Claiming benefit when you have large savings?

cw18

gunnaknow wrote: »

Thanks for the responses so far guys. I have no idea what DLA, ESA, IB and IS mean though.

DLA = Disability Living Allowance
ESA = Employment & Support Allowance (which has now replaced IB)
IB = Incapacity Benefit
IS = Income Support

cw18

gunnaknow wrote: »

The only income tax that I have ever paid is the small amount when I was 18 and the tax deducted from my large savings upon interest being paid in.

And you should be filing a Tax Return to reclaim that each year. Even though you're not working you still have a personal tax allowance (currently £6035), so shouldn't be paying tax on that amount each year.

aurorahelios

I think you should take some advice from somebody who deals with the benefits system. Some local councils have people who deal with this sort of thing it would probably be worth contacting them to find out.

I am almost certain if you buy a house with your money the DWP will consider that an attempt to intentionally dispose of capital and you will become ineligible for benefits.

You mention you've never claimed benefits and your lack of NI. As you've never paid enough NI you will not be eligible for IB as that is a contributory benefit so you would be claiming income support (IS) on incapacity grounds. If your health problems are severe enough you may be able to claim disability living allowance (DLA) this is non-contributory and is not dependent on income or savings. I believe (although I am not a benefits expert) that if you claim incapacity benefit whether through contributory or IS route then your NI payments are covered for the period you are on the benefit from the government. So on that basis you should submit a claim anyway and should have done way back when you first became ill.

aurorahelios

cw18 wrote: »

And you should be filing a Tax Return to reclaim that each year. Even though you're not working you still have a personal tax allowance (currently £6035), so shouldn't be paying tax on that amount each year.

It doesn't necessarily need to be a tax return there is a simple form which, deals with interest from savings if that is your only income - http://www.hmrc.gov.uk/forms/r40.pdf
You can only claim back a maximum of 5 years though so don't leave it too long.

You may also claim tax to be paid gross by filling in http://www.hmrc.gov.uk/forms/R85.pdf

gunnaknow

KimYeovil wrote: »

Are you spending the capital as well as the income from the savings? After all, if the lump sum were large enough to buy you a home then (well, before a couple of days ago) the interest would be higher than benefits income.

The savings are only around £115,000, so it's only enough for a fairly small house. I have been earning around 6% interest on that, or around 5% after tax. So that's about £5750 a year. Is that higher than any benefits that I'd get? I'm trying to get my savings into some fixed rate savings, so that I'll get around 7% interest for the next 6-9 months, so my income might be slightly higher for those months but then might dramatically drop when the fixed rate terms end.

cw18 wrote:

And you should be filing a Tax Return to reclaim that each year. Even though you're not working you still have a personal tax allowance (currently £6035), so shouldn't be paying tax on that amount each year.

Thanks, the tax allowance should cover me for all of the interest on my savings then. Without tax might my income from interest rise above what I would get on IB/IS? Also, what's the maximum income that I'm allowed when claiming income support? Does someone with no income receive more IS than someone nearer the allowable limit of income?

aurorahelios wrote:

I am almost certain if you buy a house with your money the DWP will consider that an attempt to intentionally dispose of capital and you will become ineligible for benefits.

Even if I've been living at my parents' house for the last ten years? Wouldn't they be able to see that my parents can't support me forever and that I need my own place? I can't see how in that situation it could possibly smell as if I was trying to get rid of my savings just to get IB/IS.

aurorahelios wrote:

If your health problems are severe enough you may be able to claim disability living allowance (DLA) this is non-contributory and is not dependent on income or savings.

I don't know whether my health problems are severe enough for DLA. Do you think that I would be eligible if my rheumatoid arthritis means that after two hours of walking or being on my feet, my hips start to ache alot and I need to have a lie down? Or that my shoulder joints crack and cause pain with lifting? Or that my chronic fatigue syndrome causes me to need to lie down every couple of hours, sometimes all day? Or that my social anxiety disorder makes me fearful of meeting and talking with people and keeps me house bound? Are any of these problems sufficient to claim DLA?

aurorahelios wrote:

I believe (although I am not a benefits expert) that if you claim incapacity benefit whether through contributory or IS route then your NI payments are covered for the period you are on the benefit from the government. So on that basis you should submit a claim anyway and should have done way back when you first became ill.

Didn't you just say before hand that I couldn't claim IB though?

Thankyou so much for your support guys. You're really doing a sterling job!

cw18

Benefits Agencies will look at your capital rather than the income from it. If you have more than £16K as a couple (so I assume £8k for a single person) then you can't get anything that's means tested. If you have between £6k and £16k for a couple (£3k and £8k if single?) they deduct £1 of means tested benefits for every £250 (or part of) between these amounts. I believe this is what they expect you to get as interest on it -- but who can get 10% interest these days

If you spend your capital faster than what you would get if entitled to full means tested benefits they can claim you shouldn't have spent it -- and will treat you as if you still have the capital available. This is where you have problems buying a house with it -- but you can use it to pay rent at a reasonable rate (ie. what you would qualify for if you got Housing Allowance (forget the proper name).

I'm about to get a redundancy payment of over the £16k we're allowed as a couple -- and have been told to keep accounts of where we spend it until we fall below £16k, at which point we can put in a claim for IS. They are likely to want to see my accounts, but if they don't initially ask for them and reject our claim, I believe I can appeal and sumbit them then.

healy

cw18 wrote: »

Benefits Agencies will look at your capital rather than the income from it. If you have more than £16K as a couple (so I assume £8k for a single person) then you can't get anything that's means tested. If you have between £6k and £16k for a couple (£3k and £8k if single?) they deduct £1 of means tested benefits for every £250 (or part of) between these amounts. I believe this is what they expect you to get as interest on it -- but who can get 10% interest these days

If you spend your capital faster than what you would get if entitled to full means tested benefits they can claim you shouldn't have spent it -- and will treat you as if you still have the capital available. This is where you have problems buying a house with it -- but you can use it to pay rent at a reasonable rate (ie. what you would qualify for if you got Housing Allowance (forget the proper name).

I'm about to get a redundancy payment of over the £16k we're allowed as a couple -- and have been told to keep accounts of where we spend it until we fall below £16k, at which point we can put in a claim for IS. They are likely to want to see my accounts, but if they don't initially ask for them and reject our claim, I believe I can appeal and sumbit them then.

The lower and higher capital limits are the same for single people and for couples.

cw18

thanks for that clarification I was confused that I've never been able to find anything different, but could have sworn it used to be extra for a couple

gunnaknow

Just to clarify, does that mean that I'm not eligible for IS or IB? DLA isn't means tested is it?

healy

gunnaknow wrote: »

Just to clarify, does that mean that I'm not eligible for IS or IB? DLA isn't means tested is it?

As you have not paid NI you would not get IB ( now ESA for new claims). As you have too much capital you would not get IS (which would also be ESA now for new claims). If you have care and mobility needs you might get DLA which is not means tested.