income support / deprivation of capital

Jet · 23 July 2008 at 12:33PM

Last year I inherited a fairly substantial amount of money. I kept the money in my account and intended to use it to move house. My intended house purchase fell through and I have recently used some of the inheritance to pay some money off my current mortgage instead. I have been working throughout.

The company I work for is a small company and has always been a bit "iffy" financially. Things are not looking good at the moment and there is a real possibiliity the business could fold.

My concern is that if I lose my job and have to claim income support (I'm a single parent), would DWP look at the paying off of the mortgage as deprivation of capital? Obviously, I have no way of knowing if the business is going to close or not and all depends on orders and the bosses ongoing ability to "prop" it up financially.

Thanks.

[Deleted User] · 23 July 2008 at 1:04PM

I would have thought that any financial dealings BEFORE making a claim would not be relevant if you have to claim I/S,remember that savings under 6k dont count,between 6k-16k benefit is reduced and over 16k no means tested benefits are payable.
As to what does and what doesnt count as capital deprivation only the dwp can answer that one and even then they dont always make the right decision.

Strike_Team · 23 July 2008 at 1:49PM

If you've paid enough NI contributions you can claim Contribution-Based Jobseekers Allowance for the first 6 months. This is not affected by your savings.

Jet · 23 July 2008 at 2:55PM

Thanks. Maybe that's what I would claim. Is there much difference between that and income support? I assume I would still get child tax credits of some sort and child benefit? I assume being on income support would mean I would get mortgage interest paid at some point whereas jsa wouldn't mean so?

I don't want to be on either for very long if I can avoid it, but flexible work hours and corresponding childcare are not always easy to find around here. It's why I've stuck it out in this job.

Kimitatsu · 23 July 2008 at 4:50PM

You wont be able to claim income support to begin with anyway. You will have to apply for contribution based JSA as you will be actively looking for a job.

As a single parent you will be assigned to a lone parent adviser who can tell you which companies do flexible working etc and can arrange for a run on of benefits when you do find work. They also have access to grants for interview expenses (travel, and suitable clothing) as well as being able to help you with suitable childcare arrangements.

Dependant on the age of your child you are entitled to ask for flexible working if they are under 6 years old (soon to be amended up to at least 12 I think).

rachnbri · 23 July 2008 at 5:08PM

Kimitatsu wrote: »

You wont be able to claim income support to begin with anyway. You will have to apply for contribution based JSA as you will be actively looking for a job.

As a single parent you will be assigned to a lone parent adviser who can tell you which companies do flexible working etc and can arrange for a run on of benefits when you do find work. They also have access to grants for interview expenses (travel, and suitable clothing) as well as being able to help you with suitable childcare arrangements.

Dependant on the age of your child you are entitled to ask for flexible working if they are under 6 years old (soon to be amended up to at least 12 I think).

Sorry that's wrong. You do not have to claim JSA if you're actively looking for a job - you can claim IS and still do this!

Regarding the deprivat6ion of capital - I'm not sure but instinct tells me you should be OK. It would be a different story if you'd spent it all on fast cars and loose women etc purely so that you could claim benefits but clearing a chunk of your mortgage seems a perfectly legitimate use of your money.

real1314 · 23 July 2008 at 6:47PM

rachnbri wrote: »

Sorry that's wrong. You do not have to claim JSA if you're actively looking for a job - you can claim IS and still do this!

Regarding the deprivat6ion of capital - I'm not sure but instinct tells me you should be OK. It would be a different story if you'd spent it all on fast cars and loose women etc purely so that you could claim benefits but clearing a chunk of your mortgage seems a perfectly legitimate use of your money.

I'd concur with that too, reducing your outstanding mortgage is highly unlikely to be seen as deprivation. Although, contrary to what someone else said, spending before making a claim CAN be considered for deprivation, particularly where it can be seen that a claim was likely to be made in the future before the spending took place (if that makes sense??

)

MRS_TO_BE_2 · 24 July 2008 at 12:21AM

As long as the reason you are spending capital isn't for the sole purpose of being able to claim benefit you should be okay. Reducing your outgoings in the current climate would prob been seen as okay. Excessive reckless spending shortly before a benefit claim would not be!!!

Jet · 24 July 2008 at 2:23PM

real1314 wrote: »

I'd concur with that too, reducing your outstanding mortgage is highly unlikely to be seen as deprivation. Although, contrary to what someone else said, spending before making a claim CAN be considered for deprivation, particularly where it can be seen that a claim was likely to be made in the future before the spending took place (if that makes sense?? )

That was my worry. If they could prove that I knew my job was on the way out, they might see it as deprivation of capital.

But seeing as the company has been teetering on a knife edge for the last 18 months, what do I do? Not spend anything in case I need to make a claim one day?

Obviously it's a bit different if I have been given notice and KNOW I am going to be losing my job. At the moment, it's a possibility but not a definate.

I'm now really confused whether to claim income support of JSA, should I need to.

Would it make any difference?

rachnbri · 24 July 2008 at 2:41PM

It depends on what savings you have really.

If you have over 6000 Income support would be reduced, over 16000 (I think) and you wouldn't be entitled as it is a means tested benefit.If that's the case you'd be better off claiming JSA as it's contributions based and savings wouldn't effect it. You can claim conts based JSA for 6 months.

If you have under 6000 left it's up to you which you claim. The money's the same and the only real difference is the eligibility criteria.

For JSA you have to demonstrate that you're actively seeking employment, which involves signing on every fortnight and showing what you've been doing to look for work. You can be penalised if it is decided that you are not taking appropriate steps to find work.

On IS you can still be looking for work but you don't have to regularly attend the jobcentre to demonstrate this. You can access New Deal for Lone Parents claiming either IS or JSA.

Personally I would go for IS if the savings aren't going to be an issue as you have a lot more flexibility.

I am assuming that your children are under 16!

Allybally · 26 July 2008 at 4:06PM

I believe in order for deprivation of capital to be considered the DWP would have to be satisfied that you have disposed of the cash purely to gain entitlement to benefit. If you do claim IS you may get help towards payment of your mortgage, this would be based on oustanding balance of mortgage, which you have now reduced.

income support / deprivation of capital

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