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Tax free capital query

Roxy6969 Member Posts: 1 Listener
I’m soon to be 60 and am thinking of taking 25% tax free capital from my personal pension. The amount I’m looking to take is £11000. I get income related esa tax credits and council tax benefits.
How much capital am I allowed before it is classed as income and affects my benefits and to what extent. I’ve read that any capital over and above £6000 affects my esa £1 for every £250 over and above this limit. 
‘I have a 2 bedroom house with 3 dependant children. I sleep in the conservatory and as it’s freezing in the winter I’m looking to utilise some of this capital to have a tiled roof fitted. Would that be classed deprivation. 
‘Thanks for any advice given. 


  • jane1973
    jane1973 Member Posts: 175 Pioneering
    Hello @Roxy6969 welcome I’m not sure about your question but I’m sure it won’t be long until someone directs you xx
    Hugz to everyone xx
  • debbiedo49
    debbiedo49 Member Posts: 2,904 Disability Gamechanger
  • Ami2301
    Ami2301 Community Co-Production Group Posts: 7,946 Disability Gamechanger
    Hi @Roxy6969
    Welcome to the community! Unfortunately I am unsure too, like @jane1973 said, there will be another member of the community along shortly to help you :)
    Disability Gamechanger - 2019
  • poppy123456
    poppy123456 Member Posts: 28,435 Disability Gamechanger

    I'm afraid no one can answer that question. A decision maker is the only person to decide if it's deprivation of capital or not. You do need to report the changes as soon as the money goes into your bank.
  • BenefitsTrainingCo
    BenefitsTrainingCo Member Posts: 2,628 Pioneering

    This is an excellent question. I agree with Poppy that you should report the changes and you should also be very clear about why you are taking the money and what you are spending it on. 

    You're not treated as having money from your pension pot before you apply for it. So the problem only arises if you do take the 25%.

    You're talking about an expenditure which I would say is really needed, as sleeping in the conservatory would otherwise be hazardous to your health in the winter. Unfortunately, the test isn't so much about what you spend the money on, as your intention behind spending it. To explain that a bit further, if you were spending it in order to keep claiming benefits, that would obviously be deprivation. But here, if you can show that you are spending it really only so that you can have a safe and healthy sleeping environment, that should be ok - though what the DWP will say is anyone's guess.

    Guidance does remind decision makers that they have to show that the purpose of the deprivation was to get or increase benefit, so if you are up front & explain exactly what you have spent it on, & why it was necessary, that is your best bet of avoiding any suggestion that that was why you did it.

    The worst case scenario is that you are treated as having £11,000, that's £5,000 over the limit and so would reduce your income-related ESA by £20 a week. But I'd want to challenge any such decision given that the only reason you are accessing the capital in the first place is because you need to make your bedroom habitable as a bedroom.


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