top of page

Disregarded capital

Unless capital is specifically disregarded by law, it will be taken into account by Universal Credit. There are various disregards on capital so if capital is a concern on your claim, it is advisable to get independent advice.


The following is some common types of capital which can be disregarded in full:

  • the property occupied by the claimant as his or her main home

  • personal injury compensation payments placed in trust funds

  • certain other compensation payments

  • personal pension schemes and retirement annuity contracts

  • life insurance policies

  • funeral plan contract

  • business assets

  • capital belonging to a relevant child dependant within the assessment unit

  • personal possessions

 This list in not exhaustive.


Other Capital Disregards

Included below are other common situations in which capital can be disregarded. If any of these should apply to you then you should explain this to Universal Credit when reporting the capital and provide any further relevant evidence.

Personal Injury Payment (including Criminal Injuries Compensation Fund)
A Payment received as consequence of a personal injury can be disregarded for 12 months from the day it was paid if any of the following apply:

  • it is not held in trust (see below for held in trust)

  • it has not been used to purchase an annuity

  • it has not been otherwise disposed of

The amount is disregarded as capital indefinitely if the sum is either:

  • held in trust

  • administered by the court

Payments made from the Criminal Injuries Compensation Fund will also be disregarded.

Arrears of benefit or compensation for late payment

Any payment received within the previous 12 months by way of arrears of or compensation for late payment of certain benefits is disregarded. Those benefits are:

  • Universal Credit

  • an abolished benefit, namely:

  • income-based Jobseeker Allowance

  • income-related Employment and Support Allowance

  • Income Support

  • Housing Benefit

  • Council Tax Benefit

  • Child Tax Credit

  • Working Tax Credit

  • a Social Security benefit which is not treated as unearned income for Universal Credit including Personal Independence Payment and Disability Living Allowance.


Arrears of benefit and tax credits

Arrears of benefit, Tax Credits or compensation for non-payment of £5,000 or more paid due to official error or error of law can be disregarded for the length of the Universal Credit award. The disregard applies to claimants who receive a payment of arrears or compensation:

  • whilst in receipt of Universal Credit or

  • whilst in receipt of a Legacy benefit and migrate to Universal Credit with a gap of less than a month between awards of benefit

This longer disregard will only be available on a transitional basis and will only apply to payments of arrears or compensation which relate to a period before Legacy benefits are abolished.

Once migration to Universal Credit is complete and Legacy benefits are abolished, a standard 12 month disregard will apply to all new benefit arrears and compensation payments whether or not they are due to official error or errors of law.

Amount to be used to purchase premises

If a person has received an amount within the past 6 months which is to be used to purchase premises that the person intends to occupy as their home, that amount can be disregarded from the calculation of the claimants’ capital where it:

  • comes from the proceeds of the sale of premises formerly occupied as the person’s home

  • has been deposited with a housing association as a condition of the person occupying premises as their home, or

  • is a grant made to the person for the sole purpose of purchasing a home it is reasonable to disregard the amount for a longer period if, for example:

    • people have tried but not found premises which are suitable for their or a member of their family's needs (in particular, if one of them is disabled and needs a certain type of accommodation)

    • the person has found premises and the

      • sale has not been completed, or

      • the seller later decides not to sell


If you own a property and live in it as your home, the capital will be disregarded. There are certain circumstances that a second property can be disregarded as capital (see below)

Premises lived in by a close relative

Premises that are occupied as a home by a close relative are disregarded indefinitely if it is their only home and the close relative has:

  • Limited Capability for Work, or

  • has reached the qualifying age for State Pension Credit

A close relative means:

  • parent

  • parent-in-law

  • son

  • son-in-law

  • daughter

  • daughter-in-law

  • step-parent

  • step-son

  • step-daughter

  • brother

  • sister

or where any of the above is a member of a couple, the other member of the couple.

Amount for repairs or alterations

If in the past 6 months, a person has received a sum of money by way of a loan, grant or otherwise which is to be used for making essential repairs or alterations to premises occupied or intended to be occupied as the person’s home, that amount can be disregarded from the calculation of the claimant’s capital but only where it is used for that purpose. It is reasonable to disregard the grant, loan or otherwise for a longer period if the repairs and alterations will take more than 6 months

Premises occupied by former partner

Premises that are occupied by a former partner as their home are disregarded indefinitely if it is their only home and:

  • the person and their former partner are not estranged but are living apart by force of circumstances, for example where the person is in long-term care

  • the person’s former partner is a lone parent and occupies the premises as their home


Premises no longer occupied

If a person no longer occupies premises as their home following separation from their former partner, those premises can be disregarded from the calculation of capital where they have stopped living in those premises within the past 6 months.

Premises a person is trying to dispose of

If a person is trying to dispose of premises, they can be disregarded from the calculation of capital where they are taking reasonable steps to dispose of the premises and those steps started within the last 6 months.

It may be reasonable to disregard the premises for a longer period where, for example - the person has done all they can to sell the premises and the asking price is no more than the premises are worth.

This list is not exhaustive – see

bottom of page