Inheritance and Universal Credit

Scottie48

Hi, just looking for a bit of advice please. I am currently unemployed in receipt of Universal Credit of approx £330 a month. I have been informed that I am set to receive an inheritance of approx £10,000, presumably I will have to inform Universal Credit of a change of circumstances, does anyone know how this will affect my monthly payments? I do have a few small debts to clear, is it ok for me to do that from the funds available? Thank you

Alice_Holt

https://www.turn2us.org.uk/Benefit-guides/Universal-Credit-income-and-capital/Capital-Savings

Yes, you do need to inform UC, put a note in your journal (and keep a screenshot).

Yes, you can use it settle debts without that being viewed as deprivation of capital by UC.

The UC calculation will be based on remaining savings at the end of your assessment period. So advise them of this figure.

tacpot12

It will affect that amount of your UC payment. Any amount of savings/capital over £6000 is treated as providing you will some income. This income is calculated as £4.35 per month for each additional £250 (or part thereof) that you are over the £6000 limit. 

So if do don't spend any of your inheritance, you will be deemed to be receiving £69.60 per month and this will be deducted from your UC payment. 

So for each £250 you spend clearing your debts, you will increase the amount of UC you receive by £4.35 per month. 

However, you can't just repay any debt you have, otherwise you might fall foul of the rules on the deliberate depravation of capital. There must be a significant purpose to you paying off the debt, such as avoiding eviction, avoiding enforcement action or avoiding high interest rates, e.g. by bringing down an unauthorised overdraft into the authorised overdraft level. if you can't identify a significant purpose for repaying the debt, the DWP might well conclude that your purpose was to increase the amount of benefits you are paid, which will result in them deciding that you still have the capital when you do not. 

You can spend money on replacing broken appliances or item of furniture that are worn out or or beyond economic repair. I would suggest you take photos of any such items, and you keep any estimates for the cost of repairs. You might also spend the money on a holiday providing that it is not excessively expensive. 

whizzywoo

tacpot12 said:

However, you can't just repay any debt you have, otherwise you might fall foul of the rules on the deliberate depravation of capital. There must be a significant purpose to you paying off the debt, such as avoiding eviction, avoiding enforcement action or avoiding high interest rates, e.g. by bringing down an unauthorised overdraft into the authorised overdraft level. if you can't identify a significant purpose for repaying the debt, the DWP might well conclude that your purpose was to increase the amount of benefits you are paid, which will result in them deciding that you still have the capital when you do not. 

I don't think the above is correct.  I understand that clearing of ANY debts is ok under Universal Credit rules.  This is different to other means tested benefits.

calcotti

tacpot12 said: However, you can't just repay any debt you have, otherwise you might fall foul of the rules on the deliberate depravation of capital. 

That is incorrect. The UC Regulations explicitly state, without qualification, that paying off debt is not deprivation of capital. (This is different to legacy benefits which is probably what you are thinking of.)

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.

Alice_Holt

tacpot12 said:

However, you can't just repay any debt you have, otherwise you might fall foul of the rules on the deliberate depravation of capital. There must be a significant purpose to you paying off the debt, such as avoiding eviction, avoiding enforcement action or avoiding high interest rates, e.g. by bringing down an unauthorised overdraft into the authorised overdraft level. if you can't identify a significant purpose for repaying the debt, the DWP might....

     Sorry tacpot, but this is incorrect for UC.  See my earlier post -  repayment of debt will not trigger the deliberate deprivation of capital rule.

    One advantage of UC over legacy payments.

   Calcotti has helpfully linked to the UC regulations confirming this.

   You may wish to amend your post accordingly. 

  

TELLIT01

There are many differences between the rules applied to legacy benefits e.g. ESA, Income Support and JSA and those applied to UC.  I have to admit to being surprised at some of the changes as they do actually seem to benefit the claimant!

Scottie48

Many thank for your replies and advice, it is very much appreciated