Savings

BenPonti · 31 October 2004 at 3:15PM

My husband and I are both disabled and on benefits. I am confused, though, how much we can have in savings before we have to notify whoever for IS and HB purposes. I am 59 and hubby is 80 so I think there may be some age allowance that kicks in but its all a bit confusing. ???

Ted_Hutchinson · 31 October 2004 at 4:35PM

From Social security benefit rates (GL23)
Savings rules – savings are sometimes called Capital

Upper limit (income-based Jobseeker’s Allowance and Income Support) £8,000
Lower limit (income-based Jobseeker’s Allowance and Income Support) £3,000
Upper limit (income-based Jobseeker’s Allowance if you or your partner are aged 60 or over) £12,000
Lower limit (income-based Jobseeker’s Allowance if you or your partner are aged 60 or over) £6,000
Upper limit (Income Support if your partner is aged 60 or over) £12,000
Lower limit (Income Support if your partner is aged 60 or over) £6,000
Upper limit (Housing Benefit (HB) and Council Tax Benefit (CTB)) £16,000
Savings/capital are ignored for HB/CTB where a person is in receipt of Income Support, income-based Jobseeker’s allowance, or the Guarantee Pension Credit (with or without a Savings Credit).
Child and young person’s limit £3,000
People in care homes
Upper limit (income-based Jobseeker’s Allowance, Income Support, Council Tax and Housing Benefit) £16,000
Lower limit (income-based Jobseeker’s Allowance, Income Support, Council Tax and Housing Benefit) £10,000

The next page (26) tells you about Tariff Income.
As your husband is over 60 (and I presume not in a Care Home) your lower Savings limit it £6000. Tariff Income is what the DWP (and Inland Revenue) call the expected income they think you will derive from your excess savings. So for every £500 of savings you lose £1 a week benefit until you reach the Upper Savings Limit of £12,000, more details in the guide linked to above.

BenPonti · 31 October 2004 at 8:08PM

Upper limit (Income Support if your partner is aged 60 or over) £12,000

Would this figure be per person, if a couple or is it total for a couple?

Ted_Hutchinson · 31 October 2004 at 10:00PM

Would this figure be per person, if a couple or is it total for a couple?

The amount for a couple is the same as for an individual. The answer I gave above was in respect of Income Support, if you were considering the impact of savings on Pension Credit then this paragragh from Saga Magazine Paul Lewis writing about Pension Credit and Capital summarises the position, note that there is in this situation no upper capital limit but the effect of the "Notional" or "Tarriff" income gradually diminishes the amount of Pension Credit.

From October there will also be more generous rules for people who have saved up money. Officially it is called ‘capital’ but it includes cash and investments such as shares that can be converted into cash. Capital up to £6000 will be ignored completely. Capital of more than £6000 will be converted into a notional ‘income’ regardless of what the money actually earns. Once capital exceeds £6000 the DWP assumes the person has £1 a week of income and a further pound for each extra £500 capital. This ‘notional’ income is then added to any other income before Pension Credit is worked out. The current upper limit of £12,000 on capital will be scrapped. So some people with considerable savings who could not get MIG will be able to get pension credit. For example, a single pensioner with just the basic state pension and £15,000 in the bank will be counted as if she had an extra £18 a week income but will still get Pension Credit of £17.45 a week (over 65) or £6.65 (aged 60-64). Before October nothing would be paid. A couple living on the basic state pension of £123.80 who have £45,000 in the bank could still get Pension Credit of 80p a week.

HairyHatMan · 23 May 2005 at 12:28PM

I am soon to be made redundant and will probably have to spend some time on benfits (I am already signed off from work and claiming incapcity benefit). M yredundancy pay will pay off my debts, plus some. Hence I will have savings that will reduce my benefit entitlement. If I give some money away (lets say £10,000) to a family member, pressumably this could be traced and seen as some kind of avoidance. However, if I decided I needed to buy a new car, then would it not be legitimate to spend £10,000 on such a purchase, which would then not be taken into account when determining my eligibility for benefits. As it happens, I don't need a new car and the depreciation might be more than the difference in benefits I get. Has anyone any comments or better suggestions as to how to 'loose' £10,000 without risking that 'investment' (a nice diamond ring springs to mind)?

Debt_Free_Chick · 23 May 2005 at 12:40PM

Whatever you do, there is a risk that the Benefits Agency will deem that you have deliberately deprived yourself of assets, in order to claim benefits

Ted_Hutchinson · 23 May 2005 at 1:34PM

HairyHatMan wrote:

I am soon to be made redundant and will probably have to spend some time on benfits (I am already signed off from work and claiming incapcity benefit). M yredundancy pay will pay off my debts, plus some.

I should first point out that Incapacity Benefit is not means tested so this (like disability living allowance) will not be affected by any redundancy payment. It is only "Means Tested" benefits which are affected by the Capital/savings thresholds described in the back of this leaflet Social security benefit rates (GL23),
It isn't quite as straightforward as you may imagine, as paying off debts earlier than you are legally required to do may also be seen as a deprivation of capital to obtain benefit you would not otherwise be entitled to. You need to have as much debt in the form of an overdraft which the banks simply reclaim, rather than you repaying when the account is in credit.
As the benefit office will assume a redundancy payment will be made so will ask for copies of your bank statements. They will then want you to explain your purchases if the capital appears to have got "lost" very quickly. Keeping receipts will make it easier to justify your purchases. While the diamond ring may seem to you like a good investment, and you are right that you will not be required to sell "capital items" it doesn't seem to me an essential or normal purchase, certainly to my lifestyle and possibly yours.

Some people have found even taking a holiday abroad has been classed as "Deprivation of Capital" and been made to do without benefit for a while but this may be owing to the type and duration of the holiday chosen.

You may find it easier, should you have to appeal any decision to withhold benefit, to have purchased items for which you can point to a specific need. Replacing windows, renewing kitchen units, paying for a conservatory so you can benefit from greater sunshine be easier to justify as would any spend related to your illness or disability. It is your "INTENTIONS" they will be trying to second guess and for someone with an illness and possibly limited prospects of employment ahead is buying an extremely expensive diamond ring a necessity or simply a intentional spend to lower your capital/savings threshold to bring you into the realm of means tested benefits? A necessary spend to replace your roof to keep you property in good condition would provoke no such questions.

damo73_2 · 24 May 2007 at 8:54PM

as well as the above suggestions, the repaying of a long term loan to a family member now that u can afford it is usually accepted as long as it will be confirmed. keep all bank statements.

I'm an income support decision maker