Deprivation of capital - how does notional capital work

Peter39

Hi I'd greatly appreciate any help and advice please, my cousin is due to get inheritence money from a relative who passed away last month, it's going to be around 20k and he is in receipt of ESA support group with severe disability premium and PIP and wants to give half of the inheritance to his older brother who has given him alot of money over the years and helped him alot in life, I had heard of deprivation of capital before so I said to wait until I had looked into it and did a bit of research incase he could get in trouble for it, I couldn't get through to a CAB advisor so I've been doing reading through the threads on here and diffrent sites and I think that repaying a loan to a relative would still count as gifting it and would therefore definitely be deprivation of capital and so he would have notional capital to the amount of 20k is that right?

If that's the case and he still wanted to go ahead with it with the intention of living off the 10k savings plus his PIP for the duration of the notional Capitol to come back down under his savings limit would that be ok for him to do legally as long as he informed ESA straight away as soon as he has received the money and told them his intentions and that he is ok with having notional income for a few years until he is back under the saving limit? Is that how it works

If so then how is the notional capital reduced do they take the amount he is currently receiving from esa + the severe disability premium monthly and take that away from the notional capital of 20k each month? Or do they count up his living expenses of an average month and deduct that from it?

Also I haven't been able to find out for sure but I was assuming the severe disability premium was means tested since he receives it as part of his ESA so would that also stop if he had notional capital if he was still living alone and no one claimed carers allowance for him?

Thanks for any help and advice

pmlindyloo

With an inheritance of £20k he would no longer be entitled to any means tested benefits.

If his ESA is contribution based with an income based 'top up' (usually the premiums - Enhanced Disability premium and Severe Disability premium in this case) - check the award letter - then he should retain the contribution based ESA as it is not means tested and the savings will make no difference.

If it is totally income based ESA then he would lose it all but the claim should stay open and NI credits paid.

As regards the notional capital it is laid out here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/689995/dmgch52.pdf
52885 onwards

Seems very complicated!

If it were me then when he receives the money I would write to the DWP and explain what he is going to do and ask them for a written reply to how this will affect his ESA.

Peter39

Thanks for the reply, I think it is the support group part of esa and not contribution so it must all be income related i'll check to be sure, wow that does indeed seem very complicated that's gonna take a while to skim through

The main thing is that the claim will stay open so that he can continue to claim again in a few years after the notional capital has expired, at least that won't be so bad.. Also I forgot to ask - with income related ESA can he still have up to 16k savings it just gets reduced by £1 a week up until 16k? If so would that mean that once he's spent 4k of his 20k notional benefit would he then fall under the 16k and gradually start getting a small amount of ESA again or £1 a week for every 250 that he goes under the 16 of notional capital.. It's all so very confusing but so hard to get through to CAB over the phone too unfortunately

[Deleted User]

Its reduced by £1 a week for every £250 over £6000, then at 16k it stops, he can spend the money on things he needs e.g a new cooker etc but not a round the world cruise, he is best keeping all the receipts for the money he spends to reduce it under 16k.