What can benefit savings be spent on?

fred376

Rubyroobs said:

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.

That would still be considered deprivation of capital. So I would rather spend it on myself!

strawb_shortcake

To be fair he didn't specify which benefit, someone on tax credits could spend £8k on holiday or watch and it wouldn't impact the benefits they receive in the slightest.

fred376

 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?
If you were down to £8,000 and you spent it all, you would still be getting benefits though? It wouldn't stop. That has been confirmed by a previous post.

A_Lert

In theory the law is about intent. In practice buying expensive luxury goods is the kind of thing that would prompt the DWP to act. From the regulations:

Notional capital
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.

2a obviously doesn't apply. 2b doesn't apply, unless you bought the watch back when you were a high earner and had no reason to think you'd lose those earnings. So the DWP would just need to show it's more likely than not (balance of probability) that you bought the watch to avoid your benefits being reduced. The fact you've posted this thread is already strong evidence that would indeed be your purpose.

fred376

A_Lert said:

In theory the law is about intent. In practice buying expensive luxury goods is the kind of thing that would prompt the DWP to act. From the regulations:

Notional capital
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.

2a obviously doesn't apply. 2b doesn't apply, unless you bought the watch back when you were a high earner and had no reason to think you'd lose those earnings. So the DWP would just need to show it's more likely than not (balance of probability) that you bought the watch to avoid your benefits being reduced. The fact you've posted this thread is already strong evidence that would indeed be your purpose.

The problem is even if 2a or 2b doesn't apply and if your intention is not to gain or retain benefits, you would still be convicted of DOC and that would clearly be wrong. So my question is how do you avoid falling into that trap? Is this a loophole?
I did not post this thread to ask how to avoid DOC if it really is DOC. I am asking how to avoid it if you have been falsely accused. 

Spoonie_Turtle

You are 'allowed' in that you can do what you want, technically, but there will be consequences for that decision if you are claiming means-tested benefits.

If you then end up with 0 savings, you will be getting reduced benefits because they are treating you as still having £8000 savings and taking off a proportional reduction.  If you thus end up not being able to afford to eat, or behind on your rent, or in debt, that watch is only going to help if you sell it to recoup your money.

If you are able to continue saving up, once you have £8000.01 of savings they will be treating you as if you still have the £8000 you spent, therefore you are over the £16000 threshold and not entitled to means-tested benefits.  You now have to live off whatever low income you have and your modest savings which will likely dwindle soon enough.

If you are not claiming means-tested benefits and buy an £8000 watch, your savings fall below the £16000 threshold and you then apply for means-tested benefits, once they find out they will treat you as if you still have the original amount over the £16000, your benefits will indeed be stopped and you will have to repay anything you received.


While this is not a discussion board, for once I think most would agree with the intention behind this concept because benefits are there for people who need them, not to fund excessive luxury purchases*.  You would be hard placed to argue that your intention was not DoC and therefore you have a right to the higher amount of benefits; that's not something anyone could morally justify even if it were legally possible.  (If you are legitimately entitled to benefits and are able to afford a lifestyle comfortably above the poverty line, you are one of the rare fortunate ones!)

[*If you save up your non-means-tested benefits in order to be able to purchase some such luxury, it could be argued that's not what it's for but ultimately if you are entitled to that money it is up to you what you do with it.  If a one-off luxury purchase genuinely brings you that much joy that it's worth saving for, fine.  Just appreciate that you are fortunate enough to be able to do that, and maybe don't broadcast it - the anti-scrounger brigade would love nothing more than to use it as ammunition for wanting the government to cut benefits and make it even harder for people to access the support they need.]


Yes, I know I'm trip-trapping over their bridge but my brain wouldn't shut up until I got it out anyway.

fred376

I think this is a loophole as nobody has been able to point out to me where it says in the law that luxury goods are not allowed. Spending reasonably and DOC are two completely different things. One is about what you buy, the other is about your intention behind the spending.  

poppy12345

I wouldn’t call buying a watch for 8k “reasonable spending.”

poppy12345

fred376 said:

I don't know if you are on benefits or not poppy but you don't seem to realise how hard we have to fight to get benefits and stay on it. Many of us have to appeal. I think its reasonable to spend our hard earned money on whatever the law permits. It's none of your business.

FYI yes i do claim means tested benefits, which include ESA, housing benefit and council tax reduction. I know exactly how difficult it is but i certainly would never spend 8K on a watch, not that i have that amount to spend anyway.

You came here to ask a question and it was answered several times across the thread. I'm very sorry you didn't get the answer you came for.

airliner

This is what I advise my clients when they are receiving means tested benefits such as Universal Credit and they are going to spend a large amount of money.

You are allowed to spent your money on anything you like. However, it may have a knock-on effect with your benefits because of the deprivation of capital and notional capital rules - unless an exception applies.

For the deprivation of capital rule to apply, a DWP decision maker must deem that the claimant was motivated in some way to spend that money in order increase or maintain their current level of benefits. Even if there are multiple reasons behind the decision to spend the capital, it is enough for part of the decision making process to be about benefits for the deprivation rules to come into play.
As a DWP decision maker is not in a claimants head when those decisions are made, the threshold for a DWP decision maker to deem that deprivation of capital took place is pretty low. 

There are no loopholes here, just subjectivity.