Universal Credit warning: Claims may be affected by lump sum back payments from the DWP

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Universal Credit payments can be altered from month to month based on a claimant’s income and savings levels. If a claimant goes beyond a certain limit their benefit payments can be stopped entirely.

For those who have less than £6,000 in savings their Universal Credit claim will not be affected.

However, if a claimant has between £6,000 and £16,000 in savings, their payments will be reduced.

If this is the case, the first £6,000 is ignored and the remainder of the savings is treated as if it gives the claimant a monthly income of £4.35 for each £250, or part of £250.

So, for example, if a claimant has £7,000 in savings the first £6,000 of it is ignored.

The remaining £1,000 will be counted as giving the person a monthly income of £17.40.

The following calculation will then be applied: £1,000 ÷ £250 = four, four x £4.35 = £17.40.

Finally, £17.40 will be taken off the claimant’s monthly Universal Credit payments.

In some cases, benefit claimants may have been underpaid what they were owed and as such, they could be entitled to a back payment from the DWP.

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This could involve a substantial lump sum payment, which could push people over their savings’ limit for means-tested benefits.

This not only would impact Universal Credit claimants but could also affect those claiming:

  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance
  • income Support
  • housing Benefit
  • pension Credit

It should be noted in some cases, this payment will not be counted as savings for one year and will not affect income related or means tested benefits during this time.

Additionally, where benefits have been underpaid because of an official error or an error on the point of law, any payments over £5,000 can be disregarded for the length of the claim or until the award ends.

Universal Credit payments will vary based on specific claimant circumstances but between £342.72 and £594.04 per month will be paid out as a minimum.

Extra amounts may also be awarded for elements such as raising a child or covering housing costs.

On top of the savings limit rules, to be eligible for Universal Credit a person must also:

  • be on a low income or out of work entirely
  • be aged between 18 and state pension age
  • be living in the UK

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