On universal credit - received a tesco loan and paid it all out same day - how will i be affected?

NaomiNim

Hi all

I receive rouglhy £665 a month on UC - for me and the 2 children and childcare
(I'm a trainee teacher on little pay!)

I took out a new loan today to consolidate my debt, and will be better off each month as ive been able to pay off my existing loan and my credit card balances, saving £140 a month.

I received the payment today an hour ago and have paid the entire amount out already to clear the outstanding loan and credit cards.

I know if you have savings of more than £6000 you will lose you UC entitlement.

Anyone know how i'd be affected for the following month's payment?

Many thanks

calcotti

It will make no difference. Had you kept the money in your account it would count as capital. However your UC entitlement is based on your situation on the last day of your assessment period so given the money has already gone out it will not be taken into account.

pmlindyloo

The OP may be thinking about deprivation of capital.

If the money was used to pay off debts (which you say it was) then there is no deprivation of capital.

From Advice for Decision Makers:

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 case1.
1 UC Regs, reg 50(2)

NaomiNim

Hey there!

Sorry but could you explain your post?

I've only been claiming UC a few months after a separation and a drastic financial circumstance change so am not fully up to date with all the terminology!

calcotti

NaomiNim wrote: »

Sorry but could you explain your post?

I've only been claiming UC a few months after a separation and a drastic financial circumstance change so am not fully up to date with all the terminology!

I am not clear what you want explaining.

NaomiNim

i'm not sure how it replied to your post - it was the comment below yours that i was confused at!

yours was crystal clear - the loan went in and out within 2 hours so it shoudn't affect me?

calcotti

The other post does not affect you. There are rules that say if you have capital but then spend it you can be treated a# still having it - this is called deprivation of capital. When pmlindyloo posted they thought this might be what you were concerned about. However, as they said, using capital to pay off debt is not deprivation of capital so the rules do not affect you.

NaomiNim

perfect thanks!

I was paranoid they'd remove my claim!

yksi

NaomiNim wrote: »

I know if you have savings of more than £6000 you will lose you UC entitlement.

You never had savings - you had a loan. That money technically is someone else's money, so you don't need to worry.

I have £7k in my bank account right now but it belongs to a relative and it's only sitting there until it can be sent overseas to them. I do not have £7k of savings (of my own money) so my UC is not affected.

calcotti

yksi wrote: »

You never had savings - you had a loan. That money technically is someone else's money, so you don't need to worry.

That is not correct. If you have money in your account it is generally treated as yours for UC regardless of what it is intended for.
While the money is in your account you own it. The fact that a debt is owed to a lender is not relevant. However UC allows you to pay back that debt, regardless of when repayment is due, without treating this as deprivation of capital.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/843713/admh1.pdf

H1098 A legal owner of a bank account is the beneficial owner of any money in the account which has been lent or given to the legal owner by another person.

Your case where you are holding money for someone else is different if the money came from them in the first place. It can be treated as ‘in trust’ and therefore you are not the beneficial owner. Holding money for someone is not the same as borrowing it with an obligation to pay it back in the future. Nonetheless DWP might wish to investigate your capital in order to decide whether or not you are the beneficial owner which will determine whether or not it is taken into account.

TELLIT01

NaomiNim wrote: »

I know if you have savings of more than £6000 you will lose you UC entitlement.

Are the savings rules different for UC to ESA, IS etc? If not, this is incorrect as savings between £6k and £16k result in reduced payments, but entitlement only ceased when £16k is reaches.