Does fostering affect Universal Credit savings limits?

Universal Credit assesses your household’s capital separately from your fostering income. The key issue is not simply how much fostering money you receive, but whether funds remain in accounts or assets that belong to you or your partner when your capital is assessed.

How the capital rules work: Universal Credit has a lower capital threshold and an upper capital threshold. Below the lower threshold, capital usually does not reduce the award. Between the two thresholds, the DWP may treat your capital as producing assumed income, which can reduce the amount of Universal Credit you receive. If your capital reaches the upper threshold, you will normally be unable to receive Universal Credit, subject to the detailed rules and your circumstances.

Capital can include:

• money in current, savings and deposit accounts;
• cash ISAs and other savings products;
• shares, investments and some trusts;
• premium bonds and similar assets;
• money held in joint accounts; and
• property or land other than the home you normally live in.

For a couple claiming Universal Credit jointly, the DWP generally considers both partners’ capital together. This means that savings built up by either partner can affect the household’s claim. The treatment of a particular asset can depend on who owns it, how it is held and whether it is genuinely available for your household to use.

Fostering payments and savings are different issues. Rules may allow fostering payments to be treated differently from ordinary earnings when Universal Credit income is calculated. That does not automatically protect money that remains in your account. If you retain part of an allowance or other fostering payment and it accumulates, the balance may be treated as capital in a later assessment.

This does not mean that every payment received immediately becomes assessable savings. Money used for ordinary household costs, fostering-related expenses or other legitimate spending is not normally capital simply because it originally came from fostering. The relevant question is the value of the assets you still own at the point used for the Universal Credit assessment.

Keep fostering-related money clearly recorded. Separate records can help you explain:

• which payments were received from the fostering service;
• what was spent on the household or on caring for a foster child;
• what remains in an account; and
• whether any money is being held for someone else rather than for your own use.

Do not assume that a separate account is automatically ignored. If the account is in your name and the money is available to you, it may still be considered your capital. Equally, money belonging to a foster child should not automatically be treated as the foster carer’s savings, but you may need evidence showing that it is held on the child’s behalf and cannot be used for your own household needs.

Some assets have special treatment. The home you normally occupy is generally not counted as capital, while a second property may be relevant. Pension funds, business assets and money that is temporarily unavailable can have specific rules. A debt owed to you may also be treated differently from money already held in an account. These areas can be fact-sensitive, so provide full information rather than deciding yourself that an asset is excluded.

The DWP can investigate whether someone has deliberately reduced their capital to qualify for Universal Credit. Giving money away, transferring assets to another person or buying something mainly to avoid the capital rules may result in the DWP treating you as though you still had the money. Spending money for a genuine need is not automatically deprivation of capital, but keep reasonable evidence of significant transactions.

You should report changes to your savings, investments, property or other capital through your Universal Credit account, and provide statements or other documents if requested. Report the balance accurately rather than reporting only the money described as a fostering allowance. If you are unsure how an asset or account should be treated, explain the circumstances in your journal and obtain independent benefits advice before making a major financial change.

When assessing the effect of fostering on your claim, consider both calculations separately: first, how the fostering payment is treated as income, and second, whether money you have retained has increased your household’s capital. A fostering service can explain the payments you receive and help you keep appropriate records, but the DWP makes the Universal Credit decision.