You can generally have up to £16,000 in savings and still claim certain benefits in Scotland, such as Universal Credit. However, if your savings exceed £6,000, your benefit amount may be reduced.
Understanding Savings Limits for Benefits in Scotland
The rules regarding savings primarily apply to Universal Credit, a key working-age benefit claimed across Scotland and the rest of the UK. These limits apply to the total amount of savings and capital held by you and/or your partner.
The £16,000 Savings Limit
This is the upper threshold for Universal Credit. If your combined savings and capital amount to £16,000 or more, you will typically not be entitled to receive Universal Credit. This limit is a hard cut-off point.
How Savings Between £6,000 and £16,000 Affect Your Benefits (Tariff Income)
If your savings fall between £6,000 and £16,000, your Universal Credit payment will be affected by what is known as 'tariff income'. Here’s how it works:
- First £6,000 Ignored: The initial £6,000 of your savings is completely disregarded and does not impact your Universal Credit entitlement.
- Tariff Income Calculation: For every £250 (or part of £250) you have above £6,000, a monthly income of £4.35 is assumed and deducted from your Universal Credit payment. This is applied even if you don't actually draw any income from your savings.
Here's a quick overview:
| Savings Tier | Impact on Universal Credit |
|---|---|
| Up to £6,000 | No impact on your Universal Credit amount. |
| £6,000 to £16,000 | Your Universal Credit amount is reduced based on tariff income. |
| £16,000 or more | Generally not entitled to Universal Credit. |
Example Calculation of Tariff Income
Let's consider a practical example:
- Scenario: You have £7,500 in total savings.
- Step 1: Identify the disregarded amount. The first £6,000 is ignored.
- Step 2: Calculate the amount taken into account. Subtract the disregarded amount from your total savings: £7,500 - £6,000 = £1,500.
- Step 3: Determine the number of £250 units. Divide the amount taken into account by £250: £1,500 / £250 = 6 units.
- Step 4: Calculate the monthly deduction. Multiply the number of units by £4.35: 6 units * £4.35/unit = £26.10.
In this scenario, your Universal Credit payment would be reduced by £26.10 per month. If you had £7,501 in savings, it would still be treated as 7 units (because of the "part of £250" rule), resulting in a slightly higher deduction.
Important Considerations
- Other Benefits: While these rules are specific to Universal Credit, other benefits might have different savings limits or rules. It's always advisable to check the specific criteria for any benefit you are claiming or intend to claim.
- Types of Capital: 'Savings' and 'capital' include more than just money in a bank account. They can also include cash, investments (like shares or ISAs), and property you don't live in (unless it's disregarded for specific reasons).
- Seeking Advice: Understanding how your specific financial situation affects your benefits can be complex. For more detailed guidance on how savings affect your benefits, you can visit MoneyHelper.
