How much savings you are allowed before it affects the benefits

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  • if on benefits and receive compensation cheque will it affect benefits
  • teddyboy02
    teddyboy02 Posts: 22
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    Hi All,

    In need of as much info and advice as possible due to being contacted by the DWP Fraud Officers who allege I did not inform them of monies paid out when medically retired from work.

    I wrongly believed that you were allowed up to approx 14-16k in savings/redundancy payments without having to declare it as this would not effect any claim for Income Support,Council Tax benefit and help with Mortgage payments????
    After receiving my redundancy which was approx 14k i paid off various creditors, some money loans from family members and had a family holiday too,I was left with approx 9k in capital.

    As of yet i do not know how much i have been overpaid but the little money i do have from my redundancy is now approx 6-7k and has been for last couple of years.

    If found guilty of deliberately and calculatedly defrauding the system what is most likely to be the outcome re punishment other than the obvious repayment,court case,poss criminal record and fine etc....???

    My biggest fear is that i could be jailed which would devastate both myself and my family and most probably leave them homeless and fighting to pay off unaffordable debts without me to help.

    Would it be a good idea to try and get some legal advice in this field too so that i at least have a chance to put forward my side and try to reason as to how and why this genuine mistake occurred??



    many thanks.

    any informative reply good or bad would be appreciated.
  • rogerblack
    rogerblack Posts: 9,446 Forumite
    teddyboy02 wrote: »
    After receiving my redundancy which was approx 14k i paid off various creditors, some money loans from family members and had a family holiday too,I was left with approx 9k in capital.
    <snip>

    As of yet i do not know how much i have been overpaid but the little money i do have from my redundancy is now approx 6-7k and has been for last couple of years.

    If found guilty of deliberately and calculatedly defrauding the system what is most likely to be the outcome re punishment other than the obvious repayment,court case,poss criminal record and fine etc....???


    Addressing only the overpayment for the moment, and assuming you did this solely to obtain more benefit. (this will be the DWP argument)

    The first issue is that money given to others when you absolutely don't have to, or unreasonable spending may result in you being treated as if you still have that money.

    'Absolutely have to' - means that debtors are at the point of calling debt collectors.

    Assuming that 4K of this early spending is 'unreasonable' spending that you diddn't have to do, that means you have 4K of 'notional capital'.
    This is added to your actual capital.
    Assuming none of the spending more recently (the 2-3K) was not on reasonable essentials, and is not disputed, this means that you are treated as if you have had 9+4=13K at the beginning of the period, and 6+4=10K at the end.

    13K will knock 28 pounds a week off means-tested benefits (13000-6000)/250), and 10K 16 pounds.

    A simple calculation would be (say) 28*52+16*(3*52) =around 4000.

    But, unfortunately, IS and CTB are treated separately in the calculations, so this increases your overpayment. (the CTB overpayment can't be as large, as it's at a maximum of your CT per year)

    Then you get into the more complex bits.
    The 'notional capital' (seperately for each benefit) is diminished by the amount your IS (for example) would have been reduced if you'd informed them.
    So your 'notional capital' reduces initially by 1456/year for IS, and by the full amount of your council tax for CT.


    The calculation that needs to be done for your actual overpayment per week is something like:

    date actual notional total effect overpayment

    01/01/2009 9000 4000 13000 28 28
    07/01/2009 9000 3972 12972 28 56
    14/01/2009 8700 3944 12644 27 83

    For both IS, CTB, and any other means-tested benefits you are entitled to.

    This is one half of the equation. This is an idea of how to compute the actual overpayment.
    (the 9000-8700 on 14/01/09 is an example if you'd bought a washing machine after your old one broke, it's an allowed expense)
    It's important that this is done correctly - as it will reduce dramatically the overpayment.

    _However_.
    The other, equally if not more important side is your state of mind.
    http://www.dwp.gov.uk/docs/dmgch52.pdf - you really need to read the bits that apply to you - specifically 52815 and on.

    52840 - 'you do not deprive yourself of capital for the purpose of getting more benefit if you did not know that it would affect your benefit'

    (this would be about the initial funds you gave away, and any major spending) It means that if you can get them to accept that you did not know, any overpayment is limited to the amount your benefit would have been reduced by your real capital.

    (so, in the case outlined above, it would start out at 9000-6000/250 = 12 pounds/week)

    Proving this is going to be hard.
    Were any of the debts at the stage of debt collectors?

    The overpayment looks like it's going to be several thousand pounds, certainly over 2.
    This is over the threshold for prosecution.

    I would strongly advise reading the above documents section on notional, actual capital, and deprivation several times - most of it can be skipped, as it's about stuff that doesn't affect you like vaccine damages and stuff.

    And yes, this is a time when a solicitor would be a good idea.
    You need to find one that understands benefit law.
    If they can't answer (roughly) 'what is deprivation of capital as it applies to means tested benefits' with more-or-less what the document above outlines, consider a different one.

    To recap.
    There are two separate strands.
    First, properly compute the actual amount of overpayment.
    This has two values, depending on if notional or only actual capital is used - this depends on if you can convince the DWP of your foolishness and normal honesty.

    The second is related to the first - if you can convince them that you've been honest - you are due perhaps to repay 2500 pounds (I've not done the sums), with no prosecution.

    If you can't, you will need to repay perhaps 4500, and prosecution is a possibility.





  • i have just lost my job and have been paid over 36k redundancy. i was told that when i claim any benifits they would only take notice of anything over 30k. i was made reduntant due to the site closing.
    can some please tell if this is true as i have to see the job centre people on monday.
    thanks for any help
  • pmlindyloo
    pmlindyloo Posts: 13,049
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    royalmail wrote: »
    i have just lost my job and have been paid over 36k redundancy. i was told that when i claim any benifits they would only take notice of anything over 30k. i was made reduntant due to the site closing.
    can some please tell if this is true as i have to see the job centre people on monday.
    thanks for any help

    Providing you have paid the correct class of NI contributions over the past two years or so you will be able to claim contribution based Job Seekers Allowance for 6 months.

    This is not means tested and your savings/redundancy money will not affect this benefit.
  • xylophone
    xylophone Posts: 44,140
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    "i was told that when i claim any benifits they would only take notice of anything over 30k. i was made reduntant due to the site closing. "

    Are you confusing benefits with tax? http://www.hmrc.gov.uk/guidance/redundancy-factsheet.pdf

    http://www.direct.gov.uk/en/Employment/RedundancyAndLeavingYourJob/Redundancy/DG_182503
  • royalmail wrote: »
    i have just lost my job and have been paid over 36k redundancy. i was told that when i claim any benifits they would only take notice of anything over 30k. i was made reduntant due to the site closing.
    can some please tell if this is true as i have to see the job centre people on monday.
    thanks for any help

    Dare I suggest that maybe your £36k will be enough to pay the bills until you get another job.... :shocked:
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  • you are right 36k would pay the bills till i get a new job but i'm going through a divorce, they say things come in 3's i'm just waiting for the next problem to turn up. so i'm losing house and all that go's with it so i will have to rent or it would be nice for the council to house me so i can have the kids over without spending all my redundancy as that is all i have.
  • HappyMJ
    HappyMJ Posts: 21,115
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    royalmail wrote: »
    you are right 36k would pay the bills till i get a new job but i'm going through a divorce, they say things come in 3's i'm just waiting for the next problem to turn up. so i'm losing house and all that go's with it so i will have to rent or it would be nice for the council to house me so i can have the kids over without spending all my redundancy as that is all i have.
    Use your £36k to buy your partners share of the house. The money would then be excluded from your capital calculation as the house you live in is always excluded.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • karenx
    karenx Posts: 4,988 Forumite
    I doubt the council will house you as you won't be seen as high up on the priority list. And even then you will still have to use your redundancy to pay the rent
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