New legislation includes an eligibility verification measure to check for savings that exceed what’s allowed to claim benefits (Image: Getty Images)
The has released the specific thresholds that could spark a fraud investigation as part of intensified measures against benefit cheats.
The Government has said that fraud and error within the welfare system cost taxpayers an estimated £10 billion annually. Since the onset of -19, a staggering sum of £35 billion has been wrongfully paid out to individuals not entitled to it.
Under the new legislation called the Public Authorities (Fraud, Error and Recovery) Bill, financial institutions must monitor accounts, flagging capital amounts that exceed the limit set for income-related benefit claims. Currently, claimants must inform the if their savings breach predetermined thresholds.
This Bill, projected to reclaim £1.5 billion over the next five years, is part of broader Government efforts to recoup £8.6 billion during the same period in what Labour describes as “the biggest welfare fraud and error Budget package in recent history.”
For 2024-2025 and extending into 2025-2026, the has reaffirmed that existing caps on claimant capital will stand firm.
Labour is attempting to recoup losses due to fraud and error within the benefits system. (Image: Getty)
According to current regulations, which are set to continue into the subsequent fiscal year, the upper limit £ for those claiming any of these means-tested benefits is £16,000.
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.
The system treats any capital between £6,000 and £16,000 as if it generates a monthly income of £4.35 for each £250, or part thereof, irrespective 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 considered a monthly income of £8.70.
This amount is then subtracted 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 when it is deposited into your account every two weeks.
Claimants are also cautioned that non-essential spending or gifting money to stay within the benefit limits could be seen as a ‘deprivation of capital’. In such cases, the treats your claim like you still possess the money.
Once your capital falls below £16,000, you can reapply for benefits.