Deprivation of capital and universal credit

kingston

I have looked at rules re deprivation of capital for UC and am worried about spending money my benefits total 1339 through pip and uc after paying rent so I have a lot of disposable income which will just increase my savings every month until I hit 16k then my benefits will stop. If they stop my benefits if I reach 16k when the savings are gone will they reinstate my benefits? It is all making me ill worrying.

kingston

a friend of mine of uc says she spends the majority of her uc on clothes shoes and going out and she is not worried about deprivation of capital. My mental health worker said to just spend the money but I am not a frivolous person so know my savings will rise till I hit the 16k my mental health worker also said once the savings are gone it takes a long time to reinstate benefits so then I will be in the opposite position of not being able to pay rent or bills. It’s all worrying me sick

Albus_Scope

Hi @kingston sorry to hear the situation is causing you so much distress. If your benefits carry on to the following month, then they'll start counting as savings. But if you go over the £16k then yes, unfortunately any means tested benefits would stop, but you would be able to reapply for them when you were under the limit again. So your PIP would be unaffected by any savings.

Between £6k and £16k, your UC would decrease by I believe it's £4.35 for every £250 over £6k you have in savings. The first £6k is ignored.

kingston

thank you I am trying to work out what dwp deem to be deprivation of capital it’s all very confusing about what I can and can’t spend my money on

kingston

My mental health worker (I have a mental health condition) told me one of her patients spent three grand on a treadmill and £6k on a new kitchen which has got to be deprivation of capital

kingston

Can I pay an extra months rent from my savings or would that be deemed depravation of capital

Albus_Scope

Sorry, I've been checking on a few sites for some more information for you.

Reducing or paying a debt owed by yourself or purchasing goods or service, if reasonable, is not considered deprivation of capital. But if you're purposely buying expensive items, just so you can claim a benefit, then that would count as deprivation.

kingston

thank you for the info albus

OverlyAnxious

Just to add to the above advice, it is not true that it takes a long time to reclaim UC. As long as it is within 6 months of your payments ending, you can make a rapid reclaim, which is basically just opening up your old claim again. You may be asked to provide bank statements to prove that you haven't purposely deprived yourself of capital in that time.

Unfortunately there are no specific rules on what you can or can't spend money on. It is a bit of a grey area.

Personally I think a decision maker would class an extra rent payment as deprivation of capital. I can't think for what reason any other person would do that.

A treadmill is used for exercise, and a kitchen can be made more accessible, so both of those could be classed as an acceptable spend. However, if the kitchen was fitted out with all very expensive top branded appliances and materials, the decision maker could decide that at least part of that spend was deprivation of capital.

kingston

ok thank you I have just moved into a council flat and have had to furnish it from top to bottom I have just paid 250 to get blinds fitted to all the windows would this be deemed to be deprivation

OverlyAnxious

https://forum.scope.org.uk/discussion/comment/911635#Comment_911635

No, paying for blinds should be perfectly acceptable. That is what anyone else would do when they move into a new property. 🙂

kingston

I’ve read that it is fine to go on holiday which would not be classed as deprivation (not abroad)

poppy123456

You can spend your money on anything you want to, including a holiday. Your benefits payments only become capital at the end of the next assessment period after you received your last payment.

kingston

thank you poppy I have a mental health condition and don’t go out much hence why my savings have built up. UC terrifies me about deprivation so I am worried to spend sometimes

kingston

do you know if when I reach 26k and they stop my benefits when I go under the threshold again will they reinstate my benefits and how long does that take? I am on limited capability to work. Will this still apply to new claim or will they have to go through the assessment process again?

kingston

16k I meant not 26k

kingston

I am going to get some advice from my mental health support worker and the citizens advice bureau. My savings won’t last long if having to pay rent bills with no benefits

poppy123456

If your capital goes above £16k then yes UC will stop. You can reclaim UC once they go back under £16K.

Your first UC payment would be just under 5 weeks after you reclaim but you will need to go through the work capability assessment process again.

There's a way around not needing to go through the WCA again by claiming New style ESA. If you haven't worked at some point in the last 2 tax years you won't be entitled to any payments but you'll receive NI credits because you have Limited capability for work and this would mean you'll be entitled to the LCWRA element from the start of your UC again when you reclaim.

There's a deduction of £4.35/month for every £250 or part thereof over £6,000.

Do also be aware that if you're claiming council tax reduction some local Authorities have a maximum savings limit of £6,000 before CTR ends.

Please be cautious about using citizens advice because they've been known many times to give incorrect information.

kingston

oh I am claiming council tax reduction I didn’t know about the savings threshold for that as well. Do I need to let them know that I have savings then? I’m sure when I filled the ctr form I notified them that I have savings

kingston

would buying new clothes shoes etc be seen as deprivation?

OverlyAnxious

https://forum.scope.org.uk/discussion/comment/911918#Comment_911918

I didn't realise a previous LCWRA claimant would have to go through another WCA if UC stopped for just a few months while their savings dropped below £16k again. I thought that only applied if it took longer than 6 months to reclaim?

I'm in a similar position to the OP, in that I get more income than I can use and my capital will keep creeping up now. I thought that was ok to some extent as I could just have a few months 'off' before reclaiming again. But I can't have all the stress & hassle of a WCA to reclaim.

When is the best time to apply for NS ESA for people in this situation? Is it before the capital rises above £16k and loses UC entitlement or after that?