Am I allowed to invest in a Stocks & Shares ISA whilst claiming benefits?

MalMonroe

The only way to get a true picture of what you are and are not allowed to do is to contact DWP and ask. Then you will know for sure.

I wouldn't commit to investing anything anywhere until you have all the correct information you need. 

poppy12345

MalMonroe said:

The only way to get a true picture of what you are and are not allowed to do is to contact DWP and ask. Then you will know for sure.

This isn't the best advice to give either because they are not there to give benefit advice in this way. I've heard of so many people being given totally incorrect advice by doing this.

calcotti

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932378/dmgch52.pdf

Dividends fall under this category

52021 A payment is capital if it is
1. not made or due to be made regularly and
2. made without reference to a period.
The payment is income if this does not apply.

Gary_2021

calcotti said:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932378/dmgch52.pdf

Dividends fall under this category

52021 A payment is capital if it is
1. not made or due to be made regularly and
2. made without reference to a period.
The payment is income if this does not apply.

For example, if I invest into a fund of shares that pay monthly dividends, is this classed as regular income? Also, are those monthly dividends made with a reference to a period. Considering I will not be withdrawing dividends/ profit or any capital out of a Stocks & Shares ISA, would those dividends be classed as income. I'm still unclear about this. Thank you

Alice_Holt

MalMonroe said:

The only way to get a true picture of what you are and are not allowed to do is to contact DWP and ask. Then you will know for sure.

        No, Mal I'm afraid your advice is incorrect.

        DWP call handlers are not benefit advisers. Sadly, you cannot rely on their answers given over the phone.

        One of the better sources of information is the DWP decision makers guide (posted here by Spoonie and calcotti) accessed via the internet, and sites like adviceguide, entitledto, turn2us, scope, etc are also an excellent source of benefits information / advice.

      DWP administer benefits. They do not have a dedicated advice line staffed by benefit advisers (perhaps they should!).

      For accredited benefit advice you are better going to charities such as Age UK, Macmillan, Citizens Advice.   

       

calcotti

GaryMSE said:

calcotti said:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932378/dmgch52.pdf

Dividends fall under this category

52021 A payment is capital if it is
1. not made or due to be made regularly and
2. made without reference to a period.
The payment is income if this does not apply.

For example, if I invest into a fund of shares that pay monthly dividends, is this classed as regular income? Also, are those monthly dividends made with a reference to a period. Considering I will not be withdrawing dividends/ profit or any capital out of a Stocks & Shares ISA, would those dividends be classed as income. I'm still unclear about this. Thank you

No they would not. Dividends are a return on capital and treated as additions to capital.

the_mixer

Alice_Holt said:

Dividends and investment growth will not be classed as income, they increase the value of your capital.

Means tested benefits have a capital / savings limit of £16k.  Capital / savings above £6k will attract a notional tariff income which will reduce the amount of benefit paid:

 https://www.entitledto.co.uk/help/savings


However,
    You may wish to consider if having an emergency fund in an instant cash account is better than an S&S ISA;

  Equities are better held for the very long-term to balance out the volatility of stock values. You do not want to be a forced seller, at a time when your fund has fallen in value by 40%  (not an unusual occurrence).

  If you wish to invest, then also consider a SIPP. Contributions attract a tax uplift, can be invested in the same funds as an ISA (but with a different tax wrapper), a SIPP is excluded from capital for mean-tested benefits, and can (currently) be accessed at the age of 55. 

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/self-invested-personal-pensions?source=mas#

Is a Sipp really excluded from capital for benefits? I've been on ESA and PIP for years and never knew. I'm mid to late 40s

Alice_Holt

Is a Sipp really excluded from capital for benefits


SIPP = Self Invested Personal Pension

"Occupational and personal pensions 
The value of any right to receive a pension under
1. an occupational or personal pension scheme (a), or
2. any other registered pension scheme is disregarded indefinitely .

(a) Pension Schemes Act 1993, s 1; Finance Act 2004, s 153; 2 UC Regs, Sch 10, para 10"


See para H2046 of the linked HMG guide on Capital disregards:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932331/admh2.pdf


Makes sense when you think about it. Otherwise many many people would be excluded from means-tested benefits because of pension savings they are unable to access until they reach 55 (or more) years of age.  Destitution would result.

And many more people would be deterred from saving for their old age.