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Moving house and all that entails....

TheAlien

I need to move house shortly, mainly due to damp, lack of adaptations issues and a complete breakdown in trust in my landlord. I've been fighting for essential repairs for over 5 years, but that's another story.

I'll, hopefully, be moving into an already adapted bungalow, so that solves one problem, but.... the bungalow is in another area so I'll have to move from income based LCWRA ESA to UC. I also get PIP.

To fund the move (new carpets, curtains, actual moving costs, furniture I need to replace due to damp etc) I may need to draw from my pension fund. The drawings would be less than the amount allowed in savings as its a very small pension pot, plus it would be spent fairly quickly.

Can anyone offer any advice as to the best way to manage this?

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Comments

calcotti

When you say less than the amount allowed - do you mean less than £6000 or less than £16,000?

TheAlien

Less than £6,000.

poppy123456

TheAlien said:

Less than £6,000.

Savings of less than this amount do not affect means tested benefits.

calcotti

TheAlien said:

Less than £6,000.

Provided your total savings remain below £6000 you need not report them to UC and your benefit entitlement will be unaffected.

Alex_Alumni

All the best for the move @TheAlien, that must be exciting?

Has calcotti helped to answer you're query or is there anything else we can help with?

TheAlien

I do have other questions;

Is a pension lump sum drawdown classed as income or savings?

Also, is tax taken into consideration? I can claim the tax back, but not immediately.

poppy123456

It's not income, it's classed as savings, as previously advised. Can't answer the tax question though.

calcotti

When the tax rebate is received that would count as earned income if it related to a year in which you were in work. However, as I infer you are not currently working, it appears that rule would not apply, in which case it will fall to be treated as capital.

TheAlien

But which year would the tax rebate be classed as income? Would it be the tax year its refunded, or the tax year the pension drawdown is claimed?

Also is the tax refund added to the original amount of savings immediately following the drawdown? I'm only asking in case it goes 1p over the £6,000

calcotti

TheAlien said:

But which year would the tax rebate be classed as income? Would it be the tax year its refunded, or the tax year the pension drawdown is claimed?

Also is the tax refund added to the original amount of savings immediately following the drawdown? I'm only asking in case it goes 1p over the £6,000

The tax refund will relate to the year in which you make the pension drawdown. If that is a year in which you did not work then the refund is capital, not income. It will be added to your total capital amount as soon as it is received. However it is the capital amount on the last day of your UC assessment period that matters. If your capital goes over the threshold temporarily but has fallen below it by the last day of the period then it has no impact.

TheAlien

Thank you! At the moment in still on income related ESA, I havent had to move to UC yet.

calcotti

TheAlien said:

Thank you! At the moment in still on income related ESA, I havent had to move to UC yet.

My comments all relate to how the drawdown and tax refund affect UC because I understood that you would be making the drawdown after moving house and switching to UC.

TheAlien

The drawdown depends on my financial position at the time I move. I will need cash to pay for the removal men, also cash for carpets, redecoration etc which will have to be paid close to the removal date.

However, I've been advised that I don't need to switch to UC until I've physically moved.

calcotti

For ESA if you have more than £6000 in your account(s) at any time you should inform DWP and your entitlement will reduce.

For ESA a tax refund will always be treated as capital, not income.

However the tax refund will obviously come later by which time you may be on UC in which case my previous comments apply.