Giving Away Savings to Claim: Deprivation of Capital

Universal Credit is means tested, and savings count. Most people cannot claim if they, or their partner, have savings over £16,000, and any savings between £6,000 and £16,000 will lower any Universal Credit entitlement¹. If you spend or give money away so you can claim benefits or get a higher monthly payment, the DWP could either refuse your claim or work out your Universal Credit as if you still had the savings².

That second outcome is the one people do not expect. The money has gone, but the DWP treats it as though it were still sitting in your account. This is called notional capital, and it can reduce your payment or stop your claim even though your actual balance is low³.

The rule is not there to punish ordinary spending. It is aimed at money moved deliberately to get or increase an award. The DWP has to decide what your intention was, and you can challenge that decision if it gets it wrong.

What deprivation of capital means for Universal Credit

Deprivation of capital is the DWP's term for reducing your money on purpose so that you qualify for Universal Credit, or qualify for more of it. The rule applies to claimants who spend or give away savings to claim or get a higher payment².

If the DWP decides that is what happened, it has two routes. It can refuse the claim, or it can work out your Universal Credit as if you still had the savings². In practice the second is more common, because it keeps the claim alive while removing the advantage the DWP believes was created.

The consequence can be severe. If your income, capital and savings reduce your Universal Credit to £0, you will no longer be able to claim Universal Credit⁷. So a deprivation decision does not just trim a payment; it can end entitlement entirely.

There is an important limit on the rule. You may not be treated as having deprived yourself of capital if you did not know about the Universal Credit capital rules, or if the DWP gave you incorrect information⁸. The test is about intention, not just about what happened to the money.

The £6,000 and £16,000 savings limits

Two figures do most of the work in Universal Credit capital rules. To claim, you must usually have no more than £16,000 in money, savings and investments as a single claimant or living with a partner². Above that, most people cannot claim at all¹.

Between the two figures, capital reduces your award rather than stopping it. You will get less Universal Credit if you have savings over £6,000⁹. The reduction is worked out as assumed income: £4.35 for every £250 or part thereof between the capital disregard and the upper capital limit, for 2026/27⁵.

The £16,000 limit is not only about savings accounts. It covers money, savings and investments, and one off or irregular charitable payments can push you over it: if you are getting Universal Credit and a payment takes your capital above the capital limit of £16,000, your Universal Credit stops¹⁰. Some compensation and welfare support payments are not taken into account as savings, either indefinitely or for up to 12 months².

How the DWP decides whether you deprived yourself of money

The DWP looks at what you did with the money and why. There is no single formula published, but the decision turns on whether the reduction in capital was deliberate and connected to claiming.

Two things weigh in your favour. First, not knowing the rules: you may not be treated as having deprived yourself if you did not know about the Universal Credit capital rules, or if the DWP gave you incorrect information⁸. Second, the timing and purpose of the spending. Money spent before you had any reason to think about benefits is in a different position from money moved the week before a claim.

Two things weigh against you. Giving money away to family is the classic case the rule is designed to catch, because the money still exists somewhere and you chose to put it there. Paying off a debt that did not need to be paid off immediately does not count as deprivation where the benefit claimed is Universal Credit or the person is over State Pension age¹¹.

Notional capital: being treated as still having the money

Notional capital is the mechanism that makes a deprivation decision bite. You will be treated as still having the capital if it is decided that you did this to get, or increase your award of Universal Credit¹². The DWP may still count it as part of your savings, and it may reduce your benefit payment³.

The rule is not confined to cash gifts. Money lent to others may still count as notional capital if the DWP thinks you intentionally reduced your capital to qualify for or to increase Universal Credit entitlement¹³. If you deprive yourself of savings or capital in order to increase the amount of benefit you get, you can be treated as if you still had that capital¹⁴.

Notional capital does not last forever. It reduces by an assumed amount in each assessment period until it is exhausted¹². Where the notional capital is over £16,000 and this means you cannot get Universal Credit, it is reduced each month by the amount of Universal Credit you would have received⁸. So the figure the DWP counts against you falls over time, and at some point the claim becomes possible again.

There is a parallel rule in social care, where a council can treat you as if you still had an asset, include its full value in your financial assessment and charge you accordingly¹⁵. That is a separate system with separate consequences, but the principle is the same.

Spending that is usually not deprivation

Ordinary living costs are not deprivation. Money spent on rent, food, bills and normal household expenses is spent, not hidden, and the DWP is not looking at that.

Some specific protections exist. If you are made bankrupt, your capital is not counted⁸. Amounts deducted from earnings under tax-exempt schemes, for example payments to purchase shares under a Share Incentive Plan, are not included when calculating entitlement¹⁶. Some compensation and welfare support payments are not taken into account as savings, either indefinitely or for up to 12 months².

Where a home is involved, the DWP can disregard its value for a period. The DWP can ignore it for more than 6 months if you do everything you can to try and sell¹⁷. You cannot get Universal Credit if you have more than £16,000 left from the sale¹⁸.

Challenging a deprivation decision and where to get help

If you think a Universal Credit decision is wrong, you may be able to ask for an explanation, have the decision looked at again, or appeal against the decision²⁰. If you disagree with a decision that you have deprived yourself of capital or that you have notional capital, you can ask for a mandatory reconsideration⁸.

The order matters. You must ask for a mandatory reconsideration before you can make an appeal²¹. You can ask the DWP to look at their decision again if you still think it is wrong, and this is called a mandatory reconsideration²². Free guidance on what universal credit is and how to challenge a universal credit decision is available from advice services²³.

If money is being taken from your Universal Credit, there are limits on how much. Normally the most that can be taken from your payment to repay a debt is 15% of your Universal Credit standard allowance²⁴. The total of the deductions should not be more than 15% of your standard allowance, and generally only three deductions at any one time, though the limit does not apply to child support payments, overpayments, universal credit advances or hardship payments²⁵.

A financial hardship decision will be considered if deductions are being taken from your Universal Credit payments for repaying tax credit over-payments, paying off benefit debt, or repaying a Social Fund loan²⁶. If your total deductions would be more than 15 per cent of your Universal Credit Standard Allowance, deductions will be prioritised in a set order, starting with fraud penalties and sanctions²⁶.

For free, impartial help, advice services such as Turn2us and AdviceNow publish guidance on challenging decisions and appeals²⁰. If you are struggling with debt as well as benefits, debt advice charities can look at both together.