Odd capital allowances for universal credit.

seatbeltnoob

So I am on receipt of universal credit as I am a small business owner whose had his business income go down to £0 basically.

I had to pay off a lot of my debt to get below 16K to be eligible for UC. I was stoozing actually, and have £3K in a fixed savings account and £3K in credit card debt. I expected them to count that £3K as my capital. I declared it and told them the money is locked in a savings account until end of June. I asked the bank to release it early to me but they refused. UC said that since the money isn't accessible to me it won't count as capital.

Does that mean that people can just shift a whole load of money from an easy access savings/current account into a 1 year bond or something to get below the threshold to claim UC? Or have they been nice to me because I had that money locked in 1yr savings account before applying for UC?

I also have £5K in my business current account, I mentioned this to them, they didn't ask if any of it was directors loan, business profits, tax, VAT etc. They just took the bank balance and said this is the property of my business so it's discounted. They just discounted the whole balance. In the end the actual money we have access to worked out below £6K and they didn't deduct any money at all. That was a pleasant surprise because I was expecting them to deduct £128 amount from the UC from us (£8K above the £6K lower limit).

If money in the business bank account is completely unquestions, does that mean someone can just shift all their savings into their business bank account. Have £50K in the business account and still claim universal credit?

NedS

These matters are normally decided by a decision maker and can be somewhat subjective. I will try to provide some insight.

Firstly, capital can be disregarded if it is genuinely locked up and not available to a claimant. This is not the case in most cases. In most cases the capital is available but often at a penalty to the claimant for accessing it early. That is not the concern of UC and the claimant is expected to take the hit. It will normally be up to the claimant to prove that they are genuinely unable to access the capital. However, at present due to coronavirus, DWP operate a policy of Trust and Protect whereby DWP will take what you tell them on trust for now. However, you may be asked to provide proof when it is safe to do so, and if you are unable to provide the proof then the decision could be reversed and you be liable for any overpayment.

With regard to business assets, capital (including cash) can be disregarded if the claimant can prove that the capital is essential to the day to day running of the business. For example, if you had a business that trades (buys and sells) clothes, and built up a cash balance before spending it purchasing more stock on a quarterly basis, the capital would be deemed as essential to the running of the business and could be disregarded. Contrast that with a sole trader who builds up a cash balance in his business account during the year and uses it each year to pay for the annual family holiday abroad. That capital is not essential for the running of the business and would be treated as capital available to the claimant to live off and would reduce their entitlement to UC. In both cases the onus is on the claimant to provide evidence to prove the capital should be disregarded.

So no, you can't simply move money into a bond or business account to avoid capital limits when claiming UC.

huckster

You have to remember that UC had 1,400,000 claims in a few weeks. Government have issued legislation, DWP have daily volumes of new processes.  
They are trying to help people in this difficult situation the country finds itself in.
Once the current lock down is relaxed and we return to a more normal situation, they will no doubt change the way they deal with the matters you raise.
NO people cannot deliberately lock or hide capital savings and investments, so they can obtain more benefits.  People have to declare all if the information and a DWP Decision Maker will apply the current guidance they have in place at the time.

Spoonie_Turtle

It is likely they made the decision in your favour for the savings account because you'd already put the money away many months before you knew you would need to claim. If you had put it away maybe a month or two before claiming then it quite possibly would have been a different decision.

seatbeltnoob

Well the decision about capital was escalated by 2 UC staff, 1 staff initially, and then a second staff because the payment was being delayed. It was finally expedited to a senior officer who has written a formal letter back saying they are disregarding the locked savings and business capital.

So I am fairly confident that there won't be any issues further down the line because I've declared everything and have been absolutely clear.

They did ask me several times what are the penalties for taking the money out early. I have repeated to them that there is no option to take the money out. I needed the money from the savings account out to pay off the stooze balance and wrote a hardship case letter to the bank requesting the release of the savings. All they were able to do for me was release a derisory 10% and repeat that they can't release the rest of the money.