Stressed and Dont know what to do

Welsh_whovian

Hello,

at present me and my family are on Universal Credit and rely on it heavily for the household bills. My Taid (Grandad) passed away beginning of the year and due to probate and things the outcome of his will came through to day. He has given everyone about £12,000 each.

Now i'm stressing if this will affect my Universal credit. I know its alot of money and Universal credit is there for people who are struggling. But with this money we are looking to clear debts, but things we need for the house e.g. tumble dryer, fix the car etc.

is there a way of finding out how it will affect my universal credit? i have looked online but dont trust it completely

Robbie64

Capital under £6,000 has no effect on UC and capital at or above £16,000 means a person isn't eligible to claim UC. For someone in your situation:


Capital over £6,000 but less than £16,000


This will affect how much Universal Credit you can get. For each £250 (or any part of £250) you have over £6,000, your Universal Credit will reduce by £4.35 in each assessment period.


For example, if you have savings of £6,200 your Universal Credit will reduce by £4.35.



https://www.entitledto.co.uk/help/Savings-and-other-capital-overview-Universal-Credit


You can spend a reasonable amount of money without it affecting your UC. However if you spend too much you can still be treated as possessing the money. Buying a tumble dryer or fixing the car would usually be treated as reasonable expenditure as would buying other items for the house, or decorating etc. For paying down debts it would depend on whether it was necessary to pay off the debt (for example, a CCJ or the possibility of one being obtained) as opposed to just paying off a debt to get it cleared. The guiding principle is that you can still be treated as possessing capital if the Case Manager believes that you spent money for the purpose of obtaining UC or getting an increase in UC. The Case Manager may rule you have done so if your expenditure looks unreasonable though you can appeal against such a decision if it is necessary.


If the £12,000 is your total capital then the first £6,000 is ignored. You can then spend as necessary but you will need to report your capital and I would advise you to keep a breakdown of what you spend of the other £6,000.

Alice_Holt

https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/capital-rules/

https://www.entitledto.co.uk/help/Savings-and-other-capital-overview-Universal-Credit

https://www.turn2us.org.uk/Benefit-guides/Universal-Credit-income-and-capital/Capital-Savings

https://www.entitledto.co.uk/help/Deprivation-of-savings-and-other-capital-Universal-Credit

https://www.rightsnet.org.uk/forums/viewthread/9641/#43629

calcotti

Robbie64 wrote: »

For paying down debts it would depend on whether it was necessary to pay off the debt (for example, a CCJ or the possibility of one being obtained) as opposed to just paying off a debt to get it cleared.

This is the rule for legacy benefits. For UC it is my understanding that the rule has been relaxed. Payment of any debt will not be treated as deprivation of capital regardless of whether it is immediately repayable or not.

See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/778104/admh1.pdf

H1796 People are not treated as having capital of which they have deprived themselves if
1. it reduces or pays a debt owed by the person or
2. they purchase goods and services and that expenditure was reasonable in the circumstances of that person’s case

11krage

Hi. First thing to do is tell UC this. They'll find out eventually and if they don't find out from you promptly bad things could happen.


You'll then need to show them all your bank statements (and your partner's if you have one) and they'll calculate how much capital you have. If this decreases going forward you'd need to provide bank statements again to verify the new amount and for them to check you haven't spent excessive amounts in order to reduce your capital to be entitled to more UC.


If for example you need to fix your car, just keep some kind of record showing this was necessary (and this was what the money was spent on) in case they ask for it. Debts are more difficult. Often decision makers will accept paying off lump sums of debt when you come into money, but equally well if it's something like credit card debt that could've been paid off at a lower rate they may argue you could've made lower regular payments (really depends on the DM). I'd have the bank statements ready to provide soon after you tell them what's happened as they should be stopping your money until they've calculated your new entitlement. As long as you send everything in promptly and completely (all bank accounts, covering the right span of dates) it shouldn't delay your payment too much and maybe not at all.


An amount will be deducted from each payment going forward from when your capital increased to over 6k. If you heavily rely on UC to pay bills, I'd prepare yourself to spend some of the money you've inherited to cover any shortfalls in your outgoings.


You're also able to book an appointment to ask for money guidance (formally known as personal budgeting support). If you've been struggling so far you might as well make the most of any support. I can't tell you the amount of people who've said they can't live on x amount (which is sometimes because they've received 3k earnings within a month and were somehow expecting to still qualify for UC) and most of their weekly shops are at waitrose. Not saying this is you, but often people get stuck in a way of living and don't consider whether slight changes to their lifestyle might help them budget.


If you have 16k or more you will not qualify for UC and would need to live off the savings and any other income until your capital is below this amount.

Robbie64

calcotti wrote: »

This is the rule for legacy benefits. For UC it is my understanding that the rule has been relaxed. Payment of any debt will not be treated as deprivation of capital regardless of whether it is immediately repayable or not.

See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/778104/admh1.pdf

H1796 People are not treated as having capital of which they have deprived themselves if
1. it reduces or pays a debt owed by the person or
2. they purchase goods and services and that expenditure was reasonable in the circumstances of that person’s case

Thanks for the link calcotti. That's quite a generous relaxation of the rule on deprivation re: debts which has been applied to the various means tested benefits for decades.

calcotti

11krage wrote: »

Debts are more difficult. Often decision makers will accept paying off lump sums of debt when you come into money, but equally well if it's something like credit card debt that could've been paid off at a lower rate they may argue you could've made lower regular payments (really depends on the DM).

Again I believe this refers to legacy benefits and that UC takes a less onerous view. See the link I posted at #4.

The relevant regulation is very simple

50.—(1) A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.

(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—

(a)reducing or paying a debt owed by the person; or

(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person’s case.

I cannot see that the DM has any legal basis to challenge payment of a debt (provided it's properly evidenced).

11krage

If it is decided by the DM they could've paid the debt off in lower monthly payments then they can. Such as with a credit card or loan which would usually be paid in a monthly amount. Or at least, that's what a decision maker told me a couple of weeks ago when we were discussing something that might turn into a deprivation of capital case.

calcotti

11krage wrote: »

If it is decided by the DM they could've paid the debt off in lower monthly payments then they can. Such as with a credit card or loan which would usually be paid in a monthly amount. Or at least, that's what a decision maker told me a couple of weeks ago when we were discussing something that might turn into a deprivation of capital case.

Can you confirm, was that for UC? I don’t see how the legislation gives them any grounds to do this and if it happened to me I would challenge it.

I fully accept this could take this approach with legacy benefits. Possibly Decision Maker has not realised there has been a change.