Deprivation of capital for UC & major home improvements 5 December 2022 at 8:01PM in Benefits & tax credits 10 replies 434 views

consequences

Hi all,

I'm wondering what exactly will be cnsdierd deprivation of capital for UC reasons.
We have some savings and we have been adding to them for a long time.

We are going through the motions of home improvements, extension, kitchen, downstiars loo, as these things are needed for our growing family and we dont wish to move.
If we spend the money on these things, which we have been planning for a loan time and I have some evidence to prove such as dated emails, self drawn plans, emails to council, etc, if we come to claim UC for reasons such as losing jobs in the coming recession, what will UC feel about it?

The working is going to be in the order of 50k. We are currently mortgage free.

From what I read, paying down debt is considered reasoanble, funding a house is also reasonable, but I dont read anything about improving said house.

Does anyone have any knowledge of previous cases ?
It seems like a reasonable expense to me, I can't predict a future job lose and keep our life on hold, and it is our money earned from income.
But does UC have a time limit for deprivation of capital? I read that social care does not.

Thanks for reading.

Spoonie_Turtle

If you are not at imminent risk of job losses or other foreseeable need to claim UC then you should be fine.  For DoC the DWP need to prove that a motivating factor was to increase benefits entitlement, and it sounds like you have plenty of evidence that would contradict that. 

Obviously if you lost a job leading to needing to claim, and then still went ahead with the work on the house, that could be deemed not reasonable because immediate living expenses should be more important than improving your home.  But if you're reasonably secure for the moment with no foreseeable substantial loss of income in the near future, you shouldn't need to worry.

Edit: the only real 'time limit' for DoC prior to claiming is case-specific, going back to whenever someone first knew they would likely have to claim UC. 

consequences

Do you think the same would apply if I were to reduce my hours (or increase salary sacrifice pension contributions) and thus happened to move into the threshold where by I would qualify for UC ?

They seem like reasonable things to do. Spend more time with the kids, look after my future.
But, depending on ones point of view, having just spent all the money on home improvements and then making a claim after a reduction in income, it might start to raise a few flags?

I realise pension contributions are not counted for UC, but, coupled with spending savings, it could be seen as deprevation of capital/earnings for the purpose of claiming UC. But it isn't, it just happens that you might then qualify (so would be daft not to take it)

calcotti

consequences said:.

From what I read, paying down debt is considered reasoanble,

To be pedantic it is not that paying off debt is considered reasonable but that under UC regulations paying off debt cannot be treated as deprivation of capital. Whether or not it is reasonable is therefore not a matter to be considered.

consequences

Pedantic is just being technically correct. The best kind of correct.

NedS

consequences said:

Do you think the same would apply if I were to reduce my hours (or increase salary sacrifice pension contributions) and thus happened to move into the threshold where by I would qualify for UC ?

Voluntarily reducing hours to claim UC (or claim more UC) without good reason is not permitted and will attract a 3 month sanction.

Increasing pension contributions is permitted and all relievable pension contributions are deducted from earnings when considering any entitlement to UC. There are no limits in the UC Regulations as to how much of your salary you can contribute into your pension (other you must stay within HMRC limits for relievable pension contributions).

elsien

UC isn’t designed to allow people to cut their hours as a lifestyle choice and then make a claim . Otherwise we’d all be at it as part time workers being subsidised by the state. 

Spoonie_Turtle

consequences said:

Do you think the same would apply if I were to reduce my hours (or increase salary sacrifice pension contributions) and thus happened to move into the threshold where by I would qualify for UC ?

They seem like reasonable things to do. Spend more time with the kids, look after my future.
But, depending on ones point of view, having just spent all the money on home improvements and then making a claim after a reduction in income, it might start to raise a few flags?

I realise pension contributions are not counted for UC, but, coupled with spending savings, it could be seen as deprevation of capital/earnings for the purpose of claiming UC. But it isn't, it just happens that you might then qualify (so would be daft not to take it)

Cutting hours to spend more time with your family / have a better work/life balance is reasonable if you have the means to support yourself, yes.  But having a low enough income to then claim UC usually indicates not having the means to support oneself, which the government then deems not to be reasonable if you've simply chosen to reduce your income by working fewer hours.

Pension contributions, that's a bit of a loophole in some respects and under the current legislation contributing towards your retirement funds subject to any restrictions in pension legislation - and thus ensuring you most likely won't need/qualify for state help after retirement - is currently allowed. 
[We had a long thread with someone having to battle every month to get their pension contributions disregarded as income for UC, and actually had a civil servant getting snotty with them saying it wasn't supposed to work like that, but staff views on it don't change what the law actually says.]

consequences

elsien said:

UC isn’t designed to allow people to cut their hours as a lifestyle choice and then make a claim . Otherwise we’d all be at it as part time workers being subsidised by the state. 

Whilst Im not clued up on it as much as some who are, it's quite clear that with only 15hrs work required to qualify for UC that actually it's being used by some in exactly the manner suggested.
If I were to obtain agreement with my employer for a zero hours contract, I suppose then I would qualify.
I would imagine the latest govt announcement of being able to ask for flexible working from day one is related to this.

However I'm here to understand the rules, not the politcs.

I'm not going to assume someone elses situation, the reasons why they might wish for a better work/life balance and likewise for myself.

Spoonie_Turtle said:

[We had a long thread with someone having to battle every month to get their pension contributions disregarded as income for UC, and actually had a civil servant getting snotty with them saying it wasn't supposed to work like that, but staff views on it don't change what the law actually says.]

In my case I'm salary sacrifice, so as I understand it, my pension contributions are not ever considered part of my pay as I'm technically not being paid, thus it never can be income. HMRC dont class it as income.
They might not feel the same way about pension contribs from salary which is arguably more of a discretionary spend.

But my understanding, they also cannot question what one spends their money on, nor their perception of the morality of it. eg gambling, alcohol, etc.

kaMelo

Your understanding is correct regarding salary sacrifice, it was never pay so can't be counted towards anything.

Something to possibly be aware of,  depending upon how much salary you give up, is the increase in AET coming soon.

consequences

Thanks for the tip.
I may well be wrong (all new) but I dont believe I would find my/our self/selves below the threshold as it could affect NI contributions and thus future state pension if was earning that amount to be under AET ?