Universal Credit claimants have been warned about the so called "£4.35 rule" by which the Department for Work and Pensions (DWP) deducts multiples of £4.35 from claimants' payments.
If those claiming Universal Credit, or some other means tested benefits, manage to save cash, savings or investments between £6,000 and £16,000, the DWP will decrease their Universal Credit (UC) payments by £4.35 for each £250.
According to the DWP, payments might be reduced if any of the following apply:
- you are paying back an advance on a Universal Credit payment
- you would get above the amount limited by the benefit cap
- you’ve been overpaid benefits in the past
- you owe money for Council Tax, court fines, electricity, gas, water or Child Maintenance
- you pay your gas or electricity bill directly from your Universal Credit payment
- you have a paid job
- you have other income – for example, money from pensions or certain other benefits
- you have more than £6,000 in money, savings and investments
If you've moved in with a partner or your living arrangements have changed, remember to update your circumstances using your Universal Credit account
Not reporting changes could lead to overpayments that you may have to repay#TellDWP about any changes https://t.co/juQY3HI1Hk pic.twitter.com/lbcsClR01W— Department for Work and Pensions (@DWPgovuk) October 21, 2025
If you have over £6,000 in money, savings and investments, your payment will be reduced by £4.35 for every £250 you have between £6,000 and £16,000. Another £4.35 is taken off for any remaining amount that is not a complete £250.
Find out more about money taken off your Universal Credit payment .
What’s not counted as money, savings and investments
Your personal possessions are not taken into account.
Some types of money, savings, investments or other assets might not affect your claim for Universal Credit. You still need to tell the DWP about these, including:
- Bereavement Support Payments (previously Widowed Parent’s Allowance)
- funds from selling your home
- money for tax payments if you’re self-employed
- personal injury and illness compensation
- special compensation schemes for traumatic events
- welfare support payments
Read more:
- Scrapping two-child benefit cap cost-effective way to cut poverty, say experts
- Good news for parents: Child Benefit could rise after new figures out today
- New State Pension to increase by £574 in autumn budget, under Triple Lock pledge
You do not need to tell them about:
- life insurance policies that have not been paid out
- funeral plan contracts
- savings or investments belonging to your children in your children’s name. Read more about Universal Credit and children’s savings
- business accounts and assets for businesses that are still operating or have closed in the last 6 months
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