worried sick about esa savings limit

fred376

The problem is I failed to notify dwp about savings going over 6000 for several months. However I received some backpayments from dwp and some compensation monies from nhs which is really what pushed my savings over the limit. i have read that these types of income are disregarded but i'm not sure. without these payments my savings would still be below the limit.
so my first problem is this could land me in prison for fraud. whats the truth about this ?

TELLIT01

ESA savings limits only apply to Income Related benefit. If you are in receipt of Contribution based ESA there is no problem.
Backpayments from DWP are disregarded for a period of 12 months.
A prison sentence is highly unlikely, but you do need to inform DWP as soon as possible, because the problem will not simply go away.
Money below the £6k limit can be spent as you wish as it doesn't affect benefit entitlement. Blowing a lump sum in order to retain benefit would almost certainly be considered deprivation of capital, although replacement of old household items, replacing old car, or similar actions are permissible.
DWP are likely to want to see bank statements from the time savings exceeded £6k and possibly 6 months prior to that date.

fred376

if the backpayments as well as the compensation payment are disregarded for 52 weeks then what happens thereafter?

is there any way i can avoid exceeding the 6000 limit without being accused of deprivation of savings?

and how are you supposed to reverse the reduction in your benefits once you exceed 6000?
The only way I see is to spend or withdraw your entire fortnightly benefit payments and additionally withdraw about 20 pounds. Do this for a few years until your savings diminish to below 6000. is that it?

This process could be speeded up by withdrawing bigger amounts each time, but at what point does it become deprivation of savings?

It seems that whether i tell them or not and whether I spend my money or not I will facing undesirable consequences?

TELLIT01

In order to qualify for Income Related ESA, your savings need to be below £16k, not below £6k. Between £6k and £16k, your money from ESA will be reduced by £1 for every £250 savings. For example if you had £6999 savings your money from ESA would be reduced by £4 per week.

fred376

I am on income related.

what Im asking is if eg you had 7000 savings, how would you bring it back down to below 6000 legitimately? It seems to me that you cant. Therefore your benefits will continue to be reduced at a rate of a pound for every 250 saved, permanently. Is that right?

Mojisola

fred376 wrote: »

what Im asking is if eg you had 7000 savings, how would you bring it back down to below 6000 legitimately? It seems to me that you cant. Therefore your benefits will continue to be reduced at a rate of a pound for every 250 saved, permanently. Is that right?

You can - you spend the money on things you need.

If you gave £1000 away to someone else just so your benefits wouldn't be reduced, that would be deprivation of capital and you would be considered to still have the money.

fred376

why doesnt the deprivation of capital rule apply if your savings are below 6000? you could argue that a person has spent a large amount of savings to delay or prevent your benefit being reduced even if it happened before you reached 6000.

and if it does apply, how is the dwp supposed to find out ? you are only required to report savings above 6000 to them. you are not required to report the purchase of an expensive jacket or other item. Or are you?

WhenIam64

Here is the guide. It should answer all your questions.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/774198/dmgch52.pdf

Start at 52720 and work forward...

TELLIT01

It is pointless to worry about why rules apply as they do. Simply understand that they are what they are, and that you have to abide by them.

Nothing in the rules prevent you spending money. The reason for 'deprivation of capital' is to prevent people either giving money away in order to obtain benefits or to remain on them when there would be no entitlement. It's also there to stop people who are in receipt of benefit spending excessively in order to get back on benefit. For example, spending a few thousand to replace an old car would be acceptable, but spending 10s of 1000s buying a brand new, top of the range vehicle would in all probability be considered excessive.

fred376

I've looked at the regulations. It doesnt say that spending excessively is automatically considered as deprivation of capital. So how would you prove that if you spent a chunk of money on an expensive item, that it wasnt deprivation of capital?

calcotti

fred376 wrote: »

I've looked at the regulations. It doesnt say that spending excessively is automatically considered as deprivation of capital. So how would you prove that if you spent a chunk of money on an expensive item, that it wasnt deprivation of capital?

The Decision Maker has discretion which is why it’s impossible to say whether something will definitely be or will definitely not be treated as deprivation of capital. However common sense dictates that excessive spending is more likely to be deprivation of capital.