benefit. 

For individuals approaching state pension age, their national insurance record could influence the level of state pension they receive. 

Therefore, this also impacts their entitlement to Housing Benefit. A strong national insurance record can also support a claim for attendance allowance or pension credit, potentially offsetting housing costs.

Role of Pension Service in Housing Benefit

In supporting pension age individuals to navigate their Housing Benefit claims, the Pension Service offers vital help. They provide information on how savings and pensions impact housing benefit, ensuring that older adults receive the support they are entitled to.

For those who have reached the qualifying age for pension credit, the pension service can offer guidance on how this benefit interacts with savings and Housing Benefit. 

In addition, they can provide support with applications for guarantee credit. Therefore, this can increase housing benefit entitlement for those with lower incomes.

Tax Credits and Housing Benefit Eligibility

For people with children or those on a low income, tax credits can dramatically affect your entitlement to Housing Benefit. Child tax credit and working tax credit are types of income that must be declared when applying for Housing Benefit, as they can affect the benefit cap.

When assessing for Housing Benefit, the local council considers tax credits as part of an applicant’s income. Particularly in cases where the income from tax credits pushes total earnings above the threshold for maximum benefit support, the amount of Housing Benefit received can be impacted.

Housing Associations and Rent Affordability

In order to source accommodation that can prove more affordable than the current market rates offered by private landlords, housing associations in the UK should be recognised as a potential option. 

This can be particularly beneficial for individuals who are claiming Housing Benefit and may have their eligible rent covered up to the local housing allowance limit.

When applying for housing benefit, the rent charged by a housing association is taken into account to determine the level of support an individual can receive. 

For those on a low income or receiving benefits like income-based jobseeker’s allowance, housing costs could be made more manageable by moving to a housing association.

Housing Associations and Rent Affordability

A Case Study on Maximising Housing Benefit With Savings

To illustrate the practical aspects of managing savings while receiving Housing Benefit, let’s consider a case study. By providing a real-life example, we hope to highlight the relationship between savings and Housing Benefit.

Meet John, a 58-year-old living in a rented flat in Manchester, UK. John is currently unemployed and has been claiming income-based Jobseeker’s Allowance while actively looking for work. 

He has a small amount of savings, which are well below the £16,000 upper capital limit. Consequently, he is thinking about applying for Housing Benefit to help with his rent.

John’s national insurance number shows that he has made sufficient contributions in the past, potentially opening the door for certain means-tested benefits. 

As he is aware that his savings could affect his Housing Benefit claim, he decides to source advice from Citizens Advice. This helps him to recognise his entitlements, as well as making sure that he complies with all requirements.

Due to his low income, John is eligible for a discretionary housing payment to cover the shortfall between his Housing Benefit and his actual rent. Due to his long-standing health issue, he also discovers that he might be entitled to Personal Independence Payment. 

It is important to note that this doesn’t count towards the benefit cap and could help him financially. John’s situation is further complicated by the fact that he is part of a mixed-age couple. 

His partner, who is 62, has recently started receiving guaranteed pension credit. This means that while John’s savings are under examination for his housing benefit claim, his partner’s pension credit is not affected by their savings. Therefore, his overall income is stabilised.

Their combined income, including child benefit for their dependent child and notional capital, is carefully calculated to ensure that they receive the correct housing benefit amount. 

John’s case highlights that planning and sourcing the right advice are essential to maximising your benefit entitlements.

Key Takeaways and Learnings

To summarise, this article has covered the relationship between Housing Benefit and savings. Here are the key points to keep in mind:

– Your savings can impact your entitlement to Housing Benefit, with the upper limit being £16,000.

– Staying informed about your eligibility, particularly regarding changes in income, savings, or circumstances, is essential to maintaining your Housing Benefit.

– Understanding the interaction between other benefits, including pension credit or tax credits, and your Housing Benefit is vital.

– For those nearing state pension age, being aware of how savings and pension income impact Housing Benefit entitlement is vital.

– When dealing with complex benefit claims or changes in your financial situation, it is crucial to seek guidance from the pension service or Citizens Advice w.

In conclusion, the relationship between savings and housing benefit is a nuanced one that requires a clear understanding of the rules and regulations set by the UK government. 

This means that you need to be proactive in managing your finances, remembering to keep updated with the latest information on benefit entitlements and thresholds. 

You should also report any changes in your financial situation to the relevant authorities to ensure that your Housing Benefit claim remains accurate and that you receive the correct level of support.

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