Benefits Question

mrs*n_4

I personally think its reasonable to pay a lump sum off your mortgage or your childs school fees before you are made redundant. If its going to be a 60 day notice period then doing it sooner rather than later would be better as in my (limited) experience finances/income evidence is based on 2 months bank statements and savings ...? Like i say, very limited experience. But if its a 60 day notice period and youre in the consultation period then paying a lump sum off now wont necessarily be an issue for the dwp. If you brought you savings down below that 16K threshold then council tax will indeed have a chunk paid (you assumed it would all be paid but just like housing benefit they take into account your income and savings and award you appropraitely, if you have over 16K you get diddly squat)

Yes you arent exactly on the breadline but you dont want to be either....so taking steps to ensure that for the (hopefully short) period of time youre out of work that you can manage.

Agree with a previous post, sounds like your kids have a good dad - good luck

alwaysonthego_2

mrs*n wrote: »

I personally think its reasonable to pay a lump sum off your mortgage or your childs school fees before you are made redundant. If its going to be a 60 day notice period then doing it sooner rather than later would be better as in my (limited) experience finances/income evidence is based on 2 months bank statements and savings ...? Like i say, very limited experience. But if its a 60 day notice period and youre in the consultation period then paying a lump sum off now wont necessarily be an issue for the dwp. If you brought you savings down below that 16K threshold then council tax will indeed have a chunk paid (you assumed it would all be paid but just like housing benefit they take into account your income and savings and award you appropraitely, if you have over 16K you get diddly squat)

.

As previously stated to pay a lump sum off the mortgage will be seen as deprivation of capital to claim benefits by the DWP. If a person knows that they may be made redundant and spend their capital so they can claim state benefits, the DWP will still class them as having that money (nominal income).

mrs*n_4

alwaysonthego wrote: »

As previously stated to pay a lump sum off the mortgage will be seen as deprivation of capital to claim benefits by the DWP. If a person knows that they may be made redundant and spend their capital so they can claim state benefits, the DWP will still class them as having that money (nominal income).

yes that was a 'personal' opinion, that i felt it wouldnt be unreasonable, not that the DWP wouldnt feel that way. Sorry if it wasnt clear, should have made it more so.

But they may not class this as notional income until a decision is made then he has done nothing wrong. In the current economic climate you cannot blame ANY person for safeguarding themselves in case something should happen and right now all he knows is that something "could" happen. He does not KNOW. And until he does then he is not deliberately depriving himself of capital, he is safeguarding himself from a 'possible' but not definite redundancy/unemployment.

Who would it fall to to prove he has deliberately deprived himself of capital? ...have never thought to ask so would appreciate if anyone knows how that works? Ta x

alwaysonthego_2

mrs*n wrote: »

yes that was a 'personal' opinion, that i felt it wouldnt be unreasonable, not that the DWP wouldnt feel that way. Sorry if it wasnt clear, should have made it more so.

But they may not class this as notional income until a decision is made then he has done nothing wrong. In the current economic climate you cannot blame ANY person for safeguarding themselves in case something should happen and right now all he knows is that something "could" happen. He does not KNOW. And until he does then he is not deliberately depriving himself of capital, he is safeguarding himself from a 'possible' but not definite redundancy/unemployment.

Who would it fall to to prove he has deliberately deprived himself of capital? ...have never thought to ask so would appreciate if anyone knows how that works? Ta x

If someone has substantial savings that would affect any entitlement to benefits and they were at risk from redundancy then it is sensible that person does not go and pay a lump sum off his mortgage etc when he should be using that money to support himself and his family. To delibrately deprive yourself of your capital to gain benefits is fraud. I am sure if you can get hold of the CPAG tax credits and benefits guide it will explain it in more detail.

The DWP will investigate and they can check bank accounts, ask employers etc.

mrs*n_4

Ta - new one out this month i think so will add it to my list My husband says i have peculiar taste in bedtime reading thanks for the pointer

SuziQ

This seems to come up all the time (deprivation of capital question) and this was posted a couple of days ago


This is taken directly from the DWP website

'P1.703 A claimant should still be regarded as having deprived themself of a capital resource if they have disposed themself of it by way of a gift to a third party. However, they should not be regarded as depriving themself of it if they did it to
HB(SPC) Reg 47; CTB(SPC) Reg 37

• reduce or pay off a debt they owe
• purchase goods or services the Decision Maker considers reasonable, given their circumstances, eg
  • payments to reduce/pay off a debt, eg paying a credit card account or mortgage early
  • for day to day expenses
  • to improve their quality of life, eg buying a new kitchen or car
  • for medical treatment
  • for home repairs
  • for a holiday '

alwaysonthego_2

SuziQ wrote: »

This seems to come up all the time (deprivation of capital question) and this was posted a couple of days ago


This is taken directly from the DWP website

'P1.703 A claimant should still be regarded as having deprived themself of a capital resource if they have disposed themself of it by way of a gift to a third party. However, they should not be regarded as depriving themself of it if they did it to

HB(SPC) Reg 47; CTB(SPC) Reg 37

• reduce or pay off a debt they owe
• purchase goods or services the Decision Maker considers reasonable, given their circumstances, eg
  • payments to reduce/pay off a debt, eg paying a credit card account or mortgage early
  • for day to day expenses
  • to improve their quality of life, eg buying a new kitchen or car
  • for medical treatment
  • for home repairs
  • for a holiday '

It is a very grey area but for a person to have over £16000 and pay off a lump sum off their mortgage so they can claim benefits it is deliberately depriving themselves of their capital and they need to seek professional advice before they do so. I have seen many clients who have been in that position and have been investigated by the DWP.

alwaysonthego_2

Getting a redundancy or severance payment

When you finish work you may get statutory redundancy pay or a lump sum payment from your employer. These payments may count as capital if you are claiming a means tested benefit. Here are some rules about capital.
If you are under 60 you cannot get most means tested benefits while you have capital (savings) of £16,000 or more. This includes your partner's capital. If you have capital between £6000 and £16,000 you are classed as having a set amount of income each week, called "tariff income".
Means tested benefits include Income Support, Employment and Support Allowance (income related), Jobseekers Allowance (income based), Pension Credit, Housing Benefit and Council Tax Benefit.
If the benefit office thinks you have spent capital or savings to help you get more benefit

In this case they can treat you as though you still have the money - called notional capital. This rule may apply even if you use the money to pay off a mortgage or debts.

http://www.newcastle.gov.uk/core.nsf/a/wr_redundancyandbenefits

SuziQ

Why would the DWP website be any less reliable than the Newcastle one? As you say,they need to take advice,but the way I see it,if they reduce their mortgage and then at some stage the govt has to start paying the interest on it,then they will pay less if the claimant has used the redundancy or savings to reduce the mortgage. It sounds like swings and roundabouts to me.Even your link doesn't say this is 'deffinite'. I just wish the rules were very clear and deffinite so that everyone knows where they stand.As I'm not likely to ever have any savings or redundancy ete it doesn't apply to me,so I have no vested interest in this,it just frustrates me that any number of us can post links that seem to happily contradict one another. Even advisors on the phones often get it wrong when we phone for advice,and is it any wonder?

[Deleted User]

SuziQ wrote: »

Why would the DWP website be any less reliable than the Newcastle one? As you say,they need to take advice,but the way I see it,if they reduce their mortgage and then at some stage the govt has to start paying the interest on it,then they will pay less if the claimant has used the redundancy or savings to reduce the mortgage. It sounds like swings and roundabouts to me.Even your link doesn't say this is 'deffinite'. I just wish the rules were very clear and deffinite so that everyone knows where they stand.As I'm not likely to ever have any savings or redundancy ete it doesn't apply to me,so I have no vested interest in this,it just frustrates me that any number of us can post links that seem to happily contradict one another. Even advisors on the phones often get it wrong when we phone for advice,and is it any wonder?

The rules on capital deprivation are complex and it often falls to the individual DM to interpret them on a case by case basis,I would agree that you would think that paying a lump sum of a mortgage which would then mean the dwp paying out less ISMI would make sense to the dwp,apparently it doesnt.So I think imho that the advice to anyone who has been made redundant or expects to be, to consider carefully how they dispose of capital is good advice,and that any action that means they will become entitled to benefits where they may not have done needs careful consideration.