How capital is assessed

Capital is not defined in legislation and there is no exhaustive list, but it includes the claimant's

• savings

• property

as well as lump-sum payments such as:

• inheritance

• statutory redundancy payments

• compensation payments

The DWP looks at how much capital the claimant had on the last day of the monthly assessment period when calculating deductions for that month. The monthly assessment period dates can be found on the universal credit statements or the claimant's online journal.

Income that the claimant earned will start being treated as savings from the end of the assessment period after the one in which they were paid.

How much capital can a claimant have before deductions

The general rule is that claimants with less than £6,000 in capital will not have anything deducted.

Claimants who have more than £16,000 in capital cannot claim universal credit at all.

Deductions are made for claimants who have between £6,000 and £16,000 in capital. They will have £4.35 per month deducted from their universal credit payments for each £250 over £6,000.

For example, a claimant whose total savings came to £10,000 would have £4,000 over the minimum and would have £69.60 per month deducted from their claim.

Capital that is disregarded

Not all savings and property are counted when the DWP decides how much capital someone has. Some types of capital are disregarded from universal credit calculations and will not factor into any deductions.

For example, the following are not counted:

• the home a claimant lives in

• personal possessions including furniture, family cars, personal jewellery

There are also various special circumstances where other property the claimant owns can be disregarded such as:

• the home of a relative

• a property the claimant is trying to sell or dispose of

• a former home the claimant has left due to a relationship breakdown

There are many different situations where capital is disregarded, each with different rules. It is important for a claimant facing deductions due to their savings or property to get specialist benefits advice on whether any of their capital can be disregarded.

Notional capital

The DWP may make deductions in cases of 'deprivation' of capital.

The DWP may say that a claimant has deprived themselves of capital if they are satisfied that the claimant has deliberately given away capital in order to qualify for more universal credit.

If this happens they can continue to treat the claimant as if they still had that capital. The amount of capital they count the claimant as still having is called 'notional' capital.

A claimant's level of notional capital will diminish slowly over time based on either:

• the amount of universal credit the claimant would have received if they didn't have any notional capital (for amounts over £16,000) or

• The amount of deductions made from the claimant's universal credit due to notional capital (for amounts between £6000 and £16,000)

If the DWP accuse a claimant of depriving themselves of capital, the claimant will need professional benefits advice.

More information

Find out more about capital deductions, savings limits and what types of capital are disregarded from calculations.

Guidance for the public on capital

Find out more about universal credit savings limits on the Shelter website.

Find out more about claiming universal credit if you own a home and when the value of the home can be disregarded on the Shelter website.

Read more about universal credit: money, savings and investments at Gov.uk.

Guidance for professionals

Professionals can find more information on how capital deductions are calculated on Shelter Legal.

Government guidance for decision makers on capital and when it is disregarded

A full breakdown on what is considered capital and what types of capital are exempt from deductions can be found in Chapter H1: Capital and Chapter H2: Capital Disregards of the DWP's advice for decision making.