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As a form of welfare support, UK residents in need may be eligible to apply for Universal Credit. But having too much money in your bank account can reduce the amount of money you receive from Universal Credit. So how to hide savings from universal credit in the UK? In this article, we explore the best ways to keep your savings which you make money by hard-earned hidden from the UK government and maximize the payments you receive.
What is Universal Credit?
Universal Credit is a new type of benefit that is being rolled out across the UK. It will replace six existing benefits, including Jobseeker’s Allowance, Housing Benefit, and Working Tax Credit. The key difference with Universal Credit is that it will be paid in one single monthly payment, into the claimant’s bank account. This payment will then need to cover all their living costs, including rent, food, and other essentials.
If you are claiming Universal Credit, you will need to provide information about your income and savings to the Department for Work and Pensions (DWP). Your payments may be reduced if you have more than £6,000 in savings. If you are concerned about how your savings will affect your Universal Credit payments, there are options available to help you keep some of your money hidden from the DWP. One option is to put your savings into a trust fund. This means that the money is held by someone else (the trustee) and can only be used for specific purposes that you agree to in advance.
Trustees can be family members, friends, or solicitors. Another option is to use a ‘discretionary financial arrangement’. This allows you to keep control of your own finances but means that the DWP won’t take your savings into account when working out your Universal Credit payments. Discretionary financial arrangements can be useful if you need to access your savings for an emergency situation or for a one-off purchase. Whichever option you choose, it’s important to make sure that you understand the implications of your decision and that you seek advice from an experienced professional.
How is Savings Calculated in Universal Credit?
When you claim Universal Credit, your savings are taken into account when calculating your entitlement. Your total savings amount is divided by your monthly payment amount to work out how many months’ worth of payments you have saved up. This is then used to reduce the number of months you will receive Universal Credit payments. For example, if you have £1,000 in savings and you would normally get £100 a month in Universal Credit payments, this would be equivalent to 10 months’ worth of payments. This means your Universal Credit payments would stop for 10 months.
Strategies to Hide Savings from Universal Credit
There are a few strategies that can be used to hide savings from Universal Credit. One option is to keep the money in a separate account that is not linked to your main bank account. This way, the money will not show up on your statement and will not be taken into consideration when your Universal Credit payments are calculated. Another option is to withdraw the money in cash and keep it hidden somewhere in your home. This is riskier, as there is always the chance that the money could get lost or stolen.
However, if you are careful, it can be an effective way to keep your savings hidden from Universal Credit. Finally, you could try investing your savings in something like stocks and shares ISA. This way, the money will not be visible on your bank statements and will not be taken into consideration when your Universal Credit payments are calculated. However, you should only invest if you are comfortable with the risks involved and you are confident that you will not need access to the money for a while.
What savings don’t count for Universal Credit?
Some savings are disregarded when calculating your Universal Credit entitlement. These include:
Savings below £6,000: If you have savings below this threshold, they are typically not considered when calculating your Universal Credit entitlement.
Personal possessions: The value of personal belongings, such as household items, clothing, and essential appliances, is not counted.
Pensions: The value of pensions, including workplace and personal pensions, is generally not counted as savings for Universal Credit.
Certain types of tax-free savings: Individual Savings Accounts (ISAs) and Junior ISAs, are usually not taken into account.
Why does Universal Credit need to know my savings?
Universal Credit is designed to provide financial support to those who need it most, which means the amount you receive is based on your financial situation. Knowing your savings is crucial for determining your eligibility and the level of assistance you require.
The government uses your savings information to assess whether you meet the income and capital limits for Universal Credit. If your savings are above a certain threshold, you may not be eligible for the benefit.
Even if you are eligible, the amount of Universal Credit you receive may be reduced if you have significant savings, as this indicates that you have financial resources available to support yourself.
How to Hide Savings from Universal Credit in the UK?
Making Use of Gift Vouchers, Insurance Bonds, and Other Non-cash Assets
If you have any gift vouchers, insurance bonds, or other non-cash assets, you can use these to help hide your savings from Universal Credit. By using these assets to pay for things like food and bills, you can reduce the amount of money that is considered part of your Universal Credit calculation. This can help to keep your payments low and protect your savings from being taken into account.
It’s important to remember that you will need to declare any gifts or assets that you receive, so make sure you keep track of what you have and how much it’s worth. If you’re not sure whether something counts as an asset, speak to your local Citizens Advice Bureau for advice.
Taking Out Loans and Investments
There are a few ways that you can keep your savings hidden from the Universal Credit system in the UK. One way is to take out loans and invest money. This can be done by taking out a loan from a family member or friend, or by investing in something like a stocks and shares ISA. Another way to keep your savings hidden is to put them into a trust. This can be done by setting up a trust fund with a financial institution or by creating a trust deed yourself.
Placing Money Into Trusts
If you’re on universal credit, you may be able to keep some of your savings hidden from the Department for Work and Pensions (DWP). There are two types of trusts that can help you do this: discretionary trusts and protective trusts. Discretionary trusts give the trustees discretion over how much, if any, of the trust’s income or capital is paid to the beneficiaries. This means that, if you’re a beneficiary of a discretionary trust, the DWP won’t be able to take into account any money that’s paid to you from the trust.
Protective trusts are similar, but they also have provisions in place that protect the assets in the trust from being taken into account by the DWP. This means that, even if you’re a beneficiary of a protective trust, the DWP won’t be able to take into account any money that’s held in the trust. If you’re thinking about setting up a trust, it’s important to get professional advice from a solicitor or financial advisor first.
Conclusion
Saving money is a great way to ensure the financial security, but unfortunately can be difficult for those on Universal Credit in the UK. Fortunately, there are ways to hide savings from Universal Credit so that you can keep your hard earned money safe. We hope this article has given you some insight into how to do this and why it’s important. Remember, saving money is an essential part of personal finance and with the right strategies you can make sure your funds stay secure even when receiving benefits.
FAQs on how to hide savings from universal credit
1. Can Universal Credit see your savings?
Yes, Universal Credit can see your savings in the UK. When you make a claim for Universal Credit, you will be asked to provide information about your savings, investments, and other capital. This includes cash, bank and building society accounts, stocks and shares, premium bonds, and other investments. The amount of savings you have may affect the amount of Universal Credit you are entitled to.
2. What happens if you don’t declare savings Universal Credit?
If you do not declare your savings when claiming Universal Credit in the UK, you could be committing benefit fraud. This is a criminal offense and could result in prosecution and a criminal record. You may also have to pay back any payments that you have received as a result of not declaring your savings.
3. How do I protect my savings from Universal Credit in the UK?
- Make sure you are claiming all the benefits to which you are entitled. Universal Credit is based on your income and savings, so making sure you are claiming everything you are eligible for can help you protect your savings.
- Open a separate bank account and transfer money into it. This will make sure that your savings are not taken into account when your Universal Credit is calculated.
- Make sure you are getting the right type of advice for your individual needs. Seek advice from a financial adviser if you are unsure about how to protect your savings from Universal Credit.
- Consider setting up a trust fund to hold your savings. This can help to protect your savings from being taken into account when your Universal Credit is calculated.
- Make sure you are aware of the rules around Universal Credit and any changes that might affect you. Knowing the rules can help you to make sure that you are taking all the appropriate steps to protect your savings.
4. Can the DWP find out about savings?
Yes, the Department for Work and Pensions (DWP) can find out about savings in the UK, but only if it is relevant to the benefit claim. The DWP has access to information from banks and other financial providers and will use this information to verify the information given on benefit claims.
