What’s classed as deprived capital

Misspinkx1984

I am currently on benefits but will be coming of them soon as I have won a large amount of money. I am trying to find out if I am able to spend my winnings on what I want or do I have to save it all to fund living of benefits. 

Would like to treat my family but not sure if I can. When the money has run out and I have to claim again I wanna make sure that I have done nothing wrong. Can anyone help to advise me on this please. 

poppy12345

Deprivation of capital is giving your money away to other people and doing this you'll be classed as still having that money.

Other than that there's no definition and there's no specific guidelines. Although, i wouldn't advise you to go out and buy the money expensive things so that your money will reduce quicker. Yes, replace old things, buy a newer car and even go on holiday sometime in the future.

My advice is to keep receipts for the things you buy, although don't go as far as keeping receipts for every single thing, like food shopping etc.

Once your money goes below £16,000 you'll be able to reclaim benefits, if you're entitled to them but it will be Universal Credit that you'll need to claim.

calcotti

Paying off debt is allowed and otherwise it is expenditure that is reasonable in the circumstances. As poppy says, keep records so that you can show how money has been spent if asked.

if any of your benefits are not means tested then they will not be affected by your win. your entitlement to means tested benefits ends the day you get the money (assuming it is over £16,000).

TELLIT01

Just putting this forward as a hypothetical situation.  The OP wins £100k, comes off Income Related benefits, clears £10k of debt and gives away all but £15k of the remainder in a couple of months.  Would they then be able to claim UC without any problem, or would the £75k still be considered as Deprivation of Capital.  If it would be classed as Deprivation, how long would the OP need to be not claiming before they could get UC?  I appreciate that all such cases go to a Decision Maker but some sense of potential timescales might be helpful to the OP.

calcotti

TELLIT01 said:

Just putting this forward as a hypothetical situation.  The OP wins £100k, comes off Income Related benefits, clears £10k of debt and gives away all but £15k of the remainder in a couple of months.  Would they then be able to claim UC without any problem, or would the £75k still be considered as Deprivation of Capital.  If it would be classed as Deprivation, how long would the OP need to be not claiming before they could get UC?  I appreciate that all such cases go to a Decision Maker but some sense of potential timescales might be helpful to the OP.

There is no guidance on timescales, the test is ‘reasonable in the circumstances’ and a motivating factor has to be that the expenditure is in order to gain benefit. Consider
i) somebody who has a comfortable life style and lives well within their means, they inherit some money and give it all away, they then experience a drastic change in fortunes and have to claim benefits. At the time they gave away the money they had no reason to expect to need to claim benefits. They have probably not deprived themselves of capital
ii) somebody on benefits who loses entitlement because they inherit money. As a result they clearly have some knowledge of benefits and capital. They only have low income, or no income from work. If they give money away it is clear that they will have to resort to benefits to support themselves. That is therefore almost certainly deprivation of capital. 

I have no idea how far back DWP could go in looking at whether deprivation has occurred. 

In the example you give I am fairly certain that would be deprivation of capital. If on the other hand they clear £10k of debt, spend £50 on living expenses over 2 years, spend £15k on house improvements and give away £10k and then seek to claim benefits will that £10k be deprivation of capital? In that case it might not be if the gift was made near the beginning of the 2 year period but almost certainly is if the gift is made just before reapplying for benefits.

Alice_Holt

TELLIT01 said:

Just putting this forward as a hypothetical situation.  The OP wins £100k, comes off Income Related benefits, clears £10k of debt and gives away all but £15k of the remainder in a couple of months.  Would they then be able to claim UC without any problem, or would the £75k still be considered as Deprivation of Capital.  If it would be classed as Deprivation, how long would the OP need to be not claiming before they could get UC?  

     The key test is whether the person deliberately deprived themselves of capital in order to claim benefits or increase benefits. This will be a judgement for the decision maker who should consider the person’s individual circumstances as well as their previous spending patterns, to ascertain their intention behind the spending any of the capital.
    If the claimant disagrees with that decision they can appeal it to the Tribunal Service - where the onus is on the decision maker to prove that their intention was to increase or retain their entitlement to benefits, the claimant would be expected to provide evidence to challenge the contention that they had intentionally deprived themselves of capital or income.
    In the example you give, a DM would likely decide it was deprivation of capital, and it could be difficult for that person to persuade a tribunal otherwise.

Xbigman

I think the OP has raised a slightly different point to the answers given.
In the example of 100,000 being inherited/won by someone who gets 10,000 a year in benefits, they don't have to make the money last 10 years. It's perfectly reasonable to spend 20,000 a year and give their family a better lifestyle and go back to benefits four and a half (ish) years later. Spending an inheritance on living is fine. Its when you get into the whole game of giving away or hiding money that the deprivation of capital/assets rules come into play.  

Darren

JamoLew

Personally - after the usual clearing debts etc I would look at investing the remainder and possibly starting my own business; that way I would hopefully have a guaranteed income for life.

Would starting up a business class as deprivation ?

calcotti

JamoLew said: Would starting up a business class as deprivation ?

No. Claimant would then be self employed with business assets and business assets are disregarded.

calcotti

Xbigman said:

I think the OP has raised a slightly different point to the answers given.

calcotti said:

Paying off debt is allowed and otherwise it is expenditure that is reasonable in the circumstances. 

Not sure why this answer is different to the Op's question. I agree the hypothetical question asked later about giving away most of the money is different.

NedS

TELLIT01 said:

If it would be classed as Deprivation, how long would the OP need to be not claiming before they could get UC?  I appreciate that all such cases go to a Decision Maker but some sense of potential timescales might be helpful to the OP.

I believe the guidance states that the capital will reduce at the amount the claimant would have been entitled to receive had they been entitled to claim UC. If, for example the claimant would have been entitled to receive £740/month UC, and from your example were adjudged to have £74K in capital after clearing £10k of debts (and allowing for 16k capital limit), then £74,000 capital / £740/month = 100 months, or 8.33 years before they could claim UC. If the claimant made a claim earlier, they may be expected to provide evidence of where the capital had gone, but in your example they've already done this showing they'd given away £75k. So they'd not be entitled to reclaim for 8.33 years.