I am ask for a friend, who is expecting hard times soon. My friend is not computer literate, and I know nothing of the UK benefits system.

The best information I can find is How do savings and lump sum pay-outs affect benefits?, which says

Some benefits are affected by the amount of money you have in savings, such as cash in a savings account, or investments in shares. These benefits are called means-tested benefits.

It has a link What counts as savings?, which says

Savings are counted as any money you can get hold of relatively easily, or financial products that can be sold on. These include:

  • cash and money in bank or building society accounts, including current accounts that don’t pay interest
  • National Savings and Investments savings account and Premium Bonds
  • stocks and shares
  • property, which is not your main home.

And, that is where I am unsure. It does not explicitly mention "SIPP" or "ISA", and I don't know if one can get money from them "relatively easily" (although they can hold stocks & shares).

Can anyone point me at a (preferably UK government) site that explicitly says whether SIPP / ISA will be considered when someone claims UK benefits (especially housing, job seeker, low income)?

  • I don't want to risk my few points offering a bounty, in case no one answers. BUT, if someone does answer, then I will award a bounty.
    – Sam Fox
    Nov 12, 2020 at 15:09

1 Answer 1


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


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)

  • 1
    Great answer, thanks, and vote + accept. Just to be perfectly clear when you say " A SIPP is not inherently deprivation, if you paid into it years ago that's completely fine, it all comes down to motivations", that means that if someone works & pay into a SIPP, year after year, then falls on hard times, they can claim benefits, irrespective of the SIPP. Is that correct? But, the same is not true of an ISA held for meany years? That must be withdrawn and spent before being eligible for benefits?
    – Sam Fox
    Mar 17, 2021 at 8:34
  • 1
    Yes essentially if for example you were in the situation where you perhaps were a high earner and later a low earner, then had you earlier saved £20k each year in a SIPP or other pension, then that money would be locked up there, but if you saved it in an ISA then you'd both have access to it, and it would count towards any capital limits for benefits.
    – thelawnet
    Mar 17, 2021 at 18:00
  • That has made it crystal clear. Thanks a 1,000,000 for your help
    – Sam Fox
    Mar 18, 2021 at 8:35

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