What can benefit savings be spent on?

fred376

Hi all,
Are benefit claimants allowed to enjoy a bit of luxury by spending any large amounts of money they save up on luxury goods?  for example, a watch costing £8K. I understand there is a law on deprivation of capital but if you genuinely just want to enjoy luxury rather than do it for the purpose of increasing or retaining benefit, how do you prove it to the DWP? 

Alice_Holt

I would suggest this thread may be better on a discussion board, rather than in a board aimed at helping people identify and understand the benefits they may be entitled to.

Especially since the OP has asked the same question before:
https://forums.moneysavingexpert.com/discussion/comment/75665758/#Comment_75665758

And was given the answer by calcotti. 

I wonder why the OP raises this issue again, as It could potentially be viewed by some as a provocative post?
The notion that a means-tested benefit claimant would use almost 2 years worth of their basic UC payments to buy a high end watch approaches pure fantasy.   

fred376

It shouldnt be provocative. I am asking an honest question. Either it is allowed or its not. Nobody can argue with the law.

calcotti

It depends on a decision maker. In my opinion spending on luxury goods and then expecting the tax payer to support the basic living expenses cannot be considered reasonable and it would therefore be deprivation of capital. 

Rubyroobs

If you have 8k to spend on luxury goods, might I suggest a donation to a food bank charity to help those who genuinely are struggling to survive on benefits. Very provocative unnecessary post.

Spoonie_Turtle

A watch costing £8000 would take you from above the £6000 threshold at which deductions are made to below it significantly deplete your savings so that less or no deduction is made from your benefits.  In that instance that would increase entitlement to benefits and would therefore most likely be seen as DoC because that's beyond simply liking nicer food or nicer clothes - beyond what could be called 'reasonable' luxury for someone with such a low income that they qualify for state support.  Even £8000 on a car would need to be justified (e.g. specifically needed for the family situation and you couldn't get a decent one cheaper), let alone a watch.

fred376

calcotti said:

It depends on a decision maker. In my opinion spending on luxury goods and then expecting the tax payer to support the basic living expenses cannot be considered reasonable and it would therefore be deprivation of capital. 

what can they do? ask me to pay it back?

calcotti

fred376 said:

calcotti said:

It depends on a decision maker. In my opinion spending on luxury goods and then expecting the tax payer to support the basic living expenses cannot be considered reasonable and it would therefore be deprivation of capital. 

what can they do? ask me to pay it back?

Stop benefits and demand repayment of all benefit incorrectly claimed.

Spoonie_Turtle

fred376 said:

calcotti said:

It depends on a decision maker. In my opinion spending on luxury goods and then expecting the tax payer to support the basic living expenses cannot be considered reasonable and it would therefore be deprivation of capital. 

what can they do? ask me to pay it back?

They would make the same deduction from your benefits as if you still had the money you spent.  They treat you as still having that amount if they decide you've deliberately deprived yourself of capital.

Edit: cross-posted with calcotti; my comments assume you let them know how much you spent whilst already claiming.

Also this only applies to means-tested benefits.  If you don't claim means-tested benefits and decide to spend that much of your (for example) PIP on a watch, then that's your decision.

fred376

Spoonie_Turtle said:

fred376 said:

calcotti said:

It depends on a decision maker. In my opinion spending on luxury goods and then expecting the tax payer to support the basic living expenses cannot be considered reasonable and it would therefore be deprivation of capital. 

what can they do? ask me to pay it back?

They would make the same deduction from your benefits as if you still had the money you spent.  They treat you as still having that amount if they decide you've deliberately deprived yourself of capital.

So it is allowed then? If you accept a lower amount of benefits thereafter?

Robbie64

Do you have capital in excess of £6,000? You started three threads a couple of years ago about savings / capital limits when you had just gone above the £6,000 lower limit. Are you still in the same position.

To answer your question in this thread though: the DWP allow benefit claimants to have a modest amount of savings before any benefit payment is affected. Think of the limits as a buffer against being absolutely potless then ask yourself this. If you were down to £8,000 and needed to feed yourself and didn't have benefits available to you would you buy an expensive watch instead?