Deprivation of capital & JSA

Jean36

Hi,

Wondered if someone could help me. I was made redundant about 1 month ago and have been living off savings. Since I am struggling to find a job locally and I still live at my mums home (I'm in my mid 30's) it was time to move to somewhere where I am more likely to find another job. However this meant buying a flat of my own with my savings. Will this be counted as deprivation of capital because after all the costs I will need to claim JSA until I've found another job?

Also my mum has previously deposit about £24k into a ISA bank account with Natwest. She did this some years ago, and it's purpose was to help towards purchasing a property. However I never wanted to use her money (trying to fend for myself), and the flat I've just purchase was all without her money. So I intend giving this all back to her, especially as I have been living at her place, rent free & not paying any household bills etc. If I was to give this back to her, would that be counted as deprivation of capital?

Although I've always considered it as her money, that Natwest ISA account is in my name, and the money has been held therefore for some years. If it helps the bank I use these days is Nationwide, so I have never touched the Natwest accounts for years.

Any help or advice on the above would be greatly appreciated.

Kind Regards x

marliepanda

Buying the house is fine, that won’t go against you.

Handing over 24k with a story about how it’s your mums and it’s for a house but you didn’t use it etc etc will not work after so long. If it was last week, maybe, but years ago? No. So I’d come to an agreement with your mum and either use it for the house and get a better flat. You could use some to furnish but nothing too elaborate.

Edit as I realise you’ve already bought the flat. You are likely going to struggle with this. Had your mother ever claimed benefits?

elsien

If your savings were redundancy money, that is discounted.
If you have paid enough NI you can get contributions based JSA for 6 months without savings being taken into account, by which time you should have found another job.
Don't you need a mortgage at all?
The savings are in your name and will be counted as such. It would be silly to give them to your mum to try to protect them. It will be picked up on, even if you pretend it's to repay her.
Have you checked whether you're in a universal credit area?

Jean36

Thanks for the responses

@ marliepanda - I think my mum received some benefits about 20 years ago (as she was a single parent with me). But I don't think she has claimed anything since then.

@elsien these monies are not redundancy money, my mum previously deposit them into a ISA bank account with Natwest to help with buying a place of my own. I bank with Nationwide, so this Natwest account, has not been touched in years. I've checked and I do not qualify for contributions based JSA (was self employed before my last job).

I don't need a mortgage as I'm moving to a REALLY cheap area and its a REALLY small flat. I will have to pay Ground Rent & Service Charge however. Yes I am in a universal credit area I would really feel bad not giving that money back to my mum (who is old & really needs it). But at the same time, really don't know how long I can live off the remaining money after the house purchase, without JSA.

What you've said is what I initially thought however when I spoke to CAB about my redundancy they encouraged me to claim JSA after the move and appeal any opposition by the DWP if necessary because of the case law established in Quistclose Investments LtD v Barclays Bank (1970) House of Lords. This is what CAB sent me about that case...

Quistclose Investments LtD v Barclays Bank (1970) House of Lords.

Rolls Razor LtD had a £484,000 overdraft with Barclays Bank. However, it needed to borrow a further £210,000 in order to pay dividends to share holders. Rolls Razor borrowed this money from Quistclose Investments with the express provision that it was to be used solely for the purpose of paying the dividends. Rolls Razor then deposited the money in a special account with Barclays separate from the company’s main business account. However, Rolls Razor went into liquidation before paying the dividends. Then Barclays held the money and used it to reduce Rolls Razor’s overdraft.

Held:

Until the purpose of the loan was carried out then Rolls Razor held the money on trust for Quistclose Investments. Thus, the money could never become part of Rolls Razor’s resources and therefore Barclays Bank, as a creditor of Rolls Razor, could not lay claim to it. Consequently, the money had to be returned to Quistclose Investments.

Note, the fact that the money was held in a separate account was conclusive in this case but subsequent cases have held that there is no requirement for the money to be held separately as long as the intention behind the loan or gift is clear.

Thus, the principle established in the Quistclose case is clear for Social Security law. Because a gift or loan advanced in such circumstances is held on trust for the lender/donor until its purpose is carried out then it is never part of the claimant’s resources and thus the claimant cannot possess it. As the claimant does not possess it then s/he cannot deprive her/himself of it. Thus, the question of notional capital cannot arrive.

Do you have any thoughts on the above?

elsien

No idea about case law.
But unless I'm misreading what you've said, how can you argue the money was specifically needed to buy a house when you've managed to buy a house without using it?

Jean36

My intention was to always avoid using my mum money. Hence why I've never touched that money & chosen a REALLY cheap area & REALLY small flat, which I actually brought at auction and the vendor had to do a quick deal. But my mum gave me that money with the sole purpose to put it towards a flat purchase which I would have done had I needed to. But I found such a bargain flat & like I said I don't want to be using her money, especially as I've lived off of her for the last few years.

It seems a bit unfair that I've tried to do the right thing morally, but potentially may get penalized for it if I can't find job within the new location. Would anyone else be able to advise on the above case law?

TELLIT01

The situation seems pretty clear. You have purchased a property and still have in excess of £20k in an ISA in your name. The money hasn't been used to purchase a property and therefore will be counted as your capital. Who put it in the account in the first place is not important.
"Doing the right thing" is not a valid reason for giving the money back to your mother as far as DWP rules are concerned.

xylophone

my mum previously deposit them into a ISA bank account with Natwest to help with buying a place of my own.

This was a gift from your mother to an ISA account in your name.
It became your money from the moment it entered your account.

Bogof_Babe

The obvious thing is for you to withdraw some of the ISA to live on while you find a new job. If it has been in there a long time it probably isn't on a fixed term now, so check with the bank whether you can draw out small amounts as and when needed. You'll probably have a job before you have made much of a dent in the capital.

Alice_Holt

Going back to elsien's point:
" If you have paid enough NI you can get contributions based JSA for 6 months without savings being taken into account, by which time you should have found another job. "
https://www.entitledto.co.uk/help/jobseekers-allowance

Were you working in the 2016/17 and 2015/16 tax years?
Where you earning more than £5,600?

The case law you have quoted relates to company law., I'm not sure it would apply to a gift from one family member to another. In particular it relates to insolvency - i.e if a debtor undertakes to use the loan in a particular way and segregates the creditor's money from his general assets, and the debtor becomes insolvent, the creditor's money is refundable and is not available to pay the debtor's other creditors.
If you look at Bellis v Challinor [2015] EWCA Civ 59, you will see that for a Quistclose trust to be created, there must be an intention to create a trust on the part of the transferor which should be capable of being clearly and objectively ascertained .

Jean36

Thanks to everyone for the replies, they have been extermely helpful

@ Alice Holt I was working in the 2016/17 and 2015/16 tax years but didn't earn more than £5,600 in 16/17 (was trying to become self employed which failed). Hence I would have needed to apply for income based / means tested JSA

Is there any amount I can give back to my mum, without it being considered Deprivation of capital? As I said earlier I have been living under her roof rent free etc, so feel I owe her something.