How Much Savings Can I Have on Housing Benefit
The UK government offers a range of benefits to citizens who need financial support. One such benefit is the housing benefit, designed to help cover housing costs, especially rent. But a question often arises – how much savings can one have while still eligible for housing benefit? This is an essential question as the amount of savings you have can impact the housing benefit you can receive.
The rules around savings and housing benefit can be complex, and it’s essential to understand them to ensure you’re getting the help you’re entitled to. This article aims to provide clear, factual information about the impact of savings on housing benefit entitlement, written in a straightforward, neutral tone.
In this article, you will learn:
- Why it’s essential to understand the rules around savings and housing benefit
- Essential information about how savings can impact your housing benefit
- Detailed explanations of the rules around housing benefit and savings
- The advantages of understanding how savings can affect your housing benefit
- Steps you can take after reading this article to ensure you’re getting the housing benefit you’re entitled to.
The Importance of Understanding the Rules Around Savings and Housing Benefit
Understanding the rules around savings and housing benefit is crucial for anyone applying for or already receiving housing benefit. There is a particular link between your savings and the level of housing benefit you can claim.
The rules around savings and housing benefit are not widely understood. Many people are not aware that the amount of savings they have can impact their housing benefit. This lack of awareness can lead to people not claiming the total housing benefit they are entitled to.
If you have savings and are considering applying for housing benefit, it’s essential to know how these savings can affect your claim. Even if you’re already receiving housing benefit, it’s worth understanding these rules, as changes to your savings can impact your benefit.
Understanding these rules can also help you plan for the future. Knowing how this could affect your housing benefit can help you make informed decisions if you’re considering saving money or have received a lump sum.
Key Information About How Savings Can Impact Your Housing Benefit
The first thing to know is that having savings does not automatically disqualify you from receiving housing benefit. However, the amount of savings you have can affect the amount of benefit you receive.
In the UK, if you have savings of over £6,000, this can start to affect your housing benefit. For every £250 (or part of £250) you have over that amount, it’s assumed you have a ‘tariff income’ of £1 per week. This ‘tariff income’ is considered part of your income when calculating your housing benefit.
It’s also important to note that some types of savings are not included in this calculation. For instance, the value of your main home or personal possessions is not considered as savings. However, other assets, like a second home or money in a bank account, are included.
These rules apply to everyone who is of working age. However, the rules are slightly different if you have reached state pension age. For those of state pension age, the threshold is higher – savings of over £10,000 can start to affect your housing benefit.
Detailed Explanations of the Rules Around Housing Benefit and Savings
As mentioned, the rules around savings and housing benefit can be complex. To help clarify, let’s look at some examples.
Let’s say you’re working age and have £7,000 in savings. This is £1,000 over the £6,000 threshold. As you have £1,000 in savings over the threshold, it’s divided by £250 to give 4. So, it’s assumed you have a ‘tariff income’ of £4 per week. This £4 is then taken into account when calculating your housing benefit.
But what if you’re of state pension age and have £12,000 in savings? This is £2,000 over the £10,000 threshold. So, it’s divided by £500 to give 4. This means it’s assumed you have a ‘tariff income’ of £4 per week. Again, this £4 is considered when calculating your housing benefit.
It’s also worth noting that if you have savings of £16,000 or more, you will not usually be eligible for housing benefit, unless you receive the guarantee credit part of Pension Credit.
The Advantages of Understanding How Savings Can Affect Your Housing Benefit
Understanding how your savings can impact your housing benefit can help ensure you receive the correct benefit amount. By understanding these rules, you can also better plan for the future and make informed money-saving decisions.
It can also help you understand other aspects of your finances. For example, understanding how your savings can affect your housing benefit can also give you insight into how savings can impact other means-tested benefits.
Furthermore, understanding these rules can help you avoid potential issues. For instance, if you didn’t realise that your savings could impact your housing benefit and didn’t report a change to your local council, you could be overpaid for housing benefit. If this happens, you’ll usually have to pay the extra money back.
Steps You Can Take After Reading This Article
After reading this article, there are a few steps you can take to ensure you’re receiving the housing benefit you’re entitled to.
First, if you’re not currently receiving housing benefit but think you might be eligible, consider applying. The UK government’s benefits calculator can help you understand what you might be entitled to.
If you’re already receiving housing benefit and your savings have changed, report this to your local council. Even a tiny change in your savings can affect the housing benefit you’re eligible for.
Finally, if you’re unsure about anything or need more advice, consider contacting an organisation like Citizens Advice. They can provide free, confidential advice and can help you navigate the complexities of housing benefit and savings.
The Pros and Cons of Having Savings on Housing Benefit
In this section, we will explore some advantages and disadvantages of having savings while on housing benefit. Understanding these is important to make informed decisions about your financial situation and potential benefits.
Pros of Having Savings on Housing Benefit
Having savings while on housing benefit can provide several advantages:
1) Financial Security
- Having savings can provide a level of financial security. In unexpected situations, such as a sudden repair cost, you have a safety net to fall back on.
- Savings can also help cover living costs when the housing benefit payment might not fully cover your rent or other housing costs.
2) Greater Independence
- With savings, you have more options and flexibility in your housing choices. This can be especially true if you are looking to rent from a private landlord.
- Savings can also allow you to cover a deposit or advance rent, standard requirements when renting a property.
3) Potential for Investment
- If you have savings, you may have the opportunity to invest in things that can improve your life quality. This could be anything from education to home improvements.
- However, it’s essential to carefully consider any investment, as it could impact your housing benefit and other means-tested benefits.
Cons of Having Savings on Housing Benefit
However, having savings can also have some drawbacks when it comes to housing benefit:
1) Reduced Housing Benefit
- Your housing benefit may be reduced if your savings exceed a certain threshold. This can make covering your rent and other housing costs more challenging.
- The reduction is based on a ‘tariff income’ system, where it’s assumed that for every £250 or £500 (depending on your age) you have over the threshold, you have an income of £1 per week.
2) Potential Loss of Eligibility
- If your savings reach £16,000 or more, you generally lose your eligibility for housing benefit. The only exception is if you receive the guarantee credit part of the Pension Credit.
- If you’re close to this threshold, you must manage your savings to maintain your housing benefit carefully.
3) Complexity and Confusion
- The rules around savings and housing benefit can be complex and confusing. It can be difficult to understand how your savings will impact your housing benefit.
- It’s important to get advice if you’re unsure about these rules. Organisations such as Citizens Advice can help provide guidance.
The Impact of Other Benefits on Housing Benefit
Regarding housing benefit, many factors can influence how much you receive. One such factor is the presence of other benefits. Certain benefits, such as universal credit or income support, can affect your housing benefit claim. This can be due to the overall assessment of your income and circumstances.
Universal credit is a means-tested benefit that has replaced housing benefit for many people. You’ll receive a housing element to help with your rent if you’re eligible for universal credit. This could affect your need for housing benefit. You might still receive both in some cases, but checking your eligibility is essential.
Income support is another benefit that can impact your housing benefit. Like universal credit, income support is means-tested. If you’re eligible for income support, it could increase your housing benefit. However, savings might decrease the amount of income support you receive, which could, in turn, reduce your housing benefit.
Attendance allowance and disability living allowance are benefits for people with disabilities. These benefits are not means-tested, so they don’t count as income when calculating your housing benefit. However, receiving these benefits could make you eligible for higher amounts of housing benefit, due to the additional costs you might have as a disabled person.
Housing Benefit and Your Weekly Income
Your weekly income plays a significant role in determining your housing benefit. The amount of housing benefit you receive is based on your eligible rent, income, and circumstances. Your weekly income is considered, including any earnings, most benefits, and any tariff income from savings above a certain threshold.
If you’re working, your wages will be counted as income. However, some money can be disregarded, such as the first £5 per week if you’re single or the first £20 per week if you’re a single parent. Certain other disregards may also apply, depending on your circumstances.
If you receive benefits such as universal credit or income support, these will also be counted as income. However, certain benefits, such as attendance allowance and disability living allowance, are not counted as income.
Lastly, any tariff income from savings above £6,000 (or £10,000 if you’re of state pension age) is also counted as income. This is calculated at a rate of £1 per week for every £250 (or part of £250) you have above the threshold.
Rent and Housing Benefit Eligibility
The type of rent you pay can also affect your housing benefit. If you rent to a private landlord, you may be eligible for a local housing allowance. This is a type of housing benefit for private renters. The amount of local housing allowance you can get depends on where you live, the size of your household, and your circumstances.
If you pay rent to a housing association, you may be eligible for housing benefit to cover all or part of your rent. However, if your housing association charges a service charge for certain services or facilities, housing benefit may not cover this.
If you live in temporary accommodation arranged by your local council, you can get housing benefit to cover all or part of your rent. However, this may not cover any charges for utilities or other services.
Additional Support for Housing Costs
In some situations, you might need additional help with your housing costs. This could be due to a temporary situation, such as a loss of income, or a longer-term issue, such as disability. In these cases, there are several options available.
Discretionary housing payments are extra payments that can help cover rent shortfalls. They’re granted at your local council’s discretion and are usually only available for a short time.
Council tax support can help you pay your council tax bill if you’re on a low income or receiving certain benefits. The amount of council tax support you can get depends on your income, circumstances, and the council tax rates in your area.
Lastly, the benefit cap limits the total amount of certain benefits you can receive, including housing benefit. If you’re affected by the benefit cap, you might receive less housing benefit. However, certain people are exempt from the cap, such as those who receive disability living allowance or attendance allowance.
Case Study: Navigating Savings and Housing Benefit
To better illustrate the impact of savings on housing benefit, let’s consider a real-world case study. This example should help bring the topic of “how much savings can I have on housing benefit” to life and make it relatable.
Meet Sarah, a single person living in temporary accommodation arranged by her local council. She’s of working age and currently receives an income-based Jobseeker’s Allowance. She also has a child and receives child benefit and child tax credits. Recently, she received a lump sum payment from a building society account opened for her as a child.
Sarah’s circumstance is unique because of her lump sum payment. The payment has increased her savings to £8,000. Sarah is aware that savings over £6,000 can affect her housing benefit, so she’s unsure about the impact of her new savings on her benefits.
After researching and consulting with the Pension Service, Sarah learned about the ‘tariff income’ system. For every £250 (or part of £250), she has over £6,000; it’s assumed she has an income of £1 per week. This means her ‘tariff income’ from her savings is £8 weekly.
Sarah also discovered that her other benefits, including her Income-Based Jobseeker’s Allowance, child benefit, and child tax credit, count as income. However, certain disregards apply, reducing the amount of income considered.
However, Sarah struggled to meet her housing cost and applied for a discretionary housing payment. This additional support helped her cover her rent shortfall. She also applied for council tax reduction to help with her council tax bill.
Sarah’s case illustrates the importance of understanding how savings can affect housing benefit. By staying informed and seeking advice, Sarah could navigate the complexities of her situation. This allowed her to receive the support she needed while managing her newfound savings effectively.
Key Takeaways and Learnings
As we draw this article to a close, let’s take a moment to summarise the crucial aspects of how much savings can impact housing benefit. This summary will help reinforce the key points and guide any actions you may need to take.
- The amount of savings you have can affect your housing benefit. If your savings exceed £6,000 (or £10,000 if you’re of state pension age), it can reduce your housing benefit.
- Certain benefits, such as universal credit, income support, and working tax credit, can impact your housing benefit. They are counted as income when calculating your housing benefit.
- Certain benefits, such as attendance and disability living allowance, do not count as income. They can, however, make you eligible for higher amounts of housing benefit.
- If your savings reach £16,000 or more, you generally lose your eligibility for housing benefit, unless you receive the guarantee credit part of Pension Credit.
- If you’re struggling with your housing costs, you might be able to get extra help. Discretionary housing payments, council tax reduction, and other means-tested benefits can provide additional support.
The complexities of housing benefit and savings highlight the importance of staying informed. Understanding these rules can help you receive the support you’re entitled to and make informed financial decisions. If you’re unsure about anything, don’t hesitate to seek advice. Organisations like Citizens Advice can provide valuable guidance and support.
This article has provided a comprehensive overview of how much savings can impact housing benefit. It has explored the rules around savings, the effect of income and other benefits, and the additional support available for housing costs. The case study of Sarah illustrated these points in a real-world context, providing a practical example of these rules in action. Whether you’re considering applying for housing benefit, already receiving them, or advising others, this knowledge can be valuable in navigating the UK benefits system.