Early pension. Took a lump sum, will this be deducted from my UC or housing benefit?

Paulbee1122

I wonder if anyone can answer a question I have please.

I'm 52 and on uc lcwra pip and housing benefit.

I had a small pension and cashed it out as the Dr stated I won't be able to work again.

I received £3,500 but I had some debts so I paid them off.

Will I have my uc or housing benefit deducted this month as if so it will leave me in a bad position.

Also I was taxed on the pension. Can I claim that back or best to leave it as it is?.

Kimi87

Debt repayment to an official creditor is generally allowed under UC.

Did you receive the money & pay debts both within the same Assessment Period?

Paulbee1122

Yes. As under i6kni thought it might not count

Paulbee1122

Sorry as under 6k should read

Kimi87

Pension lump sums count as capital straight away.

If it didn't take you over £6k capital you should be fine, especially as you paid off official debts within the same AP as receiving the money.

Paulbee1122

Got my statement this morning as due to be paid on Tuesday £33 they have left me with for the month.

The considered my pension one off payment as income.

I'm gutted as I'm certain people can have upto £6,000 before deductions.

It seems I'm wrong, it seems dwp are tighting on everything.

Kimi87

£6000 is the capital amount people are allowed, UC have classed your lump sum as income which is treated differently.

Perhaps you could consult a trained benefits advisor, make sure they have done things correctly?

https://advicefinder.turn2us.org.uk/

Paulbee1122

I have asked.

They said no it's deffinatly income.

I got a little angry as they was not listening. It was a case manager and she said final decision

66Mustang

I'm not speaking as someone knowledgeable about benefits… but from an accounting (i.e. tax) point of view any pension drawdown is considered income, however regular or one-off it might be

Whether this means the benefits office class it as income I don't know

The £3,500 you drew down is taxable income for that year, but you should only have paid income tax on it if your taxable income for this tax year is high enough to pay tax on, i.e. usually £12,570

Normally it's assumed people will pay 20% (it's called emergency tax) but if you weren't eligible you can get that back… should be £875

66Mustang

Just realised I calculated the £875 wrong as presumably 25% of the pension is tax free … so might be about £657 but don't quote me

Kimi87

Even with a case manager saying final decision, you still have the right to ask them to look at that decision again, known as Mandatory Reconsideration, with an independent appeal tribunal hearing being the next step if the decision is unchanged.

https://www.citizensadvice.org.uk/benefits/benefits-introduction/problems-with-benefits-and-tax-credits/challenging-benefit-decisions/challenging-a-decision-by-the-dwp-or-hmrc/challenging-a-benefit-decision-mandatory-reconsideration/

https://www.citizensadvice.org.uk/benefits/benefits-introduction/problems-with-benefits-and-tax-credits/challenging-benefit-decisions/challenging-a-decision-by-the-dwp-or-hmrc/appealing-against-a-benefit-decision/