DWP Introduces Fraud Checks for Benefit Claimants With Certain Bank Account Balances

The Department for Work and Pensions (DWP) has intensified fraud checks on benefit claimants with specific bank account balances.

This move is part of a broader effort to reduce financial losses due to fraud and error in the welfare system, which currently costs taxpayers billions of pounds annually.

Under new regulations, financial institutions must monitor and report accounts that exceed the capital limits for means-tested benefits. Claimants who fail to declare their savings could face investigations or payment suspensions.

Understanding these changes is essential for anyone receiving Universal Credit, Jobseeker’s Allowance (JSA), or other income-related benefits.

Why Is the DWP Introducing Stricter Fraud Checks on Benefit Claimants?

The Department for Work and Pensions (DWP) is intensifying its fraud detection measures to reduce benefit overpayments and ensure that only eligible claimants receive financial assistance.

The government has identified fraud and error in the social security system as a major issue, costing taxpayers an estimated £10 billion per year.

Following the pandemic, this figure increased significantly, with reports indicating that £35 billion was wrongly allocated to individuals who were not entitled to receive benefits.

To address this, the government has introduced the Public Authorities (Fraud, Error and Recovery) Bill, which aims to enhance scrutiny over claimants’ finances.

Under this new policy, financial institutions will be required to monitor bank accounts and flag those exceeding capital limits for means-tested benefits.

The government expects this initiative to help recover £1.5 billion over five years, forming part of Labour’s broader plan to save £8.6 billion, making it one of the most significant anti-fraud efforts in recent history.

What Are the New Capital Limits That Could Trigger a Fraud Investigation?

The DWP requires benefit claimants to declare their savings and other financial assets. There are specific capital limits in place, which determine whether someone qualifies for benefits or how much they receive.

For the 2025-2026 financial year, the capital limits remain unchanged from the previous year.

The key thresholds for means-tested benefits such as Universal Credit, Jobseeker’s Allowance (JSA), Employment and Support Allowance (ESA), Income Support, and Housing Benefit are as follows:

• Below £6,000 – No impact on benefit payments.
• Between £6,000 and £16,000 – Benefits are gradually reduced based on assumed income from savings.
• Above £16,000 – Benefits are stopped entirely.

These capital limits apply to various types of financial accounts, including:

• Bank and building society accounts
• PayPal and other online payment platforms
• Credit union savings
• Betting accounts and digital wallets

Under the new measures, financial institutions are now obligated to flag accounts that exceed the savings thresholds, allowing the DWP to investigate potential fraud cases more efficiently.

What Is Classed as Fraud With DWP?

Fraud within the benefits system occurs when a claimant deliberately provides false information or withholds relevant details to receive payments they are not entitled to.

The Department for Work and Pensions (DWP) investigates cases where claimants may have misrepresented their circumstances, either intentionally or through negligence.

Some of the most common types of benefit fraud include:

• Failing to declare savings or assets – Not informing the DWP about bank accounts, investments, or properties that exceed the capital limits for means-tested benefits.
• Providing false income details – Underreporting wages, self-employment earnings, or additional income sources to receive higher benefit payments.
• Not reporting changes in living arrangements – Failing to disclose a partner moving in, which could affect eligibility for benefits like Universal Credit or Housing Benefit.
• Claiming benefits while living abroad – Some benefits require claimants to reside in the UK, and prolonged absence without notifying the DWP can be classed as fraud.
• Working while claiming benefits – Not declaring part-time or full-time employment while continuing to claim unemployment or disability benefits.
• Using false identities or documents – Applying for benefits under a different name, using forged documents, or misrepresenting personal details.
• Deprivation of capital – Gifting or spending large sums of money to fall under the capital threshold and continue receiving benefits.

How Does the DWP Investigate Benefit Fraud?

The DWP takes a proactive approach to investigating fraud cases. When fraud is suspected, they may carry out the following actions:

• Data matching: Comparing benefit claims with tax, employment, and bank records to identify inconsistencies.
• Financial checks: Reviewing bank transactions and flagged accounts to detect undisclosed savings or unreported income.
• Surveillance: Conducting physical or online monitoring of claimants suspected of fraudulent activity.
• Interviews and evidence requests: Asking claimants to attend an interview under caution (IUC) or provide proof of their financial and living circumstances.

If fraud is confirmed, claimants may face consequences such as repayment of overpaid benefits, financial penalties, benefit suspension, or even criminal prosecution.

To avoid fraud allegations, it is crucial for claimants to report all changes in circumstances and ensure they provide accurate information to the DWP.

How Does the DWP Calculate Savings and Their Impact on Benefit Payments?

For claimants with savings between £6,000 and £16,000, the DWP assumes that they generate a monthly income from their savings, even if no actual interest is earned. This assumed income directly affects benefit payments.

• The DWP calculates an assumed monthly income of £4.35 per £250 (or part of £250) above £6,000.
• For example, if a claimant has £6,300 in savings, £6,000 is ignored, but the remaining £300 is treated as generating an assumed income of £8.70 per month, which is deducted from their Universal Credit payment.
• Claimants receiving income-based JSA, income-related ESA, Income Support, or Housing Benefit face a slightly different calculation, with a £1 per week deduction for every £250 over £6,000.

For claimants who receive fortnightly benefit payments, these deductions are applied accordingly.

• If a claimant has £6,300 in savings, they would see a £2 per week deduction from their benefits.
• Since payments are made fortnightly, this results in a £4 deduction from each payment cycle.

Can Giving Away Money or Spending Savings Affect Benefit Eligibility?

Some claimants may consider reducing their savings by giving away money or making large purchases to remain eligible for benefits. However, the DWP has strict rules against this practice, known as ‘deprivation of capital’.

If a claimant is found to have deliberately reduced their savings in an attempt to qualify for benefits, the DWP may still count that money as part of their total capital.

This means their benefits could be reduced or stopped, even if the money is no longer in their possession.

Examples of actions that could be considered deprivation of capital include:

• Gifting large sums of money to friends or family members.
• Making unnecessary or extravagant purchases, such as buying a new car or expensive jewellery.
• Transferring funds to another person’s account without a valid reason.
• Paying off large debts in a short period without an established repayment plan.

Claimants who genuinely need to spend their savings—for example, on essential home repairs or medical expenses—should keep clear records and receipts to justify their spending if questioned by the DWP.

What Should Claimants Do If Their Savings Exceed the Capital Limits?

If a claimant’s savings exceed £16,000, they are no longer eligible for means-tested benefits and must inform the DWP immediately.

Once their savings drop below the threshold, they may reapply, but they will need to provide full financial disclosure to confirm eligibility.

Steps claimants should take include:

• Reporting any changes in their savings to the DWP as soon as they occur.
• Keeping detailed records of all income, savings, and significant transactions.
• Seeking professional financial advice if they are unsure how the capital limits apply to their situation.

Failing to report changes in financial circumstances can lead to penalties, overpayment demands, or potential legal consequences.

How Will Financial Institutions Monitor Claimants’ Bank Accounts?

Under the Public Authorities (Fraud, Error and Recovery) Bill, financial institutions are now required to monitor accounts and flag those that exceed capital limits for means-tested benefits.

This means that banks, building societies, and online financial platforms will share information with the DWP, making it easier for authorities to detect fraud or undisclosed savings.

The key aspects of this monitoring process include:

• Automated Checks: Banks will use automated systems to identify accounts with balances above the £16,000 threshold.
• Data Sharing: Financial institutions will provide data to the DWP when requested, particularly in cases where claimants are suspected of exceeding capital limits.
• Random Audits: Even if no suspicion arises, claimants could still be subject to random audits and compliance checks.
• Increased Transparency: The government aims to ensure that benefit claimants fully disclose their financial situation, reducing the chances of fraudulent claims.

While these measures are designed to prevent fraud, some critics argue that increased surveillance could lead to unnecessary investigations and delays in benefit payments.

Claimants should be aware of these checks and ensure they provide accurate information to the DWP to avoid potential issues.

How Will These New Fraud Checks Affect Benefit Claimants in the Long Run?

The new fraud detection measures aim to increase accountability in the benefits system and prevent financial abuse. The government expects these changes to:

• Reduce fraudulent claims and misallocated benefits.
• Improve financial integrity within the welfare system.
• Recover billions of pounds in taxpayer money over the next five years.

However, there are concerns that these measures may lead to increased investigations and delays in payments, even for legitimate claimants.

Some advocacy groups worry that vulnerable individuals, such as pensioners or those with disabilities, may struggle to navigate the stricter financial reporting requirements.

There is also the potential for one-off payments—such as inheritances, compensation claims, or insurance payouts—to temporarily push claimants over the savings threshold, resulting in benefit suspensions.

In such cases, affected individuals may need to provide evidence of how they intend to use these funds in order to justify their continued eligibility for benefits.

As the government continues to refine its fraud detection processes, claimants should stay informed about updates to DWP policies and seek assistance if they have concerns about their benefit status.

Conclusion

The DWP’s new fraud detection measures aim to tighten benefit eligibility rules and prevent financial abuse within the welfare system.

Claimants must be aware of how savings impact their payments and avoid any actions that could be considered ‘deprivation of capital.

With stricter financial monitoring, transparency is more important than ever. Those affected should report changes in their financial circumstances promptly to avoid penalties.

As policies continue to evolve, staying informed about DWP regulations will help claimants maintain compliance and secure their rightful benefits without facing unnecessary investigations or disruptions.

FAQs

What happens if I have more than £16,000 in savings while claiming benefits?

Your benefit payments will stop, and you must reapply once your savings fall below the threshold.

Does the DWP monitor my bank account directly?

Financial institutions are now required to report accounts exceeding the capital limits for means-tested benefits.

Can I appeal if my benefits are stopped due to savings?

Yes, claimants can challenge DWP decisions if they believe an error has been made.

How does the DWP define ‘deprivation of capital’?

If you deliberately spend, give away, or transfer money to stay below the £16,000 limit, the DWP may still count those funds as if you have them.

Are joint savings accounts counted towards benefit eligibility?

Yes, joint accounts are considered, and half of the balance is attributed to each account holder unless evidence suggests otherwise.

What if I receive a lump sum, such as inheritance or compensation?

Lump sums are included in your capital and could impact benefit eligibility. Proper financial planning may be necessary.

Will these rules change in the future?

The government has indicated ongoing efforts to strengthen fraud detection, so further updates may be introduced.