Government launches benefit fraud crackdown: what the new bank checks might mean for you

New bank checks are being introduced to help the government identify benefit fraud and incorrect payments.

But, if you’re following the rules and reporting changes to your circumstances, there’s no need to panic.

Here’s what you need to know, including how much you can have in savings when claiming benefits.

The Department for Work and Pensions (DWP) has issued its first Eligibility Verification Notice, requiring banks to share information to help check whether people are receiving the benefits they’re entitled to.

The new Eligibility Verification Measure (EVM) is designed to help identify potential problems, such as people claiming benefits despite having more savings than the rules allow, or spending longer abroad than their benefit permits.

The measures form part of the government’s wider crackdown on benefit fraud and error.

What does this mean for you?

The important thing to remember is that these checks are intended to help identify cases where benefit rules may not be being followed.

They are not an automatic accusation of fraud, and a flag or query doesn’t mean you’ve done anything wrong.

There may be a perfectly reasonable explanation for something that raises a question.

The aim is to help ensure you receive the support you’re entitled to, while reducing incorrect payments, overpayments and the risk of you being left with money to repay.

What will the DWP be looking for?

The government has given two examples of the types of issues the checks could help identify:

• Savings above £16,000: if you claim universal credit and have more than £16,000 in savings, you will usually no longer qualify. There are exceptions to some capital rules, so your individual circumstances matter.
• Spending too long abroad: if you claim pension credit and appear to have been outside the country for longer than the rules allow, the DWP may want to check your circumstances.

These are examples rather than a complete list. The government hasn’t published the full details of the checks banks will be asked to carry out.

And remember, if information about your account raises a question, it doesn’t automatically mean you’ve committed fraud. You may simply need to explain your circumstances or provide further information.

How much can you have in savings when claiming benefits?

If you receive benefits, it’s worth knowing how the savings rules apply to you.

The limits vary depending on which benefit you claim, and some benefits have no general savings limit at all.

Here’s a quick guide to some of the main benefits.

Universal credit

• Under £6,000: your savings and other countable capital won’t normally reduce your universal credit.
• Between £6,000 and £16,000: your universal credit will usually be reduced to reflect your capital.
• More than £16,000: you will normally be ineligible for means-tested benefits.

The DWP looks at your capital, which can include savings, investments and certain other assets, rather than just the balance in one bank account. Some types of capital are disregarded under the rules.

Pension credit

There is no general upper savings limit for pension credit. But, savings and other capital can affect how much you receive.

If you have £10,000 or less in capital, it generally doesn’t affect your pension credit calculation. For every £500 (or part of £500) above £10,000, £1 a week is normally counted as assumed income.

Housing benefit

The rules depend on your circumstances and whether you’re of working age or have reached state pension age.

For many working-age claimants, the capital limits are £6,000 and £16,000. Different rules can apply to people who have reached state pension age, including circumstances in which the lower limit is £10,000 and the upper limit is £16,000.

Certain groups and types of housing benefit claims are subject to different rules.

Other benefits

Some benefits, including personal independence payment (PIP) and attendance allowance, aren’t means-tested. This means your savings alone won’t normally affect your entitlement.

What should you do now?

There’s no need to panic about the introduction of these checks. If you’re entitled to your benefits and are meeting the reporting requirements, you should continue to claim as normal.

But it’s important to keep your details up to date and tell the DWP about changes you’re required to report.

Depending on the benefits you receive, this could include:

• Your savings and investments: tell the DWP about changes to your money or capital when the rules require you to do so.
• Your income: report changes to your earnings or other income where required.
• Your home: let the DWP know if you move house.
• Your household: report relevant changes, such as a partner moving in or out.
• Money you receive: gifts, refunds, compensation and other payments can sometimes affect your entitlement, depending on the circumstances and benefit rules.
• Travel abroad: check whether you need to notify the DWP before travelling, as the rules on temporary absences vary between benefits.

If you’re unsure, check the official guidance for your benefit or contact the DWP before assuming a change will not affect your payments.

What if you’ve forgotten to report a change?

If you forget to report something you were required to tell the DWP about, you could receive more money than you’re entitled to.

The DWP may ask you to repay any resulting overpayment. Depending on the circumstances, further action, including a penalty or prosecution, may also be possible.

But don't panic if you think you may have made a mistake.

Check what you need to report and contact the DWP to explain your circumstances as soon as possible. Taking steps to put things right can help you understand what happens next.

The new checks are intended to help the government identify potential benefit fraud and incorrect payments. They don’t mean everyone claiming benefits is suspected of wrongdoing.