New rules mean people could see the DWP take money directly from their bank accounts if they have more than £16,000 saved up.
The Government is putting in place a new law to crack down on benefits fraudsters who cheat the system.
The bill gives the Department for Work and Pensions tough new powers, including the ability to search properties, seize items, and take money out of people’s bank accounts.
Even those not currently on benefits or in PAYE employment could be subject to having money taken by the DWP.
Though the Government has yet to outline exactly what kind of benefits fraud will be targeted, it says that it will use the bank monitoring powers to check for breaches of benefits eligibility rules.
It said: “New requirements for banks and building societies to flag where there is an indication that there may be a breach of eligibility rules for benefits – preventing debts accruing.”
The most common benefit other than pensions is Universal Credit. To be eligible to receive Universal Credit payments from the DWP, claimants cannot usually have more than £16,000 in savings.
The Government’s Universal Credit rules state: “To claim Universal Credit, you must usually have no more than £16,000 in money, savings and investments as a single claimant or if you are living with a partner.
“If you have money, savings and investments between £6,000 and £16,000, your Universal Credit payments will be reduced. Your payments will be reduced by £4.35 for every £250 you have between £6,000 and £16,000.
“Another £4.35 is taken off for any remaining amount that is not a complete £250.”
The new laws will also target people who took out fraudulent COVID support loans. The time limit for recovering fraudulently obtained COVID loans has doubled from six to 12 years.
Secretary of State for Work and Pensions, Liz Kendall said: “We are turning off the tap to criminals who cheat the system and steal law-abiding taxpayers’ money.
“This means greater consequences for fraudsters who cheat and evade the system, including as a last resort in the most serious cases removing their driving licence. [This is] backed up by new and important safeguards including reporting mechanisms and independent oversight to ensure the powers are used proportionately and safely.”