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Deprivation of capital

Hi, I'm due an inheritence soon and am currently on ESA. I wanted to know if I'll be ok to spend some of that money. It'll take me over the £16000 limit, but I have some debts I'd like to clear and some possessions I need such as a new car, tv and some clothes.



I wanted to know what would get me in trouble? If I pay off debts to friends, and it takes my capital down, would that get me in trouble for deprivation of capital?


There's a few threads on here that say the obvious like don't be extravagant. However, the definition of extravagant is different for everyone. For example, it would be reasonable to say that a TV is a reasonable comfort for me to enjoy. However, what size TV? A 30 inch LCD? A 50 inch OLED? Where is the line drawn? When does a rock become a boulder?


My car is pretty old and not worth much. I want to start up my business again soon and want a newer car that's reliable. How much can I spend? £5000? £10000?



As for debts... I owe money to my electricity supplier. I also owe to some friends and family members. Due to a family death I became depressed and haven't worked in the past year, and have needed help to survive, so I now need to pay them back.



All in all, I'd need to pay out and spend about £15000 on a car, clothes, tv and debts. That'd put me at about £5000 savings. I'd imagine the DWP would be annoyed at this and come after me? But I'm really not doing anything wrong, I need new things and haven't been able to afford them for a while, and I need to pay off my debts.



I can't find any guidelines at all on this and would appreciate it if anyone could shed some light on this subject.

Comments

  • Barny1979
    Barny1979 Posts: 7,921 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Why spunk the money on frivolous stuff? Save it and get your business up and running again and work towards getting off ESA?
  • bspm1
    bspm1 Posts: 332 Forumite
    Hi, I'm due an inheritence soon and am currently on ESA. I wanted to know if I'll be ok to spend some of that money. It'll take me over the £16000 limit, but I have some debts I'd like to clear and some possessions I need such as a new car, tv and some clothes.



    I wanted to know what would get me in trouble? If I pay off debts to friends, and it takes my capital down, would that get me in trouble for deprivation of capital?


    There's a few threads on here that say the obvious like don't be extravagant. However, the definition of extravagant is different for everyone. For example, it would be reasonable to say that a TV is a reasonable comfort for me to enjoy. However, what size TV? A 30 inch LCD? A 50 inch OLED? Where is the line drawn? When does a rock become a boulder?


    My car is pretty old and not worth much. I want to start up my business again soon and want a newer car that's reliable. How much can I spend? £5000? £10000?



    As for debts... I owe money to my electricity supplier. I also owe to some friends and family members. Due to a family death I became depressed and haven't worked in the past year, and have needed help to survive, so I now need to pay them back.



    All in all, I'd need to pay out and spend about £15000 on a car, clothes, tv and debts. That'd put me at about £5000 savings. I'd imagine the DWP would be annoyed at this and come after me? But I'm really not doing anything wrong, I need new things and haven't been able to afford them for a while, and I need to pay off my debts.



    I can't find any guidelines at all on this and would appreciate it if anyone could shed some light on this subject.

    I believe I am right in saying that only a Decision maker will give you the advice you need.

    You will get LOADS of differing advice on here.
  • Barny1979
    Barny1979 Posts: 7,921 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    But I'm really not doing anything wrong, I need new things and haven't been able to afford them for a while, and I need to pay off my debts.

    I think we'll have to agree to disagree, yes, pay off debts, but then if you have sufficient savings, then you can live off that? You do not need new things.
  • IOIO
    IOIO Posts: 23 Forumite
    Look into when your income becomes capital. Normally income does not become capital until after the period for which it was intended.

    It may be easier to have two current accounts. One for Capital (inheritance) and one for your Income

    Make sure all your essential bills (mortgage/rent, electricity, gas, phone, groceries etc.) come out of your Capital (Inheritance).

    Spend your income in full (before it becomes Capital) on the new TV, new Car payments, Credit Cards etc.

    As long as your Capital is only used for essential living expenses i believe you will not be deliberately depriving yourself of Capital.

    As far as i am aware there is no offence regarding depriving yourself of income?

    The above is just my opinion and trying to help. I am sure a more qualified person will be along soon to verify the above

    Enjoy your inheritance
  • pmlindyloo
    pmlindyloo Posts: 13,062 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The first thing to do is check whether you are on contribution based ESA /income based ESA/contribution based ESA with an income based 'top up'.

    You can find this information on your ESA award letter.

    This is important because contribution based ESA is not affected by capital and therefore has no rules about deprivation of capital.

    If your ESA is solely income based then the deprivation of capital will come into play.

    As already said a decision maker is the only one who can decide.

    However, if you contact the DWP and explain what you wish to use your inheritance for and they say 'that's OK' then you cannot be found to have deliberately deprived yourself of capita.

    From the decision maker's guide:

    52843 Claimants or partners have not deprived themselves of capital for the purpose of getting benefit or more benefit if they
    1. say exactly what they are going to do with their capital and
    2. are told by the DWP it will not affect the amount of benefit they can get and
    3. do what they said they were going to do with their capital.
  • IOIO wrote: »
    Look into when your income becomes capital. Normally income does not become capital until after the period for which it was intended.

    It may be easier to have two current accounts. One for Capital (inheritance) and one for your Income

    Make sure all your essential bills (mortgage/rent, electricity, gas, phone, groceries etc.) come out of your Capital (Inheritance).

    Spend your income in full (before it becomes Capital) on the new TV, new Car payments, Credit Cards etc.

    As long as your Capital is only used for essential living expenses i believe you will not be deliberately depriving yourself of Capital.

    As far as i am aware there is no offence regarding depriving yourself of income?

    The above is just my opinion and trying to help. I am sure a more qualified person will be along soon to verify the above

    Enjoy your inheritance

    I'm sorry but that makes no sense at all, yes income becomes capital if e'g you get paid 4 weeks benefits then 4 weeks later you have some left then it becomes capital.
    as already said the only person that can give you a definitive answer OP is a DM, all you will get on the internet is opinions.
  • TELLIT01
    TELLIT01 Posts: 17,121 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper PPI Party Pooper
    The final section of #6 from pmlindyloo describes precisely what needs to be done to avoid the risk of issues with deprivation of capital. Tell DWP what you plan to do with the money, get their agreement, and only then do what you are permitted to do by DWP.
  • HollySocks_2
    HollySocks_2 Posts: 137 Forumite
    Sixth Anniversary 100 Posts Name Dropper Combo Breaker
    edited 3 December 2018 at 3:37AM
    Agree with Tellit and BSPM, check with the DWP!
    I have had to contact them about such an issue. I believe they may not let you pay off loans for example. Currently i have all my contribution benefits stopped. I totally understand why.
    It would make economical sense for you to pay off loans, but the DWP may likely take a different viewpoint.
    There are various ways in which you can use your money which should be ok, for example replacing old things, buying essential things you need but couldnt afford before.


    Just check with the DWP. If you're ringing them up, personally i would record the phone call and advise them at the start that you record calls for your own records. If a DWP advisor then says you're fine doing what you intend, then go for it.


    Personally i think people should be able to do things like pay off loans. If you struggle each month because of debts, paying them off would be great for your mental state and your finances each month, but the DWP will prob take a totally different view.
    Buying a new TV, one DWP advisior may say sure a 50 inch tv isnt extravagant nowadays , go for it. Another will prob think manage with that old 14 inch set.

    They told me last week for example i could buy a dishwasher, so its arriving later today. But i currently have £160K anyway, so maybe they feel , well his contribution benefits have been stopped anyway, so we dont care if he gets a dishwasher.If i had a smaller amount of capital and the purchases may take me back under £6K, the DWP may have taken a different view - 'we will alllow you to get a £2.39 dish cloth, you don't need a dishwasher'. It's kind of wierd having to ring the DWP before i make a major purchase now, but i'm getting used to it and i understand why.


    I doubt they may let you for example, pay money to friend and family member you owe money to, but you never know. Just ask them :-)


    Good luck with it all
  • poppy12345
    poppy12345 Posts: 18,532 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper
    HollySocks wrote: »
    Currently i have all my contribution benefits stopped.

    You mean Income Related. See quote below..
    pmlindyloo wrote: »

    contribution based ESA is not affected by capital and therefore has no rules about deprivation of capital.
  • If you're no longer claiming income related benefits, why phone up to ask if you can purchase a dishwasher? That doesn't make sense.


    Because i needed to discuss with them about whether buying a property is classed as deprivation of capital. That might take me down to around £8K in savings, therefore purchasing household items was something i wanted to check with them too.
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