Deprivation of capital

bertiebat

I have no desire to fall into a position of means tested benefit, but wondered how does this system works.

If one has a certain level of savings over the means testing threshold and is unable to find any other income then obviously savings will be reduced to cover living expenses.

Once the savings have got to the threshold then certain means tested benefits would apply. At this point I assume that some sort of assessment is done to check that the 'Deprivation of capital' rules don't exclude entitlement to benefits.

My question is how to they judge what is a fair rate of living of your own money.

Indie_Kid

It's do with the amount the law says you need to live on.

Jowo_2

This is a complex area and the guidance issued to DWP decision makers in the area of deprivation of capital and notional capital runs to dozens of pages!

www.dwp.gov.uk/docs/hbgm-bw1-assessment-of-capital.pdf

Deprivation of capital is also about knowingly reducing it to deliberately maximise eligibility for means tested benefits. I got the impression that the DWP have to prove that the claimant is aware of these thresholds.

A person shouldn't have a problem if they spent money on household expenses but could have a problem if they gave sums away to relatives and did not have any evidence of a loan that must have been paid,plus bought a top of the range car to replace their banger, for example. They can pay off debts but only those where there is a legal obligation to satisfy them.

Unlike sh1305, I don't believe that they are expected to spend according to a particular formula or certain threshold where the spend is considered acceptable. I reckon DoC is considered on a case by case basis.

Kimitatsu

Jowo is quite right - the decision is up to the compliance officer to determine what expenses are needed for each case to live on. For example if you had central heating fitted to your property then that would be a reasonable living expense, but if you went to Spain for 6 weeks to avoid the winter then it would not.

There was a case a few years ago of a couple who won the lottery, spent all the money until they were below the threshold and then applied for means tested benefits and were turned down as they were seen to be depriving themselves of the income because it had been spent on holidays and a brand new large car.

As long as you can show that your living expenses are reasonable then you should be ok.