deprivation of capital - what can you spend your money on

AlisonHarrison

Some time ago on these boards, someone did a link to (probably) a DWP website which showed what you could spend your money on and not be considered to be depriving yourself of assets for means tested benefits.
Can anyone either remember the link or does anyone know where this information could be found?

BigAunty

I can't recall a specific DWP website that says what you can spend your money on for the purposes of not being considered to have deprived yourself of capital.

However, there are DWP Decision Makers guides on the internet covering Deprivation of Capital that are staff manuals that show what isn't permissible and does show what is excluded, so google that.

I believe the HMRC tax credits info also has similar info.

Generally, ordinary living expenses - replacement cars, holidays, repairs, decoration, refurbishment and so on are permissible within reason.

Giving away money/land/property/investments to family and friends is not, nor is paying off debts early if there is no legal reason to do so (paying down a mortgage or loan before the end of the term, for example).

And the key thing is that it has to be done 'intentionally', therefore deliberately.

Mojisola

This is the information regarding DOC when paying for care homes -
https://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_125831

6.067 Examples of where a person has deprived themselves of capital (although not necessarily for the purposes of avoiding a charge for accommodation)
• A lump-sum payment has been made to someone else (e.g. as a gift or to repay a debt)
• Substantial expenditure has been incurred (e.g. on an expensive holiday)
• The title deeds of a property have been transferred to someone else
• Money has been put into a trust which cannot be revoked
• Money has been converted into another form which would fall to be disregarded (e.g. personal possessions)
• Capital has been reduced by living extravagantly (e.g. gambling or following a much higher standard of living than the resident could normally afford)
• Capital has been used to purchase an investment bond with life insurance. Councils will wish to give consideration, in respect of each case, to whether deprivation of assets has occurred i.e. did the individual place his capital in such an investment bond so that it would be disregarded for the purpose of the Assessment of Resources Regulations.

rogerblack

BigAunty wrote: »

And the key thing is that it has to be done 'intentionally', therefore deliberately.

The DWP has to find that this is the case - which is a slightly different thing.

In addition, if you are considering a big expense, if you get prior approval from a DWP decisionmaker that the purchase is allowable, then they cannot go back on this.

Mojisola

rogerblack wrote: »

In addition, if you are considering a big expense, if you get prior approval from a DWP decisionmaker that the purchase is allowable, then they cannot go back on this.

But make sure you get the approval in writing.

BigAunty

In a recent post on this subject, I got the impression that there is no way that the DWP will give written approval in advance to people on means tested benefits who want to make purchases - that there is no way the authorities will give advance consent for this type of thing.

I got the impression from that thread that they simply review spending on a case by case basis retrospectively if there is an investigation.

Mojisola

BigAunty wrote: »

In a recent post on this subject, I got the impression that there is no way that the DWP will give written approval in advance to people on means tested benefits who want to make purchases - that there is no way the authorities will give advance consent for this type of thing.

I got the impression from that thread that they simply review spending on a case by case basis retrospectively if there is an investigation.

That's very hard on people if that's the case. The rules are vague and if a decision can be made afterwards whether a particular purchase was DOC or not, why can't it be made beforehand and permission given?

BigAunty

Mojisola wrote: »

That's very hard on people if that's the case. The rules are vague and if a decision can be made afterwards whether a particular purchase was DOC or not, why can't it be made beforehand and permission given?

But how can the benefits system function if there are thousands of DWP staff required to make complex case by case decisions on the purchasing preferences of hundreds of thousands of benefit recipients?

The deprivation of capital rules are complex in some respects but quite simple in others - they are there to deter people from deliberately getting rid of their capital in order to qualify for means tested benefits. The rules are there to stop extreme abuse by those intentionally wanting to exploit the benefit system.

Mojisola

BigAunty wrote: »

But how can the benefits system function if there are thousands of DWP staff required to make complex case by case decisions on the purchasing preferences of hundreds of thousands of benefit recipients?

The deprivation of capital rules are complex in some respects but quite simple in others - they are there to deter people from deliberately getting rid of their capital in order to qualify for means tested benefits. The rules are there to stop extreme abuse by those intentionally wanting to exploit the benefit system.

But they also cause a lot of fear and anxiety in honest people who worry about spending money and then getting their benefits taken away.

If there isn't the manpower to give people specific advice, then the rules should be clearer and a lot more examples given of what's okay and what's not.

seven-day-weekend

Mojisola wrote: »

But they also cause a lot of fear and anxiety in honest people who worry about spending money and then getting their benefits taken away.

If there isn't the manpower to give people specific advice, then the rules should be clearer and a lot more examples given of what's okay and what's not.

Surely it's quite easy? You don't give your money away, buy a more expensive car than you normally would, or go on a world cruise.

Spend your money living a normal life, not an extravagent one.

Mojisola

seven-day-weekend wrote: »

Surely it's quite easy? You don't give your money away, buy a more expensive car you normally would, or go on a world cruise.

Spend your money living a normal life, not an extravagent one.

It sounds straightforward but there are plenty of people who are totally dependent on their benefits and get really frightened at the thought of doing something wrong and losing them.