If you're claiming Universal Credit and trying to build up savings, it's important to understand how your savings affect your entitlement. There are specific capital (savings) rules that determine whether you can claim at all, and how much you receive. Understanding these rules helps you plan your finances without accidentally reducing your payments.
The Two Key Savings Thresholds
Universal Credit has two important savings thresholds. The first is £6,000: if your total capital (savings, investments and some other assets) is £6,000 or less, it doesn't affect your Universal Credit at all. The second threshold is £16,000: if your capital exceeds this, you're not eligible for Universal Credit at all. Between £6,000 and £16,000, a rule called 'tariff income' applies.
- Under £6,000 in savings: no effect on your Universal Credit
- £6,001–£16,000: tariff income applies (reduces your payment)
- Over £16,000: you cannot claim Universal Credit
- These thresholds apply to household capital, not individual savings
How Tariff Income Works (£6,000–£16,000)
For every £250 (or part thereof) of savings above £6,000, Universal Credit treats it as if you have £4.35 a month of income, even if the money is sitting in an account earning far less. This is called 'tariff income'. It reduces your Universal Credit payment. For example, if you have £8,000 in savings, that's £2,000 above the £6,000 threshold. Divided by £250 = 8 chunks. 8 x £4.35 = £34.80 a month of assumed income, which is taken off your UC payment.
- Formula: (savings above £6,000) ÷ £250 = number of tariff units
- Each tariff unit = £4.35 assumed monthly income
- This assumed income is deducted from your total UC award
- Example: £10,000 savings = £4,000 above threshold = 16 units = £69.60 a month assumed income
What Counts as Capital?
Not everything counts towards your capital total for Universal Credit purposes. Money in current and savings accounts, stocks and shares, Premium Bonds, and most investments count. The home you live in does not count, and nor do pension pots you have not yet accessed. Some payments, such as certain compensation payments and arrears of some benefits, can be disregarded for a period. It's worth checking the GOV.UK guidance or speaking to Citizens Advice for your specific situation.
- DOES count: cash in bank accounts, savings accounts, Premium Bonds, stocks and shares
- DOES NOT count: your home, personal possessions, pension pots not yet accessed
- DOES NOT count: certain compensation payments, some benefit arrears
- DOES count: your Help to Save balance (GOV.UK says savings of £6,000 or less, including Help to Save, do not affect your UC)
Help to Save: Saving While on Universal Credit
The Help to Save scheme is designed to help working people on Universal Credit build savings (it was also open to Working Tax Credit claimants until tax credits ended in April 2025). You need take-home pay of at least £1 in your last monthly assessment period to open one. You can save between £1 and £50 per calendar month. After 2 years, the government adds a 50% bonus on the highest balance reached. After 4 years, a second bonus of 50% of the amount by which you increased your highest balance in years 3 and 4. The balance counts towards your savings for UC, but you can only pay in up to £2,400 over the four years, so it will only affect your UC if your total savings go over £6,000. See our Help to Save eligibility guide for full details. If you want to build a buffer outside Help to Save too, SYM can help you save a small amount each day.
- Save up to £50/month in Help to Save
- 50% government bonus after 2 years (up to £600 bonus)
- Further 50% bonus after year 4 (up to £1,200 total bonus)
- Help to Save balance counts towards your savings, but savings up to £6,000 do not affect UC
If I inherit money and it takes me over £16,000, do I lose UC immediately?
Usually, yes. Report the change straight away through your UC account. If your capital is over £16,000, your UC will normally stop. If your savings later fall below £16,000 you can claim again, but DWP checks whether money was spent on purpose to get benefits (deprivation of capital), in which case it can be treated as if you still have it.
Does my partner's savings count towards the capital limit?
Yes. If you make a joint Universal Credit claim, both partners' savings are combined when calculating whether you're above or below the thresholds.
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