DWP rules on gambling and if your Universal Credit benefit payments will be affected

People who claim Universal Credit or other benefits are being warned about the rules on gambling and whether their payments will be affected.

The rules have been clarified as thousands of people have their benefit claims checked. The Department for Work and Pensions is carrying out a Targeted Case Review initiative that will scrutinise the benefits entitlement of around two million people on Universal Credit.

Last month, as the DWP announced new measures to step up its fight against fraud, it said it was hiring over 2,500 external staff on a temporary basis to look for errors in Universal Credit cases. Combined with the DWP's own benefits review officials, this means nearly 6,000 people are examining people's claims.

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During the targeted reviews, DWP staff can ask you to send them several months of bank statements so they can see everything is in line with the rules for claiming state support, reports BirminghamLive. Here are the rules on gambling and how benefit payments can be impacted.

DWP rules on gambling

A DWP spokesperson said: "Winnings obtained from gambling activity do not meet the definition of earnings within Universal Credit Regulation 52 and are not taken into account as an unearned income. Any profit made from gambling activity will only be considered within Universal Credit as part of a person's capital.

"It is the customer's responsibility to advise DWP of a change in their circumstances that would affect their benefit and for means-tested benefits, this includes receiving gambling winnings which increase the total capital held and impact their award."

There are capital limits for Universal Credit along with several other means-tested benefits. If any winnings take your savings over these limits, your benefits could be reduced or stopped completely.

Gambling winnings aren't taxed but the interest on that money is taxable. HMRC deducts the tax and regularly shares information with the DWP to prevent fraud. This could then lead to the DWP asking you to produce bank statements if it suspects you have large amounts of undeclared capital sitting in the bank from gambling wins.

If your winnings, together with any existing capital, are below £6,000 they will be disregarded and you won't face any deductions or penalties. But any amounts that cause your total capital to exceed £6,000 will mean your benefits are reduced.

Even if you are within the capital limits, the DWP can question transactions to find out if they represent regular earnings coming in that you haven't declared. If they find entries on your statement that turn out to be cash won in matched betting, they may ask to see details of the accounts you hold at online betting websites.

Matched betting - which involves people using free bets offered by bookmakers to make a profit - may be viewed by the DWP as capital (which is fine if your total capital is under £6,000) but there have been cases where regular amounts have been counted as a monthly income which would then lower your benefit payments. The DWP can also ask to see statements from other sites such as PayPal where cash can be stored.

Online gambling accounts will also be listed on your credit record because a credit check is usually carried out by each website when you open an account, in order to verify your personal details. This means DWP will be aware of all the accounts you hold when it carries out claim reviews.

DWP capital limits and the benefits affected

There is a capital limit of £16,000 if you claim Universal Credit, income-based Jobseeker's Allowance, income-related Employment and Support Allowance (ESA), Income Support, and Housing Benefit (if you are under State Pension age). If your capital is higher than this amount, your entitlement to benefits ends and your payments are stopped.

Any money you have that's between £6,000 and £16,000 is treated as if it gives you a monthly income of £4.35 for each £250, or part of £250. So if you have £6,300, the first £6,000 of it will be ignored and the other £300 will be treated as giving you a monthly income of £8.70. This is then deducted from your monthly Universal Credit payment.

Those on income-based JSA, income-related ESA, Income Support and Housing Benefit lose £1 per week for every £250, or part of £250, that's over £6,000. For people who get Pension Credit, there is a capital limit of £10,00 before deductions are applied. Every £500 over £10,000 counts as £1 income a week. But unlike the other benefits above, there is no upper limit on the savings you can have.