This page is the dedicated deep-dive on how savings, ISAs, Premium Bonds and other capital interact with Pension Credit for the 2026/27 tax year. For the general rules — rates, who qualifies, how to apply, the gateway benefits — see the main Pension Credit hub page.
The £10,000 capital disregard — the single most important number
Every penny of the first £10,000 of your savings, ISAs and investments is ignored when DWP works out your Pension Credit entitlement. Not "treated as low-yield" — ignored entirely. Two people in identical circumstances, one with no savings and one with £9,800 in a Cash ISA, get exactly the same calculation. This is the most powerful — and most overlooked — feature of the Pension Credit means test.
Above £10,000, every £500 (or part of £500) is treated as generating £1 per week of "tariff income". This number has nothing to do with the actual interest your savings pay. If you have £15,000 sitting in a 4% fixed-rate bond paying you about £12/week of real interest, DWP still uses the deemed figure of £10/week — not £12. If you have £15,000 earning 0.05% in a high-street current account, DWP still uses £10/week — not the near-zero actual return. The deemed-income calculation deliberately ignores how the money is invested.
Critically — and this is where many DIY estimates go wrong — the £10,000 disregard is per household, not per person. A couple with £18,000 in joint accounts is treated as having £8,000 above the threshold (£16/week of tariff income), not £0. You do not get £10,000 each. The Pension Credit means test treats a couple as a single assessment unit; income and capital are pooled.
DWP calls the £1-per-£500 figure "deemed weekly income from capital". It is sometimes also called "tariff income". The two terms mean the same thing. It is a notional figure used only for the means test — you never actually receive it, and it has no tax consequences.
Do your savings disqualify you?
- 1 Total capital under £10,000→ Savings are irrelevant — entitlement is based on income alone. The first £10,000 is fully disregarded.
- 2 Capital £10k–£25k, modest State Pension only→ Likely still qualify — try the calculator below. £25k of capital adds only £30/week of tariff income.
- 3 Capital over £25k with no other income→ Probably qualify — every £500 above £10k adds just £1/week of deemed income. Even £50k of savings only generates £80/week.
- 4 Mixed-age couple (one partner under State Pension age)→ You can't claim Pension Credit since 15 May 2019 — apply for Universal Credit instead, which has a hard £16,000 capital cap and a £6,000 disregard.
How savings affect your Pension Credit — quick calculator
Enter your status, weekly income (State Pension plus any private pensions, earnings or other income) and total capital. The calculator applies the 2026/27 Standard Minimum Guarantee (£238.00 single, £363.25 couple) and the £10,000 disregard. This is a rough estimate; it does not include additional amounts for severe disability, carers or housing costs, which can lift the applicable minimum higher and increase any award.
Roughly £12,376.00 a year of Pension Credit. You'd also unlock gateway benefits worth ~£2,000–£5,000/year — Council Tax Reduction, free NHS dental and eye care, Warm Home Discount, the free TV licence (if anyone in the household is 75+), Cold Weather Payments and more.
Estimate only. Confirm with the official GOV.UK Pension Credit calculator and apply at gov.uk/pension-credit.
Tariff income at every level of savings
The point most other guides bury: even at £50,000 of capital, the tariff income is only £80/week. Many pensioners still qualify at that level if their other income is modest. The table below shows the deemed weekly income from capital at common savings levels.
| Total savings | Capital above £10,000 | Weekly tariff income | Annual tariff income |
|---|---|---|---|
| £8,000 | £0 | £0/wk | £0/yr |
| £10,000 | £0 | £0/wk | £0/yr |
| £12,000 | £2,000 | £4/wk | £208/yr |
| £15,000 | £5,000 | £10/wk | £520/yr |
| £20,000 | £10,000 | £20/wk | £1,040/yr |
| £25,000 | £15,000 | £30/wk | £1,560/yr |
| £30,000 | £20,000 | £40/wk | £2,080/yr |
| £40,000 | £30,000 | £60/wk | £3,120/yr |
| £50,000 | £40,000 | £80/wk | £4,160/yr |
| £100,000 | £90,000 | £180/wk | £9,360/yr |
Each £500 or part of £500 above the £10,000 disregard adds £1/week of tariff income. The calculation rounds up: £10,001 of capital generates £1/week of tariff income, not zero. £10,500 also generates £1/week. £10,501 generates £2/week. The next step up happens at every £500 boundary.
What counts as capital — and what doesn't
The DWP's Detailed guide to Pension Credit for advisers (April 2026 edition) and Age UK's Factsheet 48 set out the full list. The summary that matters for almost everyone:
- Current and savings accounts (in your name or jointly held)
- Cash ISAs, Stocks & Shares ISAs and Lifetime ISAs
- Premium Bonds (at face value)
- NS&I products — Income Bonds, Savings Certificates, Guaranteed Growth Bonds
- Unit trusts, OEICs, investment trusts and direct share holdings
- Second properties, holiday homes and buy-to-lets (market value, less mortgage and 10% sale costs)
- Money held abroad (converted to sterling)
- Trust funds where you are the beneficiary (some types)
- A drawn lump sum from a pension that hasn't been spent
- Business assets — sometimes, depending on whether you actively trade
- The home you live in (including garage, outbuildings, garden)
- Personal possessions — car, furniture, jewellery, household effects
- The surrender value of any life-insurance policy
- Pre-paid funeral plans (even if refundable)
- An undrawn defined-contribution pension pot
- The capital value of any annuity in payment
- Arrears of certain benefits (for up to 52 weeks, longer in some cases)
- Compensation payments held in some trusts
- Proceeds of a recent house sale, if intended to buy a new home (for 26 weeks)
- Money set aside for essential home repairs (for 26 weeks)
The undrawn DC pension pot disregard is the single biggest planning lever. A 67-year-old with £40,000 sitting in a SIPP they haven't started to draw has zero counted capital from that pot. Crystallise it, take the 25% tax-free lump sum and leave it in a Cash ISA, and that £10,000 moves into the capital count and starts to attract tariff income above the £10,000 disregard. Order of operations matters: drawing pension lump sums before claiming Pension Credit can shrink an award that would otherwise be intact.
Couples and jointly-held capital
For Pension Credit, a couple is assessed jointly. A "couple" means married, in a civil partnership, or living together as if you were. This produces three rules that catch people out:
- One £10,000 disregard per household. Not £10,000 each. £18,000 of joint savings already produces £16/week of tariff income.
- Jointly-held capital is pooled. A bank account in joint names is treated as belonging fully to the couple — there is no 50/50 split for the Pension Credit assessment (that split rule is more relevant to care-home means testing). The combined balance counts in full.
- Capital held by one partner alone still counts. A Cash ISA in your husband's name only is still part of the household capital. The DWP doesn't recognise individual ownership in the way other tax rules do.
Where one of you is under State Pension age, you are a "mixed-age couple" and (since 15 May 2019) cannot make a new Pension Credit claim at all. You must instead claim Universal Credit — which uses a £6,000 capital disregard, a much steeper tariff (£4.35/month per £250) and a hard £16,000 upper limit beyond which no UC is payable. See Independent Age's mixed-age couples briefing for the policy context.
Three worked scenarios
Eileen, 73, lives alone in the bungalow she has owned for 30 years. She has a full new State Pension of £200/week (35 qualifying years, no private pension). After her husband died she inherited £20,000 and put it into a Cash ISA paying 4%.
- Capital above disregard: £20,000 − £10,000 = £10,000
- Tariff income: £10,000 ÷ £500 = £20/week
- Total assessed income: £200 + £20 = £220/week
- Standard Minimum Guarantee (single): £238/week
- Pension Credit top-up: £238 − £220 = £18/week (~£936/year)
- Plus gateway: full Council Tax Reduction (~£1,800/year on a Band C property), free TV licence (£180/year), Warm Home Discount (£150) and free NHS dental and eye care. Total annual gain comfortably over £3,000.
Eileen's £20,000 ISA does not knock her out. The deemed-income hit is small, and the gateway benefits dwarf the Pension Credit itself.
Bill and Rita, both 70. Bill receives £200/week State Pension; Rita receives £150/week. Their combined State Pension income is £350/week. They have £35,000 spread across a joint current account, a Cash ISA in Bill's name and Premium Bonds in Rita's name.
- Household capital: £35,000 — pooled, single £10,000 disregard applies (not £10,000 each).
- Above disregard: £25,000
- Tariff income: £25,000 ÷ £500 = £50/week
- Total assessed income: £350 + £50 = £400/week
- Standard Minimum Guarantee (couple): £363.25/week
- Guarantee Credit: £400 is above £363.25, so the headline answer is £0.
But the story isn't over. If either reached State Pension age before 6 April 2016, Savings Credit may give them up to £20.10/week. And if either receives Attendance Allowance — common at 70+ — the severe disability addition of £86.05/week would lift their applicable minimum to £449.30, restoring around £49/week of Guarantee Credit. Don't stop at the headline figure.
Doreen, 75, applies for Pension Credit in May 2026. On the form she answers honestly that she gave £15,000 to her grandson in 2024 to help with a house deposit. The DWP decision-maker opens a deprivation-of-capital enquiry and asks two questions:
- "Why did you make the gift?"
- "At the time you made the gift, did you know — or could you reasonably have known — about Pension Credit and its capital rules?"
If the decision-maker concludes that obtaining or increasing benefit was a "significant operative purpose" of the gift, Doreen will be treated as still owning the £15,000. The "notional capital" gives her £10/week of deemed income on top of her actual position. The deprivation rule has no fixed time limit — gifts from years before the claim can still be reviewed if there is reason to suspect they were made with benefits in mind.
Doreen's defence: the gift was for her grandson's house deposit, planned long before she expected to apply for Pension Credit, and she has documented evidence of the timing (solicitor's correspondence dated 2024). That's the kind of contemporaneous record that wins these arguments.
Deprivation of capital — the trap most pages miss
Deliberately reducing your capital to get more benefit is deprivation of capital. Under the DWP decision-makers' guide (Volume 10, Chapter 84 for Pension Credit), if a decision-maker concludes that getting or increasing benefit was a "significant operative purpose" of how you spent or transferred your money, the DWP treats you as if you still had it. There is no fixed time limit.
Counts as reasonable expenditure (usually fine):
- Replacing a worn-out boiler, roof or kitchen on the home you live in
- Paying off the mortgage on your main home
- Normal day-to-day living costs at a level proportionate to your means
- One sensible holiday a year
- Helping a family member through a one-off genuine crisis
Likely to be challenged as deprivation:
- Large cash gifts to children or grandchildren shortly before a benefits claim
- Spending tens of thousands on luxury items or holidays inconsistent with your spending history
- Buying assets that are then "disregarded" — for example luxury goods or expensive cars
- Moving capital into a trust where you remain a beneficiary
- Paying off debts that were not pressing or were owed to family
The decision-maker is required to look at all the circumstances — not just what you did, but when and why. Get advice from Age UK, Independent Age or Citizens Advice before making a large gift if you might claim Pension Credit later.
Notional capital — when DWP treats you as having capital you don't
Notional capital is the DWP rule that says: if you would have had capital but for what you did, you are treated as still owning it. The classic example is the family gift in the Doreen scenario above. Other triggers include placing money into a trust where you remain a beneficiary, transferring property to a spouse or relative below market value, or failing to claim a capital sum you are entitled to (an inheritance, a pension lump sum) without good reason. The DWP can also apply notional capital where you have been negligent in losing money — but reasonable investment losses, even substantial ones, are not deprivation.
Notional capital is run down by what's called the "diminishing notional capital rule": each week, the amount the DWP treats you as having is reduced by the amount of Pension Credit you would otherwise have received. So even where a deprivation finding is made, the impact tapers over time.
Care-home capital rules — a common confusion
The care-home means test uses entirely different capital thresholds from Pension Credit. For people receiving local-authority care in England in 2026/27:
- Lower capital limit: £14,250 — below this, only your income is considered.
- Upper capital limit: £23,250 — above this, you are a self-funder and the council won't contribute.
- Between £14,250 and £23,250: tariff income of £1/week per £250 (note: £250, not £500) of capital above the lower limit.
These are Department of Health and Social Care figures for 2026/27 and are unchanged from 2025/26. The figures for Scotland, Wales and Northern Ireland are different. Many guides — and many search results — conflate the £10,000 / no-upper-limit Pension Credit rules with the £14,250 / £23,250 care-fees rules. They are completely separate systems administered by different bodies (DWP for Pension Credit, your local authority for care charges). See our care home fees guide for the full means-test mechanics.
Reporting capital changes to DWP
Pension Credit recipients must report any change in circumstances that could affect entitlement. For capital, the DWP guidance is to report any change of £250 or more, or anything that would push you across a £500 tariff boundary — within one month of becoming aware of it. Triggers include:
- Receiving an inheritance, lump sum or compensation payment
- Selling a second property or other asset
- Drawing a tax-free lump sum from a pension
- Winning a Premium Bond prize of any significant size
- Becoming the beneficiary of a trust
- Joint capital changing on a partner's death
Report changes through your GOV.UK Pension Credit account, or by calling the Pension Service on 0800 731 0469. Failure to report can lead to an overpayment, recovery of past Pension Credit, and a civil penalty of £50 — or, in serious cases, prosecution. From January 2026, banks are required under the Public Authorities (Fraud, Error and Recovery) Act 2024 to flag benefit accounts whose balance breaches capital thresholds, so undeclared savings are increasingly likely to be picked up automatically.
What GOV.UK says
"If you have savings or a second pension you could still get Pension Credit. The first £10,000 of your savings and investments will not affect your Pension Credit. For every £500 over £10,000, the calculator will count £1 as weekly income."
Source: GOV.UK — Pension Credit: Eligibility (retrieved May 2026). The same wording appears in the DWP's detailed adviser guide for April 2026.
Frequently asked questions
Frequently asked questions
- Can I get Pension Credit with £20,000 in savings?
- Yes, very possibly. The first £10,000 is ignored entirely. The remaining £10,000 is treated as giving you £20 a week of "tariff income" (£1 per £500). That £20/week is added to your other income for the means test. If you are a single pensioner with a State Pension of £200/week, your total assessed income is £220/week — still £18/week below the 2026/27 minimum of £238, so you would qualify for around £18/week of Pension Credit plus the gateway benefits.
- Do ISAs count as savings for Pension Credit?
- Yes. Cash ISAs, Stocks & Shares ISAs and Lifetime ISAs all count as capital for the means test — DWP makes no distinction between an ISA wrapper and a non-ISA account. The "tax-free" status of an ISA is irrelevant to benefits assessment. The value used is the cash value on the day of assessment, even for Stocks & Shares ISAs (no allowance is made for short-term volatility). This is one of the most common mistakes on Pension Credit applications.
- Does the value of my house affect Pension Credit?
- No. The value of the home you live in is completely disregarded as capital for Pension Credit. So is any garage, outbuildings or land that goes with it. The disregard applies whether you own outright, have a mortgage, or share-of-freehold. A second property — a holiday home, buy-to-let, or a property you have inherited but don't live in — does count as capital at its current market value, less any mortgage on it and 10% notional sale costs.
- What is deemed income (or tariff income)?
- Deemed income is the amount of weekly income DWP treats your savings as generating, regardless of what they actually earn. For Pension Credit, the first £10,000 of capital is ignored, then every £500 (or part of £500) above £10,000 is treated as producing £1/week of income. It has nothing to do with the actual interest your savings pay. £15,000 of capital generates £10/week of deemed income whether it's in a 0.1% current account or a 5% fixed-rate bond.
- Can I give money away to qualify for Pension Credit?
- Generally no. The "deprivation of capital" rule lets DWP treat you as still owning capital you have given away, spent unreasonably, or moved into a trust if a significant purpose was to obtain or increase benefit. There is no fixed time limit — a gift you made five years ago can still be investigated. Reasonable spending (replacing a boiler, paying off the mortgage on your main home, normal living costs, sensible holidays) is fine. Gifting £20,000 to a grandchild a few months before claiming is not.
- How do DWP check my savings?
- On the application you self-declare your capital. DWP then routinely cross-checks against HMRC interest reporting, and from January 2026 banks must flag accounts of means-tested benefit claimants whose balance breaches relevant capital thresholds (under the Public Authorities (Fraud, Error and Recovery) Act 2024). If your declared capital is materially lower than your bank balance, expect a verification request. Compliance interviews are common when capital exceeds £16,000 or rises sharply.
- Is there a savings limit for Pension Credit?
- No — there is no upper savings limit for Pension Credit. This is a fundamental difference from working-age benefits like Universal Credit, where capital above £16,000 disqualifies you completely. For Pension Credit you simply accrue more tariff income as your savings rise. Even £100,000 of capital only generates £180/week of deemed income — which would still leave Pension Credit available if your other income is low enough.
- Do Premium Bonds count for Pension Credit?
- Yes. Premium Bonds count as capital at their face value (the amount you originally invested, which equals the encashment value). NS&I savings certificates, Income Bonds, Guaranteed Growth Bonds and all other NS&I products also count. Prize winnings from Premium Bonds count as capital from the day they're received, not as income — although large wins should be reported to DWP within a month.
- What happens to Pension Credit if I move into a care home?
- Pension Credit usually continues if you move into a care home, but the means test for the care home fees themselves uses different capital limits. In England for 2026/27, those limits are £14,250 (lower) and £23,250 (upper). Above £23,250 you are a self-funder and the local authority will not contribute. People often confuse the two systems. See our guide on care-home means testing.
- Does a private pension lump sum count as savings?
- It depends on what you do with it. An undrawn defined-contribution pension pot is ignored as capital for Pension Credit (although DWP may treat the income you could have drawn as 'notional income'). The moment you take a tax-free lump sum out of the wrapper, it becomes capital like any other bank balance. Drawing £30,000 and leaving it in a Cash ISA could turn an undrawn pot worth zero in the means test into £30,000 of counted capital — a £40/week tariff income hit.
Sources and further reading
- GOV.UK — Pension Credit (overview)
- GOV.UK — Pension Credit: Eligibility — confirms £10,000 capital disregard and £1 per £500 tariff income.
- GOV.UK — Pension Credit: What you'll get — confirms 2026/27 Standard Minimum Guarantee of £238.00 (single) / £363.25 (couple).
- DWP — A detailed guide to Pension Credit for advisers (April 2026) — full capital and deemed-income rules.
- DWP — Benefit and pension rates 2026/27 (PDF) — official rates from 6 April 2026.
- GOV.UK — Pension Credit calculator — the definitive eligibility check.
- DWP — Decision-makers' guide Volumes 9 & 10 (income-related benefits) — deprivation of capital, notional capital and diminishing notional capital rules.
- Age UK Factsheet 48 — Pension Credit (April 2026, PDF) — authoritative independent summary of what counts as capital.
- Age UK Factsheet 91 — Pension Freedom and benefits — how drawing pension pots affects capital and notional income.
- Department of Health & Social Care — Social care charging 2026/27 (England) — confirms care-home means-test limits of £14,250 / £23,250.
- Independent Age — Mixed-age couples briefing — policy context for the 15 May 2019 rule change.
- House of Commons Library — How savings can affect benefits — comparison of capital rules across means-tested benefits.
- MoneyHelper — How do savings and lump-sum payouts affect benefits?
- RetirementExpert — Pension Credit hub (rates, eligibility, gateway benefits, how to apply)
- RetirementExpert — Care home fees (the separate £14,250 / £23,250 means test for care).
Figures verified against DWP and DHSC sources on 16 May 2026. The 2026/27 Standard Minimum Guarantee (£238.00 single / £363.25 couple) and the £14,250 / £23,250 care-fee limits both apply from 6 April 2026 through 5 April 2027.