Capital Gains and ESA
I am on income related ESA and PIP. A few years ago I put a little money in crypto currency that is now worth enough to buy a car when it is cashed in. I used to always have a mobility car until they changed the rules to save money. My question is if I cash this in for a car will they expect me to live off it instead. There will of course be CGT on it first.
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Heya @Netnerd
Taken from the government website; The savings limits for income-related ESA are: under £6,000: your benefit claim is not affected by your savings. between £6,000 and £16,000: you lose some of your benefit payment. more than £16,000: you're not eligible.
I'm unsure of the DWPs stance, I think they class crypto being held as capital? But as soon as you sell that crypto, then it would be definitely be classed as savings.If your crypto holdings are over £5,999k, I'd advise speaking to the DWP about this, just to be on the safe side.
But it wont have any effect on your PIP as it's not means tested. 😊1 -
Thank you for that Albus, the amount would be around £24,000, but if it goes straight on a car will they then see it as deprivation of savings or would they expect me to live of that and not buy a car.
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Have you reported this to DWP and any other means tested benefits you're claiming? Capital (savings are the same thing because it's something you own) of more than £6,000 where ever you have it, needs to be reported and this includes crypto currency. There's a deduction for capital between £6- £16,000 and no entitlement to any means tested benefits if you have more than £16,000.
Anything you have access to needs to be reported, with the exception of the home you live in, if you own it.
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In this case the UK Gov classification of this asset is neither capital or savings, it is an "Exchange Token" and will remain as that until sold when it will become capital that will incur CGT. I am aware that some crypto currencies are classified as capital, this one is different.
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If you are holding an asset (digital or otherwise) that can be swapped into money quickly, then that will be seen as capital, so you'll need to report it to the DWP.
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I will contact them to find out exactly where I stand as I understand the asset to be classified as something else legally so it is confusing.
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May I ask where did you get that from or who told you that?
Please do not ring ESA to ask this question because you won't be speaking to someone from DWP, you will be speaking to someone from a call centre who has very little knowledge of benefits other than to read from a screen.
What you should do is report it and let a decision maker from DWP make that decision.
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It gets confusing as an Asset could be a grandfather clock, oil painting, bit of furniture and many other things which could be readily and easily sold, but they do not ask you to report every possession you own that could be sold, nor do they see them as capital because they can be easily sold.
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I've just checked and yes, the DWP count cryptocurrency and other digital assets as investment assets equal to shares and the like, so they'll need to be declared to the DWP unfortunately.
As found in DWP file ADM-HM1020;
"What is capital H1020Capital is not defined in the regulations but what is meant by capital can be found in general law. The items listed below cover the kinds of things that would normally be regarded as a person’s capital but is not a definitive list
1. savings from income such as money held in • cash • a bank or building society account • a save as you earn scheme • Post Office account
2. a lump-sum or one-off payment such as • compensation for a personal injury • money which has been borrowed • one made by an employer to a person who is made redundant and the payment is not earnings • one made by the HO to people on the Refugee Resettlement Programme • one made to recompense people who have incorrectly had to pay care charges in the past
3. investments such as • businesses • capital and income bonds • individual savings accounts (ISAs) • national savings certificates • personal pension schemes • premium bonds• stocks and shares • unit trusts • crypto and virtual assets "
But massive congratulations in those crypto gains!1 -
All those items would be treated as personal items and do not count as capital.
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This where it becomes a minefield, I know they classify many cryptocurrencies as investment assets, but they do not classify this particular one as a cryptocurrency, they legally classify it as just an exchange token although it could also possibly be identified as a virtual asset I guess.
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@Albus_Scope thanks for that, great find, I was just looking for exaclty the same thing and you just saved me valuable time in looking. I hate looking through the ADM.
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Thank you for all of your input everyone, I think that gives me all that I need to know and will take further advice from the DWP.
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No worries Poppy! My eyes hurt now haha, but I wanted to get the proper advice out. 😁
No problem @Netnerd yeah it looks like anything similar would be classed as a digital asset. I dabble in crypto myself and some of the regulations are still a bit of a grey area. But I'd say it's better to be safe than sorry. Best of luck. 😊
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Just a quick not Albus as you also dabble in cryptocurrency, the gov is currently seeking to pass a law making crypto assets "Property", see below. When passed, that might bring some much needed clarity.
[download link removed by moderator for safety reasons]
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Ah brilliant, thanks @Netnerd I do think in an increasingly digital world, they need to be looking at getting more laws in place, especially when it comes to theft.
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