See UC Regs 2013 s46 https://www.legislation.gov.uk/uksi/2013/376/part/6/made/data.xht?view=snippet&wrap=true
and Schedule 10
https://www.legislation.gov.uk/ukdsi/2013/9780111531938/schedule/10
Everything is capital unless explicitly excluded, one such exclusion being:
"10.—(1) The value of any right to receive a pension under an occupational or personal pension scheme or any other pension scheme registered under section 153 of the Finance Act 2004(1)."
So the SIPP is not assessed, the ISA is.
In general if you dispose of capital, e.g., if you had £30k in an ISA and deposited into a pension a month before claiming benefits, then the assessors would be likely to deem that deliberate deprivation of capital, and you would be deemed to still have it, even though you no longer have access to it. A SIPP is not inherently deprivation, if you paid into it years ago that's completely fine, it all comes down to motivations. Note that if you have low income you CAN pay into a pension from said income, and this money will be exempt from both income tax (though not NI) and Universal Credit claw-back, though obviously the amount of money you have to live in will be less.
There are roughly three limits:
- Universal Credit has an upper limit of £16k above which you get zero (capital millionaires (or otherwise with lots of capital) with low income are eligible to change Child Tax/Working Tax Credit, and those still in receipt of that should stay on it if possible, if they have large capital)
- Universal Credit has a lower limit of £6k; you are deemed to earn £4.35 monthly from it per £250 or part of up over £6k to £16k; hence, the maximum deemed income is £174 per month. Income does not affect your base award, but it means you get money taken away, which amounts to the same thing. The withdrawal rate is 41% (of net income, not gross), so £16k would cost you £71.34 monthly, £12k savings would cost you £35.17 etc.
- Mostly Council Tax support is administered separately from UC, and the rules are set by the local council for capital. Some will use the same rules, but others have a hard cap of £10k, so you may want to have less than £10k.
Note that these are rules generally applicable to working age people and particularly with children, who can obtain very large awards due to help with rent, etc. Single people will have generally lower entitlement. Pension credit has different capital rules, with no capital limit per se, but the capital held will be treated as income for each £500 over £10k, meaning no entitlement for anyone with lots of savings.
An ISA will always be capital, but not all benefits are assessed for capital - child benefit is withdrawn based on income, for example. However these will apply for rent (which for new claims would be via UC; there is no help for mortgage payments possible)
