Is a SIPP value used to calculate benefits?

roddycherub

I have a SIPP currently invested in shares and trackers, which I can either drawdown or place into an annuity at or before the age of 75.

Is its value taken into account under capital of the household when calculating for example housing and council tax benefit?

xylophone

As far as I know, there is the concept of "notional capital and income" - see http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/rr2-a-guide-to-housing-benefit/working-it-out/income-and-capital/

I suspect that the SIPP might well count as one or other of these?

[Deleted User]

as its an investment in a personal pension fund then the answer is NO

zagfles

The capital value of the SIPP isn't taken into account. It's not available capital, you can't just cash it in.

If you're old enough to be able to take an income from the SIPP and choose not to, the income you could have taken might count as notional income, not sure about this.

roddycherub

zagfles wrote: »

The capital value of the SIPP isn't taken into account. It's not available capital, you can't just cash it in.

If you're old enough to be able to take an income from the SIPP and choose not to, the income you could have taken might count as notional income, not sure about this.

thanks everyone. dividends are about £20 a week and an annunity about £1500 a year.

sorcerer

Just an interesting point, if I put a load of money into a SIPP, and found in the future, I didn't have enought to live and started to use benefits, would this count against you.

zagfles

sorcerer wrote: »

Just an interesting point, if I put a load of money into a SIPP, and found in the future, I didn't have enought to live and started to use benefits, would this count against you.

No, unless eg you knew you were going to be made redundant and ploughed a large sum in then, or your redundancy etc.

xylophone

I was giving this more thought and found this in http://taxcredits.hmrc.gov.uk/ntchelp/Content/English/Glossary.htm#notionalincome



Notional Income

Capital treated as income

We will not normally take capital into account when we work out your tax credits. By capital we mean deposits in current and savings accounts at banks and building societies, many lump sum payments, the value of property, shares and other investments.

However, in some cases the income tax rules treat capital as income and tax it as such. For example, if you hold shares in a UK company and the company gives you new shares (called a stock dividend) instead of a cash dividend. This is part of what we call notional income and you would be expected to include it as your income in your tax credits claim.

Income that you are treated as having received

Notional income also includes income that you are treated as having received, even though you may not have.

It may include

• Trust income that, under income tax rules, is treated as the income of another person. For example, investment income of a minor child where trust funds have been provided by a parent and the amount exceeds £100. For tax credits we also treat it as belonging to another person
• Income that you have deprived yourself of to get tax credits or more tax credits
• Income that you were entitled to but did not apply for. For example, a social security benefit or allowances paid to local government councillors or civic dignitaries. This does not apply to
- a deferred state pension
- a deferred personal pension
- a deferred retirement annuity, or
- compensation for personal injury
• Income you lost out on because you worked for less than the going rate (or for nothing) if the person you are working for, or to whom you are providing a service, has the means to pay. This does not apply to
- voluntary work (for example, helping out in a charity shop or Citizens Advice Bureau, or
- employment or training programmes.

So if the SIPP is regarded as above then it doesn't count? Or would it at a certain age?

zagfles

xylophone wrote: »

I was giving this more thought and found this in http://taxcredits.hmrc.gov.uk/ntchelp/Content/English/Glossary.htm#notionalincome



Notional Income

Capital treated as income

We will not normally take capital into account when we work out your tax credits. By capital we mean deposits in current and savings accounts at banks and building societies, many lump sum payments, the value of property, shares and other investments.

However, in some cases the income tax rules treat capital as income and tax it as such. For example, if you hold shares in a UK company and the company gives you new shares (called a stock dividend) instead of a cash dividend. This is part of what we call notional income and you would be expected to include it as your income in your tax credits claim.

Income that you are treated as having received

Notional income also includes income that you are treated as having received, even though you may not have.

It may include

• Trust income that, under income tax rules, is treated as the income of another person. For example, investment income of a minor child where trust funds have been provided by a parent and the amount exceeds £100. For tax credits we also treat it as belonging to another person
• Income that you have deprived yourself of to get tax credits or more tax credits
• Income that you were entitled to but did not apply for. For example, a social security benefit or allowances paid to local government councillors or civic dignitaries. This does not apply to
- a deferred state pension
- a deferred personal pension
- a deferred retirement annuity, or
- compensation for personal injury
• Income you lost out on because you worked for less than the going rate (or for nothing) if the person you are working for, or to whom you are providing a service, has the means to pay. This does not apply to
- voluntary work (for example, helping out in a charity shop or Citizens Advice Bureau, or
- employment or training programmes.

So if the SIPP is regarded as above then it doesn't count? Or would it at a certain age?

A SIPP is a personal pension so it would apply. But those are the tax credits rules, the rules for means tested benefit may be different.

xylophone

zagfles wrote: »

A SIPP is a personal pension so it would apply. But those are the tax credits rules, the rules for means tested benefit may be different.

It's a minefield out there......

xylophone

I have now found this in relation to care home fees which may be relevant.

"Notional income

A resident can be treated as having income that they do not actually receive. This is described as notional income and it is treated in the same way as actual income in the calculation so it is taken fully into account unless it is specifically disregarded.

I. Benefits that have not been claimed are usually taken into account as notional income, except for severe disablement allowance.

Notional income is also assumed in respect of income from a personal pension plan, where the resident has not arranged to draw the maximum income from it; and income due but not paid (with the exceptions of income under a discretionary trust and income derived from a payment of damages for personal injury).

Notional income is taken into account from the date on which it could have been expected to be obtained." Quoted from http://www.ecadviser.com/xq/asp/txtSearch.Personal+Injury/exactphrase.1/sid.0/articleid.3A501061-8E12-4027-A3EF-8135F15CE977/qx/display.htm Care-home fees and the income-related means-test

All that I can find on deprivation of income (notional income) in respect of means tested benefits per se is here http://www.newcastle.gov.uk/benefits-and-council-tax/welfare-rights-and-money-advice/notional-income-and-capital

and here http://www.olderpeopleleeds.info/clients/infostore/files/FS53Capital_income_and_means_tested_benefits_fcs.pdf

and here http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS53Capital_income_and_means_tested_benefits_fcs.pdf.pdf?dtrk=true

You will see that all these simply say that a person may be treated as having income that he/she doesn't actually have if he/she fails to apply for income to which he/she is entitled.

So do we assume that if someone is applying for assistance with care home fees then an undrawn SIPP would definitely count and if for means tested benefits then it might?