House Sale and UC

7501x

Hi, 

If a house sale yields capital, is the capital always counted towards means tested benefits? Or is it disregarded for 6, 12 months or indefinitely under certain circumstances?

I read something about being disregarded for 6 months?

Thanks in advance.

poppy123456

It depends on the circumstances. If it was a house that you lived in and it was sold, it can be disregarded for 6 months, longer sometimes, if you're buying another house. You will likely be asked to prove that you're taking steps to buy another house.

7501x

Thanks for the reply 😊 It’s not me that’s selling it’s someone I know so was just asking on behalf of them so they know what their options are they won’t be buying anywhere else, they will go into rented I think. They said with their equity from the house they would pay off debt (car finance etc) and then put some into their business. I don’t suppose you know if it’s as simple as putting cash into their business bank account do you? I read that business assets (including cash in the business bank) aren’t means tested, but I couldn’t advise them on whether it’s a straight forward process of transferring money into the relevant bank account? There’s so many variables it’s so confusing and I’m quite clued up on finding out regulations etc however this one has totally thrown me 😂 any advice to pass on would be great! 

poppy123456

It would help to know what benefits exactly they are claiming.

7501x

They haven’t claimed anything yet so I assume they would go onto UC? 

poppy123456

They will be excluded from claiming all means tested benefits if they have savings/capital of more than £16,000. If they less than this there's a £4.35/month deduction for every £250 or part there of over £6,000.

Once the savings drop whether they are entitled to UC will depend on their circumstances. If they live with a partner they claim as a couple and their joint circumstances will be taken into consideration.

If they don't claim any benefits now, what are they living off? Do they work?

7501x

Hi Poppy, sorry for the late reply I hadn’t seen the response. Thank you for your help. They will apply for UC but I think they’re unsure how it works when the house sale goes through in relation to how they report capital they have from the sale. They will have the capital (that exceeds £16,000), but then after paying for debts and essentials, the capital will drop to under £16,000 (and maybe even £6,000). 

I think they’re just a bit confused about whether they have to get approval to spend the capital once they receive it, or if they can spend it and obtain evidence so they aren’t accused of deprivation of capital, and also how they go about reporting all of the changes.

Thanks 😊 

poppy123456

They won’t be entitled any means tested benefits if their savings/capital is more than £16,000. Once it goes below this then they will be able to claim and the deductions mentioned above will apply.

Paying off debt is not classed as deprivation of capital for UC. 

7501x

Thanks Poppy. Sorry about the late reply again for some reason I’m not getting notifications on here like I used to!

Most of the money is going to be used to pay off debts, however if some outgoings are not as clear cut as that, do they spend the money as soon as they need to and then they will be asked for evidence afterwards? Or do they need to get approval?

Sorry for all the questions! 

poppy123456

They just use it to live off until the savings drop below £16,000. They don't need to get approval for anything because they are not yet claiming any means tested benefits. Once it does, whether there's any entitlement to UC will depend on their circumstances.