"Deprivation of Capital" when on Income Support

Wolesley

25 years ago I bought a house for £15,000 with an endowment mortgage, about 3 years later I borrowed a further £5,000 also on an endowment mortgage. I then sold the house and paid off the 2 mortgages about 1 year later because I couldn’t afford to keep up the payments. I was persuaded to keep up the payments on the life insurances and these are due to mature in the next 2 months and will total approximately £15,000.

I have been in receipt of Income Support (IS), due to various disabilities, for about the last 12 years and know that I must declare this money to the IS Department and fully intend to do so. I also understand the rules stating the first £6,000 of saving not affecting my IS and losing £1 for every £250 above that amount up to £16,000 whereupon all IS would be lost.

My question is about spending any of the savings. I’ve spoken to my local Citizens Advice Bureaux (CAB) and they said that if I spend too much I could be accused of deliberate “Deprivation of Capital” and would be considered to still be in possession of the capital I’d spent and would not be re-assessed. CAB couldn’t, however, tell me what would be considered too much. For example, if I spent £2,000 on a car and £300 on a new couch (as my old one is held together with electrical wire) and £300 on a new fridge freezer (as the fridge in my old one no longer works) would this be considered deliberate “Deprivation of Capital”?

Any advice would be truly appreciated.

HappyMJ

No that would be acceptable. It's really for people who just give away money for no real reason other than to get more benefit. You need a car £3000 is fair. You need a couch £300 is very good and you need a fridge freezer and £300 is fair. There isn't any guidelines on what is too much. So use your common sense and buy only what is needed and back everything up with receipts.

PrincessDonna2009

No it wouldn't been seen as that!

Unless you don't go mad and spend like £5000 on a car and like £2000 on sofa and have an expensive holiday of like £2000 or so....basically if you spend it within a reasonable amount on certain things then you are ok, but if you go out on purpose and squander it just so you can claim benefit's again tehn you would be done for that.

Hope that helps you

dmg24

HappyMJ wrote: »

No that would be acceptable. It's really for people who just give away money for no real reason other than to get more benefit. You need a car £3000 is fair. You need a couch £300 is very good and you need a fridge freezer and £300 is fair. There isn't any guidelines on what is too much. So use your common sense and buy only what is needed and back everything up with receipts.

Common sense would be to get DWP approval before spending anything. I agree that the amounts involved should be acceptable in their own right, but buying several things in a short period *could* still point to intentional deprivation. It is always best to get things like this in writing, so as to avoid any investigation in the future (even if the outcome to an investigation is positive, the process in itself can be stressful).

TOBRUK

I agree with the advice that other posters have given to you Wolesley, but especially with dmg. If it were me I would write to them when you declare this money and explain what you need eg a car, fridge, sofa etc it would help if you could give them an idea of how much you are intending to spend.

They will advise you in writing on whether they think it is reasonable spending and then you can have peace of mind. Keep any receipts and the letter they send you just in case of future queries .... as you never know!

HappyMJ

dmg24 wrote: »

Common sense would be to get DWP approval before spending anything. I agree that the amounts involved should be acceptable in their own right, but buying several things in a short period *could* still point to intentional deprivation. It is always best to get things like this in writing, so as to avoid any investigation in the future (even if the outcome to an investigation is positive, the process in itself can be stressful).

How does one get this DWP approval? I have never needed DWP approval before to spend my own money and I get monies in and out which far exceed the £6000 lower limit. As in a client pays me on invoice and I spend the money. I don't claim anything from DWP I only claim from HMRC (maximum tax credits) and from council (maximum housing and council tax benefit). Quite strange I've never heard of that before.

Thanks for your advice.

diolch

PrincessDonna2009 wrote: »

No it wouldn't been seen as that!

Unless you don't go mad and spend like £5000 on a car and like £2000 on sofa and have an expensive holiday of like £2000 or so....basically if you spend it within a reasonable amount on certain things then you are ok, but if you go out on purpose and squander it just so you can claim benefit's again tehn you would be done for that.

Hope that helps you

I'm sorry but I can't agree with you.
Who defines what is reasonable?
I have always had expensive cars, Mercs etc and generally spend about £8k - £10k every three/four years to up date it. That is reasonable to me. If then I was on benefits and received an inheritance, spending that level is the norm to me but may not be to others.

So is reasonable to do with what is normal to me or what is reasonable to someone else who has never bought a car in his/her life for more the £500?

Jowo_2

Find the DWP Decision Makers guide on the internet which is the manual that provides advice to staff on how to identify deprivation of capital. That way, you understand what they regard as unacceptable spend.

There should be no issues with ordinary purchases, including replacement furniture, repairs/refurbishment, holidays and so on.

Deprivation of Capital regulations are more about preventing people from extravagant spending or transfering money to relatives or paying off loans early where there is no legal obligation to do so, in a deliberate attempt to put themselves in a position to claim benefits.

Blackpool_Saver

paying off loans early? so you can't pay off expensive loans without losing benefit?

Jowo_2

Blackpool_Saver wrote: »

paying off loans early? so you can't pay off expensive loans without losing benefit?

Go and find the decision makers guide. There is definately something in it about paying off a loan EARLY when there is no legal imperative to do so. There's not much context to it, though.

Perhaps its to encourage someone to honour their existing financial commitments at the same pace as before and use their windfall to pay for their ordinary living expenses rather than tuck it away to pay off their mortgage early, for example, and then continue relying on the state to fund their other costs? "Well, DWP, I had £25k given to me as an inheritance and instead of using it to pay for my groceries and council tax for a few years, I thought I'd just retain this newly found wealth for myself by investing it in paying my mortgage down. Please continue paying me my means tested benefits as I now don't have any money."

I don't know.

Wolesley

Jowo wrote: »

Find the DWP Decision Makers guide on the internet which is the manual that provides advice to staff on how to identify deprivation of capital. That way, you understand what they regard as unacceptable spend.

There should be no issues with ordinary purchases, including replacement furniture, repairs/refurbishment, holidays and so on.

Deprivation of Capital regulations are more about preventing people from extravagant spending or transfering money to relatives or paying off loans early where there is no legal obligation to do so, in a deliberate attempt to put themselves in a position to claim benefits.

Although the DWP Decision Makers guide is a very long and technical document I found it very interesting and hopefully useful. Thanks