Intentional deprivation of capital

Meleantha

I have recently recieved £20k from the sale of the marital home. Previous to that I'd been running into and out of the red every month, and £20k is the largest sum of money I've ever had. I paid off my credit card, and repayed people who helped me out when I moved into rented accommodation over a year ago. I am now worried about the effect that the remaining money will have on my housing benefit. I'm aware that at £6000 to £16000 some adjustment is made to means tested benefits, and over £16000 you don't get them, and I have heard of "intentionally depriving oneself of capital" but hopefully paying off credit cards doesn't count.. but what does?

My car which I need for work has been making alarming noises for a while, so I will be taking that to be (hopefully) fixed, and I also would like to replace our creaky computer. I have a 14 year old daughter who has no savings so I want to give her a JISA, and I'm planning to open some accounts that make more interest now that I actually have something to get interest on.. but will the money I put in her accounts still count as mine? If I put "too much" in, will DWP say I intentionally deprived myself of capital?

And how much difference will it all make to my housing benefit anyway? A few quid? A lot of quids?

Money is a nuisance, really. All it does is worry me!

Caz3121

keep receipts for everything
getting car repaired will be fine
paying utility bills / rent etc will be fine
making regular payment to loans/credits cards will be fine but choosing to pay off lump sum when it is not being recalled "may" not be - it will be up to the decision maker
giving money away will not be acceptable

Were you receiving HB before you came into this amount, have you declared that you received £20k (reporting change of circumstances) so they could stop your means tested benefits?
DWP do get bank account information so it is likely they will get to know that you had £20k even if you don't tell them

It is your money and you can do what you wish
What you need to watch out for is "notional capital" where the decision maker decides the spending was not acceptable (like giving it away in order to get below a figure that would affect your benefits) and you will be treated as if you still have the money in your account

Meleantha

I've literally had the money a few days, I've been on housing benefit since I moved. They know about the house being up for sale (took over a year) and said to contact them when it was sold, with details of how much I got and any deductions that were taken. The money left after the sale (is that called equity?) had to be used to pay remains of utility and council tax bills, then was split two ways. My ex husband has all the details and is sending them to me so I can tell them all that too.

I ran up £2000 on the credit card when all my benefits and tax credits were stopped last year because a letter got lost in the post (one letter lost, one benefit affected but the rest went down like dominoes) and because I was over-taxed for a year. I got it back but it all had me dipping into the red every month.

Anyway, I thought paying off the card to avoid having to pay interest every month was the sensible thing to do.. seems weird they might rather me keep paying for a debt. But then I forget, its not about me, or my kid.

I'm not trying to hide anything from DWP, would be futile, I'm just trying to make sensible decisions on something that confuses me greatly. I guess I have a fear of running out of money again, which makes no sense for someone with 5 figures in the bank. :huh:

RAS

Meleantha wrote: »

I ran up £2000 on the credit card when all my benefits and tax credits were stopped last year because a letter got lost in the post (one letter lost, one benefit affected but the rest went down like dominoes) and because I was over-taxed for a year. I got it back but it all had me dipping into the red every month.

If it was dipping you in the red, they may take more kindly. More importantly what was the interest rate?

0%, paying back the lot could be considered deprivation, 39.6% will mean that the debt increases even if you pay the mininum and anyway you would pay as much interest as the debt in 2.5 years, so a different situation.

RAS

A junior ISA for DD would be deprivation of capital. Wait until you only have £6K left and then set that up.

Meleantha

Talked to nice lady from local housing benefit office, she is going to help me fill the change of circ form in next week at a local "surgery" they run once a month near me, rather than me have to drive halfway across the largest county in England to do it. I don't like to do these things by post, in the past I've got the numbers in the wrong boxes and not included the evidence they wanted and it takes ages and goes wrong. I was going to move to a better current account this week but seems I'd better do that after and avoid the extra complications.

Meleantha

RAS wrote: »

If it was dipping you in the red, they may take more kindly. More importantly what was the interest rate?

0%, paying back the lot could be considered deprivation, 39.6% will mean that the debt increases even if you pay the mininum and anyway you would pay as much interest as the debt in 2.5 years, so a different situation.

Statement says it was 2.2%, also says I had a min payment of £45 and interest charged was £20, if I'm reading it right. So, not the scenario you mentioned, but .. i just didn't see the sense in costing myself every month, when I could just pay it off and say bye. I hate credit cards.. just as well I had it there though, not sure what I would have done otherwise, all my overdraft was gone when the benefits foul-up happened.

Part of the reason I was in the red was that I was being over-taxed, I got a lump sum back a couple of months ago, I don't want to think about what it cost me using the credit card to make ends meet while the tax man was being overenthusiastic. I was being taxed as if I was working two jobs, I'm still not sure how that happened.

Beenie

Caz3121 wrote: »

keep receipts for everything
getting car repaired will be fine
paying utility bills / rent etc will be fine
making regular payment to loans/credits cards will be fine but choosing to pay off lump sum when it is not being recalled "may" not be - it will be up to the decision maker
giving money away will not be acceptable

Were you receiving HB before you came into this amount, have you declared that you received £20k (reporting change of circumstances) so they could stop your means tested benefits?
DWP do get bank account information so it is likely they will get to know that you had £20k even if you don't tell them

It is your money and you can do what you wish
What you need to watch out for is "notional capital" where the decision maker decides the spending was not acceptable (like giving it away in order to get below a figure that would affect your benefits) and you will be treated as if you still have the money in your account

Is this really possible? I assumed it was an urban myth.

A claimant's account may not be in their home town. How does the bank know where to send the info? How do DWP know which branch(es) to approach for account details?

It's bad enough trying to get a bank to give info to your spouse, they always claim 'Data protection' so how they can willy-nilly post it out to a random govt. office is a puzzle.

BigAunty

my understanding of debt repayments and deprivation of capital is that there is no issue with paying them off when the debts are legally due but can be an issue if the debt is paid off ahead of schedule.

in discussions around this issue, the general (but not full) consensus is that the balance on a credit card statement means the sum is legally due and there is no requirement to stick to minimum payments. Again, the general-ish consensus is that someone who has a loan with a fixed period of repayment may hit an issue with the DWP/HMRC if they pay it off in full early when there is no contractual requirement for them to do so. Also, similar issues may occur if they stick a lump sum into paying down the balance of their mortgage ahead of its repayment deadline, ahead the end of the term.

but its a complex area with no real fixed rules that is investigated on a case by case basis.

letthemeatcake

I'd think the repayment to friends who helped with your moving costs would be okay if it was for genuine costs such as deposit to rent, removal costs, white goods.

RAS

Meleantha wrote: »

Statement says it was 2.2%, also says I had a min payment of £45 and interest charged was £20, if I'm reading it right.

If you had £2000 on the card and the APR was 2.2%, you would not be paying £20 in interest per month. If the monthly interest rate was 2.2%, you would be paying £44 interest.

So majorly confused here. You may need to ring them and ask for the APR.