Spending and gifting my savings whilst on income-related ESA

baza52

teddysmum wrote: »

People are saying that it's ok unless you aim to increase your benefits by parting with money, but even if you give away to keep the benefit paid the same, you are, in fact, increasing on the benefit to which would be entitled should you keep money, which would have reduced that entitlement.

can you link to the rules that back this up?

nannytone_2

teddysmum wrote: »

People are saying that it's ok unless you aim to increase your benefits by parting with money, but even if you give away to keep the benefit paid the same, you are, in fact, increasing on the benefit to which would be entitled should you keep money, which would have reduced that entitlement.

the OP is spending/gifting money to MAINTAIN benefit entitlement ... not to increase it.

this is within the rules as the only mcapital counted is that above 6k.
if capital never goes above 6k the OP is doing nothing wrong.

you are trying to make a moral judgement when the issue is one of legality and not morality

xylophone

Deprivation of income or capital to secure (obtain) or increase benefits is against the rules?

There seems a very, very fine line between obtaining and maintaining.....

nannytone_2

xylophone wrote: »

Deprivation of income or capital to secure (obtain) or increase benefits is against the rules?

There seems a very, very fine line between obtaining and maintaining.....

possibly.
but the rules state that capital under 6k is ignored.

as there are no rules regarding what benefits can be spent on, the only relevant fact to be considered is the capital amount being below 6k

tomtom256

nannytone wrote: »

possibly.
but the rules state that capital under 6k is ignored.

as there are no rules regarding what benefits can be spent on, the only relevant fact to be considered is the capital amount being below 6k

The crux is that if the OP is gifting money to keep her below £6k threshold, then they could be seen to be doing this to stop tarrif income occurring in order to maintain their benefits at the level they are currently at.

Technically this is against regulations and may get flagged up at a later date should they get a benefit review from a compliance officer etc and have to show bank statements.

Its all if and buts and this side of the benefit rules is very iffy in practice.

ev8

There's also the option that the OP is gifting money, not TO stay under the threshold, but just because they wish to gift the money and that is a coincidence, as would spending the money on things they wanted would be using the money as hey wished and not intentionally to keep the money below 6k.

I think they were just checking that it's ok and wouldn't come back on them in a negative way.

missapril75

The OP is perfectly free to gift money. The deprivation rule applies to capital and not income. The two types of money are separately defined in the benefits legislation.

There are rules for income and there are rules for capital. There are no rules for "money" because it's too loose a term, hence the definitions of income and capital. There are even different rules regarding the treatment of different incomes and different capital.

One more time. If someone has £5500 in the bank and they have income of £600 every month on, say, the 15th and that income goes into their bank, they have a balance of £6100.

But that is NOT £6100 capital, it is £5500 capital and £600 income. The purpose of the income is to live on it.

(it is possible that a member of staff misses the fact that income is included in the balance and just focuses on the balance but they would be wrong. It's one of the reasons statements are requested because a statement will show the income whereas a balance slip won't)

If the OP meets their needs spending their income in the period it's intended for - up to the following 15th - then they don't exceed £6000 because income is not capital unless accrued (eg banking half of it enough times and just leaving it there so it accrues and becomes capital) and because they don't exceed £6000 they never have a level of capital to affect benefit levels. They cannot deprive themselves of capital in order to get a higher rate of benefit because their benefit never gets reduced because the capital hasn't hit an amount where benefit is reduced.

You may feel they shouldn't be helping someone else. That was Nannytone's point about separating the moral issue from the legal one.

Too many people apply ordinary everyday definitions to things that do have different definitions in legislation and may even differ according to different benefits and tax rules with different departments.

epitome

ev8 wrote: »

I think you are wrong about buying non essential items.

I think we are allowed to buy whatever we like with the money, otherwise you wouldn't be allowed to buy a few coats if you already have one. Or a new bag or something. Do they even check on what your buying?

You are correct, it does not matter what the money is spent on, it matters only WHY the money was spent or gifted.

If the primary reason was to reduce savings so that the savings would not impact on your benefits then that is deprivation of capital, and you will be deemed to still have the money.

You can Mandatory Reconsider any deprivation of capital decision and appeal to tribunal if you like. You would have to show that you did not spend it for benefit purposes. A court would look at it based on the balance of probability, they would listen to your reasons for spending it and determine if they think you did it for benefit purposes or not.

epitome

missapril75 wrote: »

If the OP meets their needs spending their income in the period it's intended for - up to the following 15th - then they don't exceed £6000 because income is not capital unless accrued (eg banking half of it enough times and just leaving it there so it accrues and becomes capital) and because they don't exceed £6000 they never have a level of capital to affect benefit levels. They cannot deprive themselves of capital in order to get a higher rate of benefit because their benefit never gets reduced because the capital hasn't hit an amount where benefit is reduced.

Notional Capital,
A claimant is to be treated as possessing capital of which the claimant has deprived himself or herself for the purpose of securing entitlement to an employment and support allowance or increasing the amount of that allowance.

Using capital which is always less than £6000, could be construed as Deprivation of Capital, IMHO, if as they say above there is a compliance interview and bank statements are looked at.

It could be argued to be either:
for the purpose of securing entitlement to an employment and support allowance
i.e. a "continuing entitlement" at the same rate by not going over 6000 in capital.
or
for the purpose of increasing the amount of that allowance.
i.e. were it not for the deprivation the benefit rate would be lower, so there is an increase on what the tarrif income would have been.

I know there would be arguments for and against these points,

The argument against would be that the "securing an entitlement" only applies to the period before a claim is made. Once that claim has been correctly made and allowed, then notional rules cannot apply for securing an entitlement.

The other argument against would be that there is never any actual increase of the benefit, so notional rules do not apply.

I don't know the answer, but playing devils advocate, those are the arguments I can see being used against the OP.

I can agree that using each fortnights payment for whatever they want is probably going to be OK. but if say they gave all of it to his brother, they would then dip into the savings to live on themselves, I would say the dipping into the savings would be seen as just giving that to the brother rather than the income to the brother IYSWIM.

baza52

just draw all your benefits out as cash when you receive them. As you cannot deprive yourself of income you can then do what you want with the cash.

You can spend it all down the bookies, give it to charity or spend it on bird food for the local wildlife.