The Department for Work and Pensions has shared the exact amounts that could trigger a fraud alert when benefit claimants are monitored as part of a new government crackdown.
In an effort to combat fraud and error—a problem that costs taxpayers about £10 billion every yearand has led to wrongful payments totalling £35 billion since the pandemic—the Public Authorities (Fraud, Error and Recovery) Bill will expect banks and lenders to keep an eye out for capitals surpassing claim thresholds for income-based benefits.
BirminghamLive mentions that claimants currently must report savings exceeding certain levels to the DWP.
Expected to recoup £1.5 billion over five years, Labour highlights this bill as a component of broader schemes projected to cut down £8.6 billion in welfare fraud and error costs over the same period, marking “the biggest welfare fraud and error budget package in recent history.”
For 2024-2025 and maintained for 2025-2026 as confirmed by the DWP are the capital limits associated with benefits. According to the DWP’s rules extending into the subsequent financial year, a capital ceiling of £16,000 is tied to these means-tested benefits:
- Universal Credit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Housing Benefit (if you are under State Pension age)
A person’s capital includes:
- savings, such as those in a bank or building society
- investments such as Bonds or ISAs
- property that you may own or part own (other than the house you live in)
A claim is halted 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 Glasgow Live.
Any capital between £6,000 and £16,000 is considered to provide a monthly income of £4.35 for each £250, or part thereof, regardless of whether it actually does. For instance, if you have £6,300 in a savings account, £6,000 will be disregarded and the remaining £300 will be treated as providing 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 every fortnight when it is deposited into your account.
Claimants are also cautioned that non-essential spending or giving away money to stay within the benefit limits can be seen as ‘deprivation of capital’. In this case, the DWP treats your claim as though you still possess the money.
Once your capital falls below £16,000, you are permitted to reapply for benefits.
During a recent discussion with MPs regarding the upcoming legislation, Work and Pensions Secretary Liz Kendall stated: “Our new eligibility verification measure will enable us to require banks or other financial institutions to provide crucial data to help identify incorrect benefit payments people might be getting, including fraudulently, such as if someone has too much in savings, making them ineligible for a benefit, or if they are fraudulently claiming benefits abroad when they should be living in the UK.
“People should not be getting benefits they are not entitled to, and the alerts will make the process of identifying potential fraudsters much simpler, quicker and easier.”
“However, we know that people lead busy lives and sometimes genuine mistakes happen. The measure will help there too, by finding and putting errors right quickly, preventing people from building up large debts that they then need to repay. I am absolutely determined to reduce benefit mistakes by stopping them from happening in the first place and to avoid debts building up, with all the worry and distress that causes.
“That is why I have launched the independent investigation into the overpayment of Carer’s Allowance, in order to learn lessons about what went wrong and ensure that does not happen again.
“I want to stress to the House that, under our eligibility verification measure, the DWP will not be able to access people’s bank accounts or look at what they are spending. We will not share any personal information with banks. Once an alert has been issued, any final decision about someone’s benefits will always be taken by a human being and the state pension will be excluded from the measure. There will also be independent oversight of the power on the face of the Bill, with the requirement to produce reports and lay them before Parliament.”