The Department for Work and Pensions (DWP) is set to gain new powers to monitor bank accounts for signs of overpaid benefits to those not entitled to them.
Labour plans to introduce a Fraud, Error and Debt Bill that’s projected to save £1.6 billion over the next five years.
In addition to granting the government new powers to combat fraud and recover debts, the legislation will “require banks and financial institutions to share data that may show indications of potential benefit overpayments.”
The DWP clarified that it will not have access to view inside bank accounts and will not disclose personal information to third parties.
To identify overpayments, banks will scrutinise benefit claimants’ accounts for levels of savings that surpass the capital limits for means-tested benefits. They could also search for evidence of any foreign transactions indicating prolonged overseas trips that aren’t permitted.
These are the existing rules for the amount you can hold in an account while claiming benefits, reports Birmingham Live.
Capital is defined as any sum of money you possess including savings in any bank or building society account, as well as premium bonds, stocks, shares and the value of any property that isn’t your primary residence. Personal injury compensation is typically not counted for the first 12 months and workplace/personal pension pots are disregarded indefinitely.
The Department for Work and Pensions (DWP) has clarified that there is a capital limit of £16,000 for those claiming any of these means-tested benefits: Universal Credit, income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, and Housing Benefit (if you are under State Pension age). If your savings exceed £16,000, your benefit entitlement ceases until the amount falls below this threshold.
Deductions from these benefits due to savings commence at £6,000. For Universal Credit claimants, any capital between £6,000 and £16,000 is considered as providing a monthly income of £4.35 for each £250, or part thereof.
Therefore, if you have £6,300 in savings, £6,000 will be disregarded and the remaining £300 will be viewed as generating a monthly income of £8.70. This sum is then subtracted from your monthly Universal Credit payment.
For those on income-based JSA, income-related ESA, Income Support and Housing Benefit, £1 per week is deducted for every £250, or part thereof, exceeding £6,000. These benefits are typically paid into accounts fortnightly.
Hence, in these instances, if you have £6,300, you would lose £2 per week, resulting in a £4 deduction when the benefit payment is deposited into your account every two weeks.
If you’re receiving Pension Credit, the Department for Work and Pensions (DWP) disregards the first £10,000 of your savings. Every £500 above this amount is considered as £1 of weekly income, which is then deducted from your payment.
There’s no upper savings limit to be eligible for Pension Credit.
For pensioners who receive Housing Benefit towards their rent, up to £10,000 in savings can be held before it impacts your claim. Every £500 over this amount is counted as £1 of weekly income.
If you’re receiving the guarantee credit element of Pension Credit, you can have more than £16,000 in savings without it affecting your Housing Benefit.
However, if you’re a pensioner claiming Housing Benefit jointly with someone below State Pension age, the working age savings limit of £6,000 applies before it affects your claim.
Those attempting to dispose of excess savings could find they are still deemed to have the full amount. The DWP will investigate whether offloading money is what’s termed ‘deprivation of capital’ just to avoid benefits being reduced or stopped.
Deprivation of capital is determined on a case-by-case basis and can include giving or transferring the money to someone else, spending large amounts on an extravagant holiday or new car, buying a house or moving the cash into a trust fund. Paying off debts and any expenditure deemed to be “reasonable” is within the rules.