Universal Credit- Deprivation of Capital
Is making overpayment towards mortgage considered as deprivation of capital?
I had about 20K of savings and used the funds to make overpayment towards the mortgage after one month of applying for UC. This wasn’t my first overpayment & made several other overpayments towards the mortgage in the past as I didn’t try to get rid of the the funds in order to increase my UC entitlement.
I was moved from Tax Credit to UC, I thought I had migration protection & honestly didn’t know the consequences (if any) for paying towards mortgage as I thought UC allows to reduce debts.
I have been asked to provide statements which I have provided & now waiting for a decision.
Comments
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Paying off debt including a mortgage is allowed when claiming UC.
However, you would have still needed to have reported your capital/savings when you claimed UC to start with.You don’t have the 12 months transitional protection for capital over £16,000 unless you report the capital.
You will now need to wait for them to make a decision. How long that will take I don’t know. You may also have a small fine for not reporting the capital when you claimed UC.
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Thank you for quick reply. I have come across conflicting information about paying off debts, especially mortgage.
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I don't understand why you didn't declare you when you claimed UC. Had you done that and then paid off your mortgage it would have been fine. There would have been TP for 12 months too. See link Notional Capital part 50.
(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person;
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My partner did our UC applications and I just checked the information she provided. She actually did declare the savings & as stated we made the mortgage overpayment after a month (just before our first UC payment). I have a full time job & partner is carer.Today we received the decision:
“Dear ….,Capital is money available to you from things like savings, a property that isn’t your main home, a trust fund or stocks and shares.
The law says people are treated as still having capital they do not have if they deprive themselves of it in order to get Universal Credit or more Universal Credit. This capital is called notional capital.
When calculating your level of capital the question of deprivation of capital has to be considered.
We have looked at the information provided and we have not accepted your reasons for the reduction in your capital.
You are therefore treated as having capital of £21,021.56. This means your Universal Credit will be reduced for 12 assessment periods, this reduction is called an Assumed Yield.
Your Universal Credit statement will inform you of the deduction that will be made from your payment each month.”0 -
My partner did our UC applications and I just checked the information she provided. She actually did declare the savings & as stated we made the mortgage overpayment after a month (just before our first UC payment). I have a full time job & partner is carer.
Today we received the decision:
“Dear ….,Capital is money available to you from things like savings, a property that isn’t your main home, a trust fund or stocks and shares.
The law says people are treated as still having capital they do not have if they deprive themselves of it in order to get Universal Credit or more Universal Credit. This capital is called notional capital.
When calculating your level of capital the question of deprivation of capital has to be considered.
We have looked at the information provided and we have not accepted your reasons for the reduction in your capital.
You are therefore treated as having capital of £21,021.56. This means your Universal Credit will be reduced for 12 assessment periods, this reduction is called an Assumed Yield.
Your Universal Credit statement will inform you of the deduction that will be made from your payment each month.”0 -
Paying off debt, including a mortgage should not be treated as DoC for UC purposes. You can see that in the UC regulations I posted yesterday. Is there anything else you haven't mentioned here that may have contributed to the decision? was it just your mortgage you paid off or did you spend the money on something else as well?
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Thank you very much for the reply.
The money was used only to make overpayment towards the mortgage, nothing else. This is our only home & it’s a joint ownership between me and my partner. We provided bank statement to UC showing the money was paid towards the mortgage.
Is there any information that we can present in order for them to reconsider the decision?
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The only other thing that I can think of is that you didn't actually pay off the mortgage completely, you paid it towards the mortgage. I don't know if this is any different to paying off a debt completely. For this reason I'd advise you to speak to an advice agency near you. Hopefully, they will be able to give you more information than I can because I'm no expert. This link will help you find what's local to you.
Edit to add. Although, I'm still scratching my head because what ever way you look at it, it's still a debt and paying off debt is specifically written in the UC regulations so I'm baffled why they came to this decision.
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Thank you so much for the information. I’ll try to get professional advice and see what we can do. I’ll let you about the outcome.
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Since this is a situation that doesn't come up very often we'd be very appreciative @adamg123 for a confirmation on what the DWP have decided. They do often… interpret, things very much to their favour.
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Did you get this decision overturned?
It's worrying that they can get it so wrong.
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People are not treated as having capital of which they have deprived themselves if it reduces or pays a debt owed by the person. I echo the posters who have advised to seek advice from an advice agency. Unfortunately I have come across a number of instances where UC staff don't appear to understand their own guidance.
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