Deprivation of Capital Concerns

ionosphere

So, I got a significant back payment from Social Security Scotland — it was under £6 000, so I didn’t report it to the DWP, and then over the next couple of weeks, proceeded to spend it all on a few luxury purchases that I’ve been wanting for years (personal electronics, new clothes, kitchen gadgets) and paid off my credit card and bought a month’s wet cat food in advance. I wasn’t concerned about needing to keep any back, as my ADP award plus my current benefits (IR ESA) would be enough for me to live on month to month. 

However. I discovered yesterday that I may, at some indeterminate point in the near future, be getting additional money that’ll put me over the £6k benefits cap, and that might’ve put me over the hard £16k cap if I hadn’t spent my ADP back payment!

It’s something from my extended family abroad — I’m estranged, have very little contact with them and as of yet, I have no paperwork from them proving that the money exists, that they’ll give it to me and no reason to trust them on it. Further, because of where I’m from, there’s a good chance that I won’t be able to get the money anyway, as my birth country has faced financial and other sanctions from the EU, the UK and the USA, and thus it’s unclear if regular banking services would even be possible. 

What I’m worried about is that if the money comes through in the next couple of weeks, DWP might think I deliberately spend my back payment to avoid going over cap — the purchases were in character with what I’d get if I wasn’t on benefits and got a similar windfall, the clothes are from a shop I’ve patronised for years, and I am prone to impulsive spending due to my mental health issues, something that’s even been part of my ADP assessment. 

I’ve not yet reported the potential money from family to DWP, as I have zero proof of it ever existing, and I didn’t think I should report capital that I might be getting, with no paperwork proving that I’m entitled to it, from a place that has hostile diplomatic relations with my place of residence. 

I was also under the impression my benefit backpay would not be considered “savings” for 52 weeks, but when I phoned DWP to confirm, they said it would, which is why I’m worried.

Should I be at all worried? If I report a windfall payment, would I need to prove I have it and would that trigger an investigation into my spending?

I realise this is perhaps neurotic, but I’m very worried about potentially losing half of my benefits or having my ESA claim stopped and needing to reapply for UC, especially considering how draining assessments have been on my mental and physical health. 

poppy123456

You're correct that the money you received for what was owed is disregarded from your savings for 52 weeks. This means during that time you can spend it on anything you want to.

The money that you're expecting doesn't need to be reported now because you haven't received it yet. When it does go into your bank, if it's more than £6,000 (not including the backpay if it's less than a year since received) then you will need to report the changes to ESA. For every £250 or part there of over £6,000 there's a £1/week deduction.

If you're claiming council tax reduction then some Local Authorities have a maximum savings limit of £6,000. Changes also need to be reported to your LA.

ionosphere

Thank you for the information! My LA does indeed have savings limits on legacy Housing Benefit, so I’ll have to remember to inform them as well should the money ever turn up. 

poppy123456

Housing benefit has the same savings rules nationally. It's council tax reduction that maybe different.

ionosphere

Oh, my bad. I’ve just woken up, mixed up the two. Thank you for the correction! 

poppy123456

No worries.

sunshine2024

Well done getting awarded ADP, if you don't mind me asking how long did you wait for a decision?