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What is Universal Credit?

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Over the past few weeks, we’ve seen the Chancellor unveil an unprecedented number of financial measures to support those impacted by the Coronavirus. However, there are still people who may not qualify for this help, or who still face hardship, and who may want to turn to Universal Credit. Unfortunately, they still face an obstacle!

Universal Credit is a benefit designed to support people, who have a low (or no) income, with basic living expenses and housing costs. This is subject to personal circumstances such as income and savings.

The rules for qualifying for Universal Credit are too detailed for me to go into here. However, it’s worth mentioning that there is a savings cap. This is going to be the main problem for those who find themselves in some very difficult circumstances through substantial reductions in their income. This cap stands at £16,000 and causes entitlement to taper away on savings between £6,000 and that amount, and to be withdrawn altogether once it is reached.

Even more problematic is that the term ’savings’ is wide ranging and includes non-cash items that you may not even be able to convert into cash.

Typical savings (this isn’t an exclusive list) include:

  • bank or building society accounts
  • money in a Tax-Free Childcare account (80% of value, as this is what you have put in)
  • all types of Individual Savings Accounts (ISAs) ie Help to buy ISAs
  • National Savings and Investments
  • Premium Bonds, land and property (other than the property where you live)
  • money or property held in trust

What we could see in the near future?

Of course, Government may yet assess entitlement to Universal Credit. They have acknowledged that there are people who don’t meet the criteria for any of their schemes thus far, and we can see continued press coverage and lobbying for a scrapping of the savings test. Currently though, this is still a significant barrier to maintaining a level of financial wellbeing for many.  

If you have any queries, please get in touch with your usual Larking-Gowen contact or send an email to

Tessa Brown


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Larking Gowen


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