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Saving, Debt & deprevation of capital.. and a future car purchase

Kobayashi

I have a bit of a confusing situation.

I work , and my partner is unable to workdue to health. He gets LCWRA component of UC, and obviously we get the joint UC entitlement, and then housing benefit.

We have around 8k of credit card debt, and I have been lucky enough to manage to get all of it transferred to a 0% credit card. This is a relife, as the interest on this was becoming a burden.

I have calculated that we should be able to clear this debt within a year, if we pay attention to our outgoings. I originally planned to pay the minimum payments for these cards, and place any extra money into a savings account at the end of the month, to earn interest, then pay off our debts when there is enough to do it in one go.

It was then that i remembered reading about deprevation of capital…. I worked out that we will save around 6k by the time we will have enough to pay it off in full (balance reducing by minimum payments each month, etc)

Will this 6k, being used in one go, cause them to claim we are depriving our savings? it seems unfair if so, and the guidance i can see is unclear.

Also, I am wanting to buy a brand new car, once this is all sorted. I want to buy an EV next year (Renault 5 if you are interested.. it is a very affordable compared to other EVs) as I can get free EV charging at work. I would part ex my current car, and be putting around £5k towards it, then monthly payments of around £250-£300. This is currently how much I spend on fuel. If I ended up keeping the car, it would have a final payment of around £12k.

Would this purchase also be regarded as deprevation of capital at any of the 3 stages? as the car would be out for a year or so by the time i'd be ready for it, i would consider a used one so these payments could decrease..

I work hard for my income, and it would be nice to be able to spend it as I wish without my partner losing what we call his money.. we would also have been able to get a motobility car, but they decided to score him one point below enhanced rate.

I understand this is a very first world problem… but we just want to try and live as normal as possible.

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Comments

poppy123456

Paying off debt when claiming UC is allowed when claiming UC so can't be considered deprivation of capital.

If your total capital (savings) between yourself and your partner goes above £6,000 you must report the changes to UC and there will be a deduction of £4.35/month for every £250 or part thereof over that amount.

Putting a deposit on the car if your total capital is less than £6,000 will be fine. Monthly payments are fine because you can spend your money on anything you want to. The only thing that would be an issue is the £12,000 because once your capital goes above £6,000 you must report the changes and there would be that deduction each month.

Jimm_Alumni

Hey @Kobayashi, as Poppy mentions paying off debt is not seen as deprivation of capital. If you do at any point go over the £6000 threshold you do need to report that however. You can pay off the debt bit by bit rather than all at once if it would bring you over £6000?

When you say "A final payment of £12k" do you mean all the monthly payments would add up to £12,000 or you will need to save up £12,000 for the final payment?