Universal Credit - can the government legally claim that child savings are household income?

annaloulou

Hi, I've seen similar posts but none exactly fit the bill so...

I am about to migrate to UC.

I understand that a child (or it is all children in the household separately?) can hold up to £3000 of savings and any amount in a CTF or Junior ISA before they count as household savings.

Anything above counts as household income. Therefore, your UC will decrease on a sliding scale and stop altogether after £16,000. 

However, as far as I understand, your child's savings belongs to them and their use must be for them. A household with limited or no receipt of UC due to child savings that were not transferred to the junior isa on time will therefore need to use them to live on (if they are on a low income). How can the Government be allowed to say that child savings are household income if it can only be used by the child for the child?

Currently, you can add £9,000 a year to a junior isa. Is it deprivation of assets to move a child's savings, if it was £9,000 from an ordinary child account to the Junior Isa (rather than from the adult account)?

What counts as a lump sum? I have tended to put lump sums into my child's account over the years (before UC) rather than a steady flow, so what is an amount that is considered non fraudulent? 

I hope someone may have the answers! Thank you.

huckster

For the first 12 months, UC will take into account (when calculating UC awards) capital savings and investments up to £15999.  At the one year anniversary of the claim, you would need to disclose the capital savings and investments again.  UC won't normally take into account savings in the name of a child, but of course a UC Decision Maker might enquire if the parents whose claim it is, have temporarily sheltered money in their children's names, so they can still claim benefit entitlement.


Taken from advice for decision makers Universal Credit guidance.
ADM Chapter H1: Capital (publishing.service.gov.uk)


Ownership of capital of a child or young person

H1077 Capital owned either legally or beneficially by a dependent child or qualifying young person is not to be included in the capital of the claimant1 . However, the DM may still need to make enquiries about such capital if it appears to be owned by the claimant but is actually beneficially owned by a child or young person for whom they are responsible. 1 WR Act 12, s 5

H1078 Children and young people may not be the legal owners of the capital of which they are the beneficial owners. This is because businesses, such as banks, will not enter into a contract with them. If they are the beneficial owners and not the legal owners their capital will be held on trust by another person.

 H1079 Children and young people become the legal owners of their capital when the terms of the trust say they can have the capital. In England and Wales this may be when they are 18 years old and in Scotland when they are 16.

 H1080 A child or young person cannot be the legal owner of 1. real or heritable property (see H1020 4.) or 2. shares. Sometimes a mistake is made and a child or young person is shown as the legal owner. How a person gets a beneficial interest in capital

 H1081 People can get a beneficial interest in capital by 1. saving up their income such as money in a bank account 2. using their money to buy capital such as premium bonds 3. using money which has been lent to them, such as a mortgage, to buy capital1 4. being given capital such as a lump-sum payment of compensation 5. having a beneficial interest in a trust. 

NedS

In addition to the above, a decision maker will also consider intent and where the child savings has come from. The rules do not exist to prevent children from having savings, but rather to prevent claimants moving their capital into the name of their children in order to claim (more) means tested benefits.

So a DM may consider where the capital came from, when and how it was moved into the name of the child etc, and whether this was done from capital of a parent in order to reduce their capital to claim means tested benefits.

annaloulou said:

Currently, you can add £9,000 a year to a junior isa. Is it deprivation of assets to move a child's savings, if it was £9,000 from an ordinary child account to the Junior Isa (rather than from the adult account)?

I would say that is absolutely fine. If the £9k is already held in a child account, and then it is moved into a junior ISA to meet their annual ISA allowance, there would not appear to be any intent by the parent to reduce their own capital. There can be no doubt about the beneficial owner of a junior ISA.

annaloulou said:

What counts as a lump sum? I have tended to put lump sums into my child's account over the years (before UC) rather than a steady flow, so what is an amount that is considered non fraudulent?

Again, in my opinion, if you can demonstrate such behaviour has been ongoing for a number of years (every year you put £9k lump sum into your child's ISA from your income) and you continue to do this in the year you migrate to UC, you have clearly and demonstrably not changed your behaviour, so it would be difficult for DWP to prove deprivation of capital and that you have done it for the purpose of claiming means tested benefit.

annaloulou

Thank you so much. I do not put regular yearly of payments for £9,000 across. But I have put in a few thousand every so often over 14 years. It happens that he has premium bonds (only I have put into this over his life) and it is that which I want to add to his junior ISA - it will not be as much as 9k but I want to switch about 7k. Either way, I think from what you have said, that it will be demonstrably a legal transfer?