help with benefit advice

karwil

hi i am looking for some advice we are on income support and we have health issues. we need major works done to our property out of necessity and up until recently we found an old pension which could hold the key to getting the works done. But if we take this pension out we have been told that our benefits will stop as this will be classed as capital even though i told them that its only for repairs to property as health is getting worse and they money wouldn't be sitting in an account it would be paid straight to the contractor. i was told that the benefit would stop and we would have to claim again after work has been done and then it would be a claim through to universal credit which could take months. any advice would be much appreciated. 

tacpot12

I don't think that what you have been told is correct. The decision maker should look as the reason why you have spent the capital that you have received, and the onus is on the decision maker to show that your reason for spending the capital was to preserve your entitlement to Income Support. If the works that need doing on your property are objectively necessary, then I can't see how they can claim your significant operative purpose was anything other than to repair your home.

This link backs up what I have said: A guide to deprivation of capital/income | by Rachel Ingleby | Medium

It makes the point that you might have to show that you would still have spent the pension money on the repairs if you were not claiming benefits. I think you can do this easily because I'm guessing that you don't have any other capital you could have used to pay for the repairs AND the work is objectively necessary. 

You say that the major works are being done out of necessity. I would suggest that you need to review the evidence you have that the work is necessary, and then put it into safe keeping somwhere. If the building is in danger of collapse, then the work is clearly necessary; you would be homeless if the work was not done. But if the work is to create an annex so that a adult child or parent can move in with you, I think this would me much harder to argue that it was 'necessary' as there are probably other options open to the person seeking to move in with you.

So you need to be absolutely sure that the work is necessary and can be justified as such. If the work is to, for example, replace rotten windows, I think you need to document the state of the windows and consider whether they are bad enough to justify replacing them now, and not in six months time. If the rot is so bad that there is NO wood in some places, and wind is free to blow in an out of your home, then this needs fixing immediately. If the windows are going rotten and look bad, but are structurally sound and have no signifciant draughts, then perhaps not. You need to be prepared to argue your case, and show beyond doubt that the expenditure was necessary at the time you made it.

Because of the potentially serious impact of a decision against you on this, I would suggest you see what other advice is made, and possible also call Citizens Advice to get their view.

Alice_Holt

The difficulty is, I suspect, that when the OP takes the pension lump sum they will likely have over £16k in their account - causing the IS claim to end.

The advice that they can claim again when their capital falls below £16k (i.e after payment for the work) indicates that the issue is not deprivation of capital (otherwise they would not have been advised to reclaim a means tested benefit).
 

 

Newly_retired

Surely the fact that this pension is available to be drawn on means that the claimant has access to capital, however it is planned to spend it?

poppy12345

Newly_retired said:

Surely the fact that this pension is available to be drawn on means that the claimant has access to capital, however it is planned to spend it?

Not if it's in a pension pot because it's ignored (if under state pension age)  unless you draw down a lump sum or weekly/monthly income.

NedS

Newly_retired said:

Surely the fact that this pension is available to be drawn on means that the claimant has access to capital, however it is planned to spend it?

Capital held within a pension is disregarded in full until it is drawn or the claimant reaches state pension age. It is only taken into consideration once it is withdrawn from the pension, and at that point it is then treated as capital, and the claim for IS must close. There will be no option to have the pension payment made directly to a building contractor, so it has to pass via the beneficiary and must then be declared as capital.

As @Alice_Holt says, once the work has been done and the capital has been spent, a new claim for benefits can then be made, and a decision maker would potentially need to decide if spending the capital on essential house repairs constitutes deprivation of capital (as highlighted by @tacpot12)

tacpot12

Alice_holt is correct that having £16K of capital would automatically stop Income Support. I forgot to develop my thinking on this point which is if you did arrange for the pension company to pay directly into the bank account of the contractor who is doing the work, you may be able to argue that you NEVER had the capital under your control, because it was paid away when the pension was distributed. This could be very difficult to arrange, and the pension company may (and probably will) refuse to pay the money to anyone other than yourself, due to the concern around pension scams.

Another solution that might work is if a family member can lend you the money (formally, via a loan agreement arranged with a solicitor), and you then pay them back the moment you receive the pension payment.

You should also consider that by paying the contractor immediately when you receive the pension money (or the loan), you may lose your only leverage if the work is not being done as it should be. It might be better to plan to switch to UC as soon as you are happy with the work and have paid the contractor what you owe them. This might mean spending more of your capital on living expenses than is desirable, but there isn't any other option. You have to get your capital below £16,000 to be eligible to claim UC.

I think the DWP would point to any payment of the contractor before the work is complete as having the significant operative purpose of retaining your right to claim IS, and thus they will argue that they can regard you as not having made the payment and still having the capital. Arranging for the payment to be made to you once the work is done, and you paying the debt immediately would seem NOT to be for the purpose of retaining your right to claim IS as the debt is due immediately. You should ask the contractor to only send you an invoice stating that payment is due on receipt, not in 15 or 30 days! Then ask for the pension money to be paid and pay it over the same day. You might try making a test payment of £1. plus some random pence amount to the contractors account before the pension money arrives so that you are sure you have their correct bank details and these are stored in your online banking service). Ask the contractor to confirm how much you paid them, so that you know that the contractor has received what you sent. (I would always advise doing this with any large one-off payment.)

So you probably were advised correctly, and I apologise for suggesting otherwise, but there might be a way around it. It is up to you whether you try it or not, but no-one can guarantee it will be succesful, but it doesn't look like to would cause you a problem if you tried it. The DWP would just stop Income Support and tell you the reason for their decision if you ask for a mandatory reconsideration. 

Ultimately, if you can't avoid a switch to Universal Credit, then you should not worry about claiming Universal Credit. It doesn't take months, but it can take six weeks or so. Hopefully the pension amount will be enough to pay for the work AND tide you over for the six weeks or so before you start receiving Universal Credit. 

You can check to see how much difference claiming UC might make using one of the benefit calculators such as the one available at entitledto.co.uk. You might also check that you are receiving all the benefits you are entitled to using this same calculator.

calcotti

Surely if the capital is received and then paid out after a few days and only reported to IS after the event then the DM could do a closed period suppression disallowing IS for those few days.