Could this be considered deprivation of capital for UC

jane_doe

I'm currently receiving child tax credits, but I've been given notice to migrate to UC. I have savings in excess of the 16k capital limit, which I understand should be disregarded for up to 12 months after migrating to UC, unless my circumstances change? I'm not sure how safe that 12 month disregard is because I'm self employed and my income changes monthly. My trade is seasonal so it's possible I could earn above the limit for 3 consecutive months and have my UC claim terminated (but it would soon drop and I'd be eligible again). Not sure if I lose entitlement to the 12 month disregard on those circumstances?

Anyway, I own my house (with a mortgage) jointly with my brother. When I bought it, the only way I could afford to buy was with his financial help. Both for mortgage affordability and deposit (I pay all the mortgage, and maintain the property). He doesn't live in it, and never has. In fact he lives hundreds of miles away and has only ever visited a handful of times.

We're tenants in common and both of our shares in the property are clearly defined legally with a deed of trust. We had a mutual agreement that I'd buy his share of the equity (ie return his deposit) as soon as I could afford to. And that's what the majority of my savings are for, and now I've almost got enough to buy his share.

So is using my savings to buy a bigger share of the propert I live in going to be considered deprivation of capital? Technically I'm not sure it'd be classed as paying off a debt (even though my brother's contribution to the deposit was effectively a loan to me it's reflected in his stake in the equity rather than a loan agreement between us).

It would all have to be done legally, with the deed of trust updated to reflect me purchasing my brother's share. But would DWP accept that I haven't deprived myself of assets?

HillStreetBlues

Buying the house you live in isn't DoC, and that's what you would being doing.

NedS

jane_doe said:

I'm currently receiving child tax credits, but I've been given notice to migrate to UC. I have savings in excess of the 16k capital limit, which I understand should be disregarded for up to 12 months after migrating to UC, unless my circumstances change? I'm not sure how safe that 12 month disregard is because I'm self employed and my income changes monthly. My trade is seasonal so it's possible I could earn above the limit for 3 consecutive months and have my UC claim terminated (but it would soon drop and I'd be eligible again). Not sure if I lose entitlement to the 12 month disregard on those circumstances?

For a claim to be closed due to earnings, earnings (or profits after expenses in the case of self employed) must have been sufficient to NIL the UC award for 6 consecutive months.

I cannot answer as to whether or not you would lose your transitional protection in such a case.

HillStreetBlues

jane_doe said:

 Not sure if I lose entitlement to the 12 month disregard on those circumstances?

If I read the Regulations correctly, it would have to be within 3 months of the last claim ending, if later than that TP is lost.

jane_doe

HillStreetBlues said:

Buying the house you live in isn't DoC, and that's what you would being doing.

It is, but on the face of it, it would look like I'm just transferring all my capital to a relative. At first glance it could also look to DWP like we are a married couple rather than siblings (same surname)! How can I personally prove otherwise? Or is my brother going to have to provide his birth certificate, even though he's not involved in the UC claim?

NedS said:

For a claim to be closed due to earnings, earnings (or profits after expenses in the case of self employed) must have been sufficient to NIL the UC award for 6 consecutive months.

I cannot answer as to whether or not you would lose your transitional protection in such a case.

I thought I'd read somewhere that for self employed, a UC claim is closed after 3 consecutive months above the nil threshold, can't find where I saw that now though. Otherwise, if they close it immediately when a month hit's nil threshold, do I then have to make a new claim, and won't I lose a months worth of benefits each time that happens?

HillStreetBlues said:

If I read the Regulations correctly, it would have to be within 3 months of the last claim ending, if later than that TP is lost.

Yes, I thought it was 3 months to keep the TP. 

jane_doe

Reading the regs again, it seems if I earn above my nil threshold (about £2600 according to online calculators) in any month, not only will I receive zero UC (fair enough), but it also immediately closes my UC claim? And then I have to start a new claim for the next month? Can I do that immediately (assuming I don't have too much surplus earnings)? How complex is it to start a new claim each time that happens?

NedS

jane_doe said:

Reading the regs again, it seems if I earn above my nil threshold (about £2600 according to online calculators) in any month, not only will I receive zero UC (fair enough), but it also immediately closes my UC claim? And then I have to start a new claim for the next month? Can I do that immediately (assuming I don't have too much surplus earnings)? How complex is it to start a new claim each time that happens?

It's definitely 6 months of NIL by earnings at the moment. Anyway, if you are worried, even IF your claim were to be closed, you can immediately reopen it so nothing to worry about

HillStreetBlues

jane_doe said:

It is, but on the face of it, it would look like I'm just transferring all my capital to a relative. At first glance it could also look to DWP like we are a married couple rather than siblings (same surname)! How can I personally prove otherwise? Or is my brother going to have to provide his birth certificate, even though he's not involved in the UC claim?

If they did ask then you could show them the transfer of deeds to your sole name to counteract the loss of money.

NedS

HillStreetBlues said:

jane_doe said:

It is, but on the face of it, it would look like I'm just transferring all my capital to a relative. At first glance it could also look to DWP like we are a married couple rather than siblings (same surname)! How can I personally prove otherwise? Or is my brother going to have to provide his birth certificate, even though he's not involved in the UC claim?

If they did ask then you could show them the transfer of deeds to your sole name to counteract the loss of money.

Exactly, it cannot be deprivation of capital because you still have the capital - you have simply moved the capital from one pot to another - it's now in the form of your property which you live in, and as such now falls to be fully disregarded (so long as you live in it).
Deprive means to no longer have something - clearly you still have the capital so it cannot be deprivation.

HillStreetBlues

Deleted as incorrect

jane_doe

I think it looks like NedS is correct - according to ADM H2 the property you live is classed as capital, but it is a specifically disregarded capital. So buying my brothers share of the property should be considered as a transfer of capital (not disregarded) to the home property which is then disregarded. Personal possessions (which includes cars that aren't owned as an investment) are slightly different, because they aren't considered as capital at all, and therefore don't have or need a disregard. I do find it a bit odd that DWP can then use that to decide that a person who's bought themselves a car that they've saved up for with  personal savings has deprived themselves of capital (even if it is a Rolls Royce). nb I don't own a Roller!

HillStreetBlues said:

If they did ask then you could show them the transfer of deeds to your sole name to counteract the loss of money.

I could show them a copy of the updated deed of trust, that'll show the change in ownership share in exchange for the transfer of funds. Hopefully that'll be sufficient since my brother will still be named as an owner in common, as I think he'll have to stay on the mortgage for now for affordability. So the Land Registry title deeds won't change because they don't specify what share each owner has, just who they are and that we're tenants in common. The deed of trust is a separate thing, not lodged with land registry.