Esa backpayment savings query

starbuck

My husband had a backpayment earlier this year as he was put in the wrong esa group when changing from Incapacity Benefit years ago.
We put the payment into an isa so we can keep track of it and it doesn't get mixed up with our everyday money. Do we need to declare to dwp or tax credits the interest that it is earning? I can't find an answer to this online (probably because these backpayments are still fairly new). 
I don't want to ring the dwp unless I really have to as it sets off my anxiety really badly. 

wilko

Hello, the back payments are disregarded I think it’s for 12 months but after that the amount  plus interest is counted as savings so could can put you over the benefits threshold. I am sure one of our brain blessed members will correct me if I am wrong. 

starbuck

The payments are disregarded for the duration of the esa claim as it was a government mistake. 

poppy123456

starbuck said:

The payments are disregarded for the duration of the esa claim as it was a government mistake. 

Not exactly correct. Backdated payments from DWP for errors are only disregarded for the life of the ESA claim if the payment received was more than £5,000. If it's less than this they are disregarded for 52 weeks only.

For tax credits you only have declare interest on savings if that interest is more than £300 per year.

For DWP it's different, any interest you receive will be added to your savings which will increase it. For this the savings/capital rules apply.

starbuck

I'm wondering if it will affect my income support? Do I need to tell them about it and will my money be reduced? 

April2018mom

I would contact them. Ask them to clarify things. 

poppy123456

starbuck said:

I'm wondering if it will affect my income support? Do I need to tell them about it and will my money be reduced? 

Only if the interest means that your savings go over the amount you're allowed in savings,  Minus the backdated money which is disregarded for at least 52 weeks if the payment was less than £5,000.

starbuck

So the interest wouldn't be classed as income where my income support is concerned? 

poppy123456

No, definitely not. It's not classed as income because it's part of your savings. Fully confirmed in this link here.

https://www.entitledto.co.uk/help/what-counts-as-income

if you have savings of more than £6,000 then this will affect the amount of benefits you're entitled to.

starbuck

Thankyou so much!! I've been searching everywhere for info on this - I should have just asked on here first ☺

poppy123456

You're welcome. Don't forget that if the amount is less than £5,000 it is only disregarded for 1 year. After this time it is counted as savings and must be added to all of your savings.

SOB

If anyone has savings  of up to £5,000, will your ESA be stopped.

poppy123456

SOB said:

If anyone has savings  of up to £5,000, will your ESA be stopped.

If you're claiming Income related ESA then savings of more than £6,000 and your ESA will be affected £1 for every £250 over that amount. Savings of £16,000 and over and you won't be entitled to any means tested benefits.

SOB

So what if you have savings put aside for a rainy day, what then? I thought no one was aloud to have any savings at all!

poppy123456

SOB said:

So what if you have savings put aside for a rainy day, what then? I thought no one was aloud to have any savings at all!

Savings of less than £6,000 don't count. Please read my previous comment.

starbuck

This was one of the links I looked up while trying to find information. It says in the second paragraph that if you invest a compensation payment you must tell the dwp about the interest. Is the information on the site incorrrect? I'm really confused. My anxiety problems mean I can spend endless time worrying about things like this ?

https://www.the-compensation-experts.co.uk/common-questions/will-compensation-claim-affect-benefits/

poppy123456

The advice i gave you yesterday is correct, i wouldn't give incorrect advice. That link is about compensation claims, your money was from a backdated payment from DWP error.

As previously advised. The money you received, if it's less than £5,000 then it's disregarded for 52 weeks. After this time, if your total savings are more than £6,000 you must report the changes and your means tested benefits will be affected. More than £16,000 and you won't be entitled to means tested benefits.

If the money you received was more than £5,000 then it's disregarded for the life of the ESA claim.

poppy123456

Please have another read of the link i posted above. Interest on savings is not classed as income because it's part of your savings.

starbuck

Sorry to doubt your advice - it's my anxiety just looking for new things to worry about! Thanks for the help ☺☺

poppy123456

No problem.

starbuck

I meant was the information on the other site incorrect, not here ☺ This site is a fantastic resource ☺