The Department for Work and Pensions (DWP) has confirmed the exact amount of money people can have in their bank accounts before it affects their benefit payments
The Department for Work and Pensions has outlined specific criteria that may trigger a fraud investigation, ramping up the crackdown on benefit fraud.
The Government reports that fraud and error in the welfare system cost the taxpayer around £10 billion a year – a figure ballooned by the extraordinary £35 billion wrongfully paid out during the COVID-19 pandemic.
The newly proposed Public Authorities (Fraud, Error and Recovery) Bill will see financial institutions playing watchdog, set to alert authorities when account balances surpass limits for those on income-related benefits. As it currently stands, claimants are obliged to report to the DWP if their savings exceed set levels.
With the aim of retrieving £1.5 billion over the next five years, this legislation is just a part of a larger scheme intended to recover £8.6 billion in the same timeframe. Labour has slammed these plans as “the biggest welfare fraud and error Budget package in recent history.”
Moving forward for 2024-2025 and also into 2025-2026, the DWP has confirmed that existing claimant capital ceilings will remain in effect. According to ongoing rules set by the DWP, the cap for means-tested benefits will continue to be £16,000.
A claim is stopped when an individual’s total savings exceed £16,000. This includes funds in online accounts such as PayPal, credit unions, betting websites or any other platforms where money can be stored and accumulated, reports the Express.
The system treats any capital between £6,000 and £16,000 as if it generates a monthly income of £4.35 for each £250, or part thereof, regardless of whether it actually does. For example, if you have £6,300 in a savings account, £6,000 will be disregarded, and the remaining £300 will be considered a monthly income of £8.70.
This amount is then deducted from your monthly Universal Credit payment. For those receiving income-based JSA, income-related ESA, Income Support and Housing Benefit, £1 per week is deducted from their benefits for every £250, or part thereof, of savings over £6,000.
These benefits are typically paid into accounts bi-weekly. Therefore, if you have £6,300, you would lose £2 per week off your payment, resulting in a £4 deduction when it is deposited into your account every two weeks.
Claimants are also warned that non-essential spending or gifting money to stay within the benefit limits could be seen as a ‘deprivation of capital’. In such cases, the DWP treats your claim like you still possess the money. Once your capital falls below £16,000, you can reapply for benefits.
