Universal Credit payments WON’T be cut by ISA savings under new housing boost plans

People with Lifetime or Help to Buy ISAs can still apply for Universal Credit with no penalties under government housebuying help unveiled by Boris Johnson today

Housing: PM announces changes to Universal Credit rules

Savers will not have their Universal Credit payments reduced under plans announced by Prime Minister Boris Johnson today.

If carried out, the plans mean anyone saving to buy a home or for retirement with a Help to Buy or Lifetime ISA will keep access to Universal Credit.

But the plans mean anyone saving into a standard cash or investment ISA will still find this affects their benefits – depending on how much they have.

Currently, if you or your partner have £6,000 or less in savings you can apply for Universal Credit with no penalties.

If you or your other half have more than £16,000 you are not entitled to Universal Credit at all.

The prime minister unveiled plans to help savers buy homes and claim benefits



If you have between £6,000 and £16,000, the first £6,000 is ignored but the remaining £10,000 is treated like monthly income – reducing your Universal Credit payments.

Having the £16,000 rule means it is hard for struggling households on Universal Credit to save for a home, because putting cash aside means they lose benefits.

But Boris Johnson today said that savings in certain ISAs will not affect Universal Credit payouts.

“We’re going to explore discounting Lifetime and Help to Buy ISA savings from Universal Credit eligibility rule,” the PM said.

“It doesn’t mean letting anyone who claims benefits whilst sitting on a vast pension pot that they could be drawing on – that’s not the people we’re targeting.

“But making it easier for hard-working people to put away a little every month until they have enough for a deposit on their first home.”

ISAs, or individual savings accounts, are a type of savings deal, and come in various types.

But people with Help to Buy and Lifetime ISAs will be able to put cash away without affecting their Universal Credit payments.

Johnson said the government plans to “make it easier for hardworking people to put away a little every month until they have enough for a deposit on their first home”.

What are Lifetime and Help to Buy ISAs?

The Lifetime ISA launched in 2017. Anyone aged 18 to 39 can open one, and it is meant to either let you buy your first home or save for retirement.

The Lifetime ISA lets you save up to £4,000 a year, and the government will top that up with a 25% bonus worth up to £1,000 a year.

If you don’t buy a house with the money, you have to wait until you’re 60 to access the cash, or face financial penalties.

At the age of 50 you will not be able to put any extra cash into the Lifetime ISA, meaning no 25% government bonus either.

However, it will continue to earn interest or investment returns depending on if you have a cash or investment Lifetime ISA.

Help to Buy ISAs are not being offered to new customers, as the Lifetime ISA is meant to take over.

But many Brits still have them, and as the name suggests they let you save to buy your first home.

People with Help to Buy ISAs can keep saving into them until November 2029, and then have a 12 months to buy a house – with a top-up government bonus of 25% on up to £12,000 in savings.

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