Deprivation of capital while on universal credit with unusual circumstances

Zenneeded

Hello, I have a query I can’t see an answer to. I’ve just been migrated from tax credits to universal credit. I am protected by the transition but have over £16,000 so it is still reduced by, to me, a large sum. This would seem reasonable but it’s not actually my savings but 3 other sources of money. 

I was diagnosed with stage 4 terminal cancer earlier this year and have been off work and on chemo etc. Last year I borrowed £15,000 to do some essential building work which has been delayed by being extremely ill and will hopefully happen in a few months. A lot of the money is sitting in an account connected to my mortgage that used to be heavily in debit but is now at zero because of the loan money. 

I also borrowed £8,000 from my daughter who is saving for a house deposit so I didn’t have to pay the high interest on the account. 

Thirdly I got a small critical illness payout of 10,000 (I wish I’d planned for more!). Most of this money is cancelling out debt or supposed to replace my pay I’m no longer getting. 

I’m going for a high risk operation in a week and I really want to pay back my daughter beforehand in case of the worst, but I can’t get an answer from UC of whether this is counted as deprivation of capital or not. I know that there are rules in place for critical illness payouts where it counts unless you pay off debt as a lump sum, but can’t find out if repaying family is acceptable. UC say I have to do it then they will say yes or no. 

Does anyone have an experience of any of this? 

Newcad

Sorry to hear about your diagnosis. Have you put in claims for PIP and LCWRA in UC?

However the savings are a tricky question - but the starting point has to be that money in your account(s) is your savings/capital

The money for the building work is probably counted as savings, but may be disregarded if it's for needed improvements to your home, it would help there if you have previously told the DWP about it.

The "loan" from your daughter is a bigger problem. Unless there was some kind of legal document saying that it was a repayable loan, and setting out how and when it had to be repaid, then it will be regarded as a gift.

I don't know about the critical illness payment, it would depend just what that is. Is it insurance?

HillStreetBlues

I agree with the money from your daughter will be tricky. You would have to explain why the money is in your account and not your daughters. As I would seem reasonable for her to have kept the money and earned interest and then transfer it when it was time to pay.

Zenneeded

Yes the money my daughter (22yrs) loaned me was to put in a my mortgage current account which was 30,000 in deficit so I was paying 8.5% interest on it each month which was over 200 a month in interest. This was before I got sick and long before moving to universal credit. The deposit is marked in my account (when I transferred it from current account to the mortgage current account) as loan from daughter’s name, but we didn’t draw up an agreement. 

But if I pay it back and they don’t accept it then won’t they count it as money I have forever? Not that forever is likely to be long. 

Thank you Newcad, I am getting Pip but don’t know about the other one. 

The building work is needed, I am under housed with 3 kids in a 2 bed flat and am dividing one bedroom into 2 to make it 3 bedrooms and adding another toilet and to repair the roof. But I also have credit card debt of 5,000 on 0% and I still owe 13,000 on the loan for building work. I believe the critical illness insurance payout is allowed to be used to pay off debt including mortgage as the insurance industry asked for clarity on this, otherwise it would put people off taking this insurance out. I could pay off some of these but then I’ll have to re-borrow at a higher rate to do the building work. 

I’ve worked so hard to pay off a lot of 25,000 in cc debt over the past 4 years on a low income, and had everything planned out to finish paying that off and to get a better housing situation for my kids, probably what gave me cancer.  
sorry for the very long reply, my brain is going round In circles. 

HillStreetBlues

It sounds a reasonable explanation of the loan. Was it a bank transfer, if so was anything marked on the transfer (eg loan to Dad)?    Did you have any witnesses when your daughter agreed to the loan?

Spoonie_Turtle

Thinking about it, the savings over £16,000 don't exist for the purposes of UC (at the moment) because of the disregard.  So what you do with them should be irrelevant. 

*Should* - I'm not sure if that's been tested.  We may find out a year after the first managed migrations, which is a bit late for you to be deciding.

It should only be what you do with the £6k-16k that has questions asked.

So if you paid back your daughter, that leaves your CII payout which is for debt and living expenses, and the money for building work. 
How much CII would be left after paying off debt?  How much are you likely to have left of it after living for 12months?

Could you get the building work done and paid for within a year?  


Edit: further info about disregards for money for essential work on the home

"Amount for repairs H2123
Where, in the past 6 months, a person has acquired a sum of money by way of a loan, grant or otherwise which is to be used for making essential repairs or alterations to premises occupied or intended to be occupied as the person’s home, that amount can be disregarded from the calculation of that person’s capital but only where it is used for that purpose.

Is it reasonable to disregard for longer
H2124 The DM may decide it is reasonable to disregard the grant, loan or otherwise for a longer period if the repairs and alterations will take more than 6 months."
ADM Chapter H2 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1182983/admh2.pdf

Newcad

Spoonie makes a good point about the 12 month disregard for savings over £16k. It does give you a breathing space to consider what is the best to do.

Good to hear you already have PIP and I've also been thinking more about UC-LCWRA.

Do you get a Transitional Element after migrating from Tax Credits to UC?
If so then how much is it?
You don't say when you were migrated, or if you have had a UC payment yet, so you may not know that yet.
(Although you do know that there will be a £174 deduction for £16k savings, so maybe you have already had a UC payment).

I ask because if you now add a LCWRA element to UC that will 'erode' the Transitional Element.
So it depends how much TE you get (if any) whether adding LCWRA at this point would give you more money or not.
One thing that having LCWRA added would do is stop any work search conditionality, so you wouldn't have to look for work or go down to the Jobcentre apart from very infrequent occasions.
If you are doing any work then having LCWRA also gives you a 'Work Allowance' that you can earn without having the 55p in the £ deducted from it.

PS, It isn't unusual to have your brain going in circles when stuff like this is suddenly thrust at you, there are a lot of new things to take in and consider. With a little time and patience (and some questions) people can help you decide what is the best for you to do,

Alice_Holt

I would suggest contacting a Macmillan Welfare adviser.
Let them have sight of your UC payment schedule, and they should be able to advise on LCWRA and TP.
And give some guidance on the UC capital issues. 

I don't think you mentioned PIP, so if this is not in payment they could help you claim.

The nurses at the hospital should be able to make a referral for you, if not:

https://www.macmillan.org.uk/cancer-information-and-support/impacts-of-cancer/benefits-and-financial-support/benefits-and-your-rights#:~:text=0800 587 0973.-,Who can help me apply for benefits?,you may be entitled to.

Zenneeded

Thanks all for your helpful responses. 

Yes I transitioned to UC in late August and have received one payment so far, where I got 230 TP, but had 220 taken off for my last pay check and 174 removed for savings. 

I’ve asked them if my pay going down from half to zero will affect TP and also what happens when my child (2nd of 4) turns 18 soon but their response was quite cryptic.
“A decrease in earnings only affects the TP if it drops below the threshold. TP stops if this happens for 3 consecutive assessment periods. 

You need to redeclare the children after the change for further actions in your claim”
Both of these sound to me like I’ll have lost TP within 4 months. Or do I wait until my child finishes school in July?

I think I’m too scared to pay off my daughter now, and will just have to make sure she gets an extra 10,000 from my life insurance. The building work is unlikely to start before January and I borrowed the money over a year ago (delays due to freeholder permission and getting sick) so not sure if that’s acceptable for their rules. 

I think my priority is to reduce my monthly outgoings so I think I’ll put 7000 on the 13000 remaining on the loan so the monthly payments go down. And pay 1500 off a second day to day c/c. And pay 1500 of other kids expenses I have to pay over the next few months. Then I’ll have 10000 so will lose less from savings but can still top up income for a few months. 

Thanks Newcad I will ask MacMillans to advise on whether LCWRA will cancel out TP. They did help me with PIP application. Pip is to be reviewed in feb but maybe by then I’ll know more about how long I have left, post op and after starting new immuno drugs. 

Newcad

An award of LCWRA in UC pays an extra £390.06 a month.
So if one was to be added to your UC now it would mean that the TE of £230 would be completly erroded and the TE would be gone.
But that would still leave you with £160 a month more money.
However do talk to MacMillan about it and if you might qualify without a WCA, because if you would have to have a WCA then that can take months.