Question regarding means tested ESA and a potential OVERpayment — Scope | Disability forum
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Question regarding means tested ESA and a potential OVERpayment

Hi. This is my first time posting. I'll try to explain this concisely.

In 2012 my brother was moved from incapacity benefit to Income Related ESA. In the letter he was told that his previous benefit was higher than the maximum allowed with ESA. In order to avoid him suffering a drop in his benefits, his weekly ESA payment was fixed at the previous amount.

Since then his savings rose above the £6000 threshold. He has not notified anyone because due to his mental disability he did not realise it was necessary. The level of his savings have only recently come to light now that I am helping him with his finances.

My question is in two parts:

Firstly, should those savings reduce his ESA payment. Normally they would, I know. But as he was put on a higher level back in 2012 and told that this was specifically to avoid him receiving a drop in his benefits, I'm uncertain about whether they would now wish to reduce his ESA payment due to increased savings?

Regardless of whether he SHOULD have notified the ESA people about the savings, the fact is he DIDN'T. It was an honest mistake in the sense that he didn't think it was necessary; he wasn't deliberately trying to deceive anyone. But what happens if it turns out that he has received a substantial overpayment? Will they just ask him to repay it (which of course we're happy to do) or is this likely to result in legal action against him? I'm rather worried about this particular possibility.

Thanks in advance for your help.


  • david235
    david235 Member Posts: 170 Pioneering
    There is a provision in transitioal arrangements for various benefits that, when the new benefit gives a lower entitlement to benefit than the previous benefit, the monetary amount of the old benefit is fixed. That would have applied on transition from previous benefits (presumably Income Support and Incapacity Benefit) to ESA. However, the fixing of a higher starting point than is normal under transitional regulations does not give an ongoing entitlement to the higher amount if there is a relevant change of circumstances that lead to a reduction of the entitlement to benefit.

    I'm pretty certain that the normal rule applies here - each £250 or part thereof over the £6000 savings disregard reduces the weekly ESA(IR) entitlement by £1. That means that there is an overpayment owed back to DWP.

    I very much doubt the DWP will consider prosecution in circumstances where the claimant is incapable of understanding the need to declare a change of circumstances and someone comes forward on behalf of the claimant to report the situation and help to arrange repayment. Indeed, perhaps the most likely offence that would be charged in the event of a prosecution would be the offence under s. 112(1A) Social Security Administration Act 1992 (as amended), which requires knowledge that the change of circumstances affects entitlement to benefit. As your brother seems unable to form the required knowledge by reason of disability, the offence is not made out.

    My suggestion would be to report the situation to DWP, making it clear that you understand there is likely an overpayment and that you will do your best to work with your brother to furnish records and arrange him repaying the money owed. If you are prepared to administer his benefits for your brother and take responsibility for dealing with DWP on his behalf, I would also ask about becoming your brother's appointee.

    For further reassurance, maybe others with more direct experience of current DWP operating procedures than me could chip in.
  • rr2019
    rr2019 Member Posts: 5 Listener
    Thank you for the clear answer.
  • rr2019
    rr2019 Member Posts: 5 Listener
    Follow-up question if I may... is that reduction of £1 per £250, calculated per week or per month?
  • rr2019
    rr2019 Member Posts: 5 Listener
    Shoot sorry I re-read your answer and I see you already specified weekly.

  • david235
    david235 Member Posts: 170 Pioneering
    I'm glad you've worked it out. If there were assets of £6320 in a week, £2 is deducted from that week's ESA(IR) entitlement. Unless I have misremembered, these deductions work in the same way for transitionally protected amounts.

    Apologies for the typoes in my first reply, also for the perhaps less than stellar explanation of how transitional regulations typically work. If a clearer explanation is potentially interesting, read on. Note that I am using round numbers below, not real benefit rates.

    Say there was an starting entitlement of £130 per week on Income Support before deductions, with £80 per week Incapacity Benefit and no deductions from Income Support for savings. The £80 Incapacity Benefit is deducted from the £130 as it is an overlapping benefit, so the claimant receives £130 per week which consists of £80 per week Incapacity Benefit and £50 per week Income Support.

    This person moves to ESA, and their total ESA(IR) entitlement under the ESA Regulations is £120 per week. The transitional regulations fo ESA substitute the old £130 per week figure from Income Support for that £120 - though that transitionally protected £130 figure is not subjected to any uprating over time. There has not been any annual uprating for means-tested benefit for quite a few years; before this benefits freeze, transitionally protected amounts were a common answer to 'why are my benefits not going up this year?'). If, at some point in the future the claimant becomes entitled to more than the transitionally protected £130 per week on the new benefit through uprating or otherwise, the transitional protection ends permanently and the higher entitlement becomes active.

    So, we have a transitionally protected ESA(IR) entitlement of £130 and, let's say, an ESA(Cont) (contributions based ESA) entitlement of £85 per week with no deductions from ESA(IR) for savings or capital. The ESA Regulations say that any ESA(Cont) is paid first and overlaps with ESA(IR), so the claimant only gets any ESA(IR) if their underlying entitlement to ESA(IR) exceeds their ESA(Cont) entitlement. In this scenario the claimant continues to receive £130 per week, consisting of £85 ESA(Cont) and £45 ESA(IR).
  • Adrian_Scope
    Adrian_Scope Posts: 8,105

    Scope community team

    Hello @rr2019 and welcome to the community. 

    I agree with @david235, the best thing to do here will be to be honest and explain the situation. To help with your calculations and just to clarify, the deductions for savings are £1 a week (or £4.35 a calendar month) for every £250 over the £6000 savings threshold. So if he only has £6500, it would be £2 a week / £8.70 a month deducted. If he has more than £16,000 in savings he won't be eligible for any income related benefits. 

    I hope that helps and please let us know how you get on. :)
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  • rr2019
    rr2019 Member Posts: 5 Listener
    Thanks for all the details. Very helpful. I will certainly try to repay the favour by providing some useful updates as things progress.


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