Universal Credit cash rule change means benefit payments won't be stopped

Victims of miscarriages of justice will no longer have their compensation taken into account when claiming benefits such as Universal Credit.

Under the current rules, benefit claimants who have received compensation after a criminal conviction may find themselves ineligible for some means-tested benefits, which are issued to people depending on their income and how much money they have in savings.

For example, you are not eligible for Universal Credit if you have more than £16,000 in savings or investments. But moving forward, a rule that meant compensation payments were included as part of your capital has now been scrapped.

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This applies to six means-tested benefits including: Universal Credit, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Housing Benefit and Pension Credit.

It comes after the Ministry of Justice (MOJ) increased the maximum amount miscarriage of justice victims can receive through the Miscarriage of Justice Compensation Scheme from £1million to £1.3million.

Sir Stephen Timms MP, minister for social security and disability, said: "Rebuilding trust in our systems begins by restoring trust with those the system has failed.

"We can’t return the years lost by miscarriage of justice victims — but we can, and must, ensure they have every opportunity to restart their lives so they can make the most of the years ahead."

Alex Davies-Jones, minister for victims and violence against women and girls, added: "Miscarriages of justice steal irreplaceable time and devastate lives.

"Better benefit support combined with the uplift of the compensation cap will make a real difference, providing not just financial redress but rightfully deserved recognition to individuals affected."

If you claim Universal Credit and you have over £6,000 in money, savings and investments, your benefit is normally be reduced by £4.35 for every £250 you have between £6,000 and £16,000.

If the amount you have saved doesn't add up exactly to £250, but is over the threshold, another £4.35 is deducted from your Universal Credit.

For example, if you have £6,300 in savings, the first £6,000 would not be subject to any deductions, but the other £300 would see your payments deducted by £8.70.

This would be £4.35 deduced for the first £250, then another £4.35 for the remaining £50 that makes up the £300. These figures apply if you're a single claimant, or claiming as part of a couple.

You are normally not eligible for Universal Credit if you have more than £16,000 in savings. If you claim Tax Credits and you've been asked to move to Universal Credit, you may still be able to get Universal Credit for up to a year if you have more than £16,000.