Disregarded capital

Your home

The value of the home you live in is ignored for Universal Credit. This can still apply if you’re temporarily away from your home, as long as you intend to return.

If you own more than one property, only the home you live in is ignored.

In some cases, two properties can be treated as one home. This may happen if you regularly live in both properties yourself (not just family members). This is more likely if you have a large family. It may also apply if neither property alone meets your needs, for example if you are a carer living between two homes. If you think this may apply to you get advice.

Property you don't live in

The value of a property that you don’t normally live in may be ignored for 6 months or more if reasonable. This can apply in situations such as you:

• have left your home after a relationship breakdown
• are getting legal advice or taking legal action to live in a property as your home
• are trying to sell or get rid of a property
• are doing essential repair or changes so you can live in the property
• have bought a property and plan to live in it but have not moved in yet
• have taken out a loan or received money to pay for essential repairs or changes to your home

Savings related to property you don't live in

Savings related to the property you own and don’t live in may be ignored for 6 months or more if reasonable:

• have sold your home and will use the money to buy another home
• have received insurance money for damage or loss to your home
• have paid a deposit to a housing association to live in your home
• have received a grant to help you buy a home

When deciding whether the 6-month period should be extended, all circumstances are considered. This can include your personal situation, what you are doing with the property, and the housing market.

The home of a partner, former partner or relative

The value of a property is ignored if it’s the main home of:

• a close relative who is over pension age or has limited capability for work
• your former partner if you are separated and they are a lone parent
• your former partner if you are separated and they are not a lone parent (only ignored for 6 months from the date you stopped living there)

Money you borrow isn’t treated as capital if it will be used for a specific purpose, such as to pay off a debt, buy a car or an item you need.

If some of the borrowed money remains unspent, it can be treated as capital.

Personal possessions, such as jewellery, furniture and cars, are ignored when working out your capital.

Personal possessions are items you own that are not used for a business. Land is not included as a personal possession.

If you buy personal possessions to try to increase your benefit, the money you spent may be treated as notional capital.

Insurance money paid for damage to, or loss of, personal possessions is ignored if it is used to repair or replace those items. This can be ignored for 6 months or longer if this is reasonable.

If you are self-employed, your business assets are ignored while you continue to work in the business.

Business assets can include:

• machinery
• vehicles
• equipment and fittings
• money held in a business bank account

If you cannot work because of illness

If you stop working because you are ill or unable to work, your business assets can continue to be ignored for 6 months or more if reasonable. This can apply if you are expected to return to the business when you recover.

If you stop running the business

If you stop working in the business, the value of your business assets can still be ignored for 6 months or longer if reasonable. You must be taking reasonable steps to sell the assets.

Assets used for business and personal reasons

Some assets are used for both business and personal purposes. An asset can be ignored if it is used mainly for the business.

For example, a car may be ignored if it is used for business more often than for personal use. It is not always easy to tell whether an asset is a business asset or a personal possession. This can happen if you do not keep separate business and personal accounts.

Money in a personal or workplace pension is not counted as savings. If you are under pension age and choose not to take your pension (occupational or personal), it will not affect your Universal Credit.

If you take money out:

• regular payments count as income
• lump sums count as savings

If you are over pension age, you are usually expected to take your pension. If you do not, the DWP may treat you as if you are getting an income from it.

Back payments of the following benefits are ignored for 12 months from when you receive them:

• Universal Credit (UC)
• Any benefit that is ignored as income for UC
• Income Support (IS)
• Income-based jobseeker’s allowance (JSA)
• Income-related employment and support allowance (ESA)
• Housing Benefit (HB)
• Child Tax Credit (CTC)
• Working Tax Credit (WTC)
• Payments for lost or delayed new-style ESA because of a DWP error
• Maternity Allowance if you received the arrears during your current UC award or while you were getting IS, income-based JSA, income-related ESA, HB, Pension Credit, CTC or WTC, they were disregarded in that award and you became entitled to UC within a month of that award ending.

Benefit arrears of £5,000 or more

Some large benefit arrears of £5,000 or more can continue to be ignored after 12 months if they are paid:

• due to an official error or error of law and they’re disregarded from an award of another means-tested benefit and the entitlement to the arrears began before the abolition of legacy benefits was completed.
• for lost or delayed new-style ESA because of a DWP error, received before the abolition of legacy benefits is completed.

In one of the instances above, if the payments were ignored in an earlier award of legacy benefits or Pension Credit, they can continue to be ignored in a UC award that starts within a month of the earlier award ending.

Example

Jane is on Universal Credit. On 1 May 2026, she gets a payment of £8,000 arrears of ESA due to an official error, dating back several years. The arrears would normally be disregarded from income-related ESA. The £8,000 arrears will be disregarded in her UC for as long as her claim continues.

Other benefit payments

The following payments are ignored for 12 months from the date you receive it:

• The initial lump sum of Bereavement Support Payment
• Arrears of monthly Bereavement Support payments to a surviving cohabiting partner whose partner died before 9 February 2023
• Widowed Parent’s Allowance arrears that include a period before 9 February 2023 paid to a surviving cohabiting partner
• Social fund payments
• Best Start Grant (Scotland)
• Funeral Support Payment (Scotland)
• Any lump sum transitional Severe Disability Premium payments in a UC award that started before 27 January 2021 (ignored for 12 months or until your award ends, if this is longer)

The following payments are ignored for 52 weeks:

• Young Carer Grant (Scotland)
• Winter Heating Payment (Scotland)
• Pension Age Winter Heating Payment (Scotland)
• Child Winter Heating Payment (Scotland)

Cost of living payments

Cost of living payments are ignored as capital. They continue to be ignored for as long as they remain unspent.

Money held in a trust or annuity because of a personal injury to you and any income from it are ignored. If a lump sum payment is paid out to you from this trust or annuity, it will be counted as capital.

If trustees give you payments including paying your bills directly or buy items (personal possessions) for you that would normally be ignored, this will not affect your UC.

If your personal injury compensation is not held in a trust, it can be disregarded for 12 months.

Some government compensation payments are ignored completely.

These include payments from specific national schemes such as:

• National Emergencies Trust
• Windrush Compensation Scheme
• Infected blood scheme
• Grenfell Tower court settlements
• miscarriage of justice compensation payments
• other approved government compensation schemes

Money in a funeral plan is not counted as savings if it is only for paying for a funeral.

Social care payments (self-directed support) are not included as capital. Some payments from councils or social services are ignored for 12 months, such as:

• care and support needs
• crisis help or emergency support
• help to set up or keep a home