Income related benefits and debts

BACKTOBACK

I am currently living off pip and contribution based ESA. My savings around £20k But in addition to this i have moved £7k from a zero percent credit card and put that money into a savings account earning 4.1%.
Im thinking in the next 6 months my savings will be below £16k so i may qualify for income related benefits. I own the home so it will just be income related ESA (if thats still available) and council tax reduction.
Can i just be honest with the £7k and say what i have done and the reasons why? Will they take that into account as its in savings but also owed on a credit card?
Or would it be better to just pay the credit card off and close that savings account with the £7k in it?

poppy12345

Savings are savings regardless of where they are. Your debt will not be taken into consideration to reduce your savings. Quite confused why you took 7k from a CC and put it in a savings account. 

Which ESA are you claiming? Is it the old contributions based or New style? If it’s new style then there’s no income Related top up payable with this. It would need to be Universal Credit that you claim. Paying off debt when claiming UC is not classed as deprivation of capital.

If its the old contributions based then the income related top up is possible. However, paying off debt that isn’t immediately repayable can be seen as depriving yourself of capital and you could still be classed as having it. 

BACKTOBACK

Thank you for your reply, the money was moved as it was a promotion on the credit card for no interest for 12 months. It is earning around £20 per month in a savings account.
I am currently claiming the old style contribution based ESA.
I was getting both contribution based and income based but received an inheritance a couple of years ago and bought a property, which i rented out for a bit but now have to move into it as being evicted in my current rental.
Sorry i know its a bit confusing

fatbelly

poppy12345 said:

Savings are savings regardless of where they are. Your debt will not be taken into consideration to reduce your savings. Quite confused why you took 7k from a CC and put it in a savings account. 

It's called stoozing. It can work well for some people, in high-interest times.
But it doesn't work for people on means tested benefits!

Muttleythefrog

So best course of action probably is to pay the credit card debt and if your savings then do go below £16k in coming months or so then claim U/C (for which payment of debts is fine). If you do claim U/C your ESA would be deducted as unearned income if you continued to claim and get it.

PIP would be unaffected and you should look to claim Council Tax Support as you suggest around time of claiming U/C.

Obviously this would mean you'd lose the small amount of interest you're getting on that borrowed £7k... however... (if not already done) you could put the majority of the monies you do have left into say an instant access savings account and probably get over 5% judging by current market - refer
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess

Bear in mind that deprivation of capital can be an issue if it appears there has been unreasonable spending to gain benefits so sensible for no sports car, round the world cruise or generous gifts to family etc just before claiming U/C!

HillStreetBlues

fatbelly said:

It's called stoozing. It can work well for some people, in high-interest times.
But it doesn't work for people on means tested benefits!

I never knew there was a term for it.
It's what I'm currently doing with £4.5k. With that amount I'm able to keep my capital under £6k and get about £17 pm interest, so pays for my internet and phone.

peteuk

£7K to the CC from £20K savings will still leave you above the savings threshold of £6K for UC, so although you will be entitled to claim it will effect the amount you receive.

BACKTOBACK

So if i am claiming contribution based ESA old type. Have done for years. I used to claim income related ESA when i was entitled to it.
Can i reclaim income related ESA when capital is below £16k? Or would it now have to be income support to top it up?

poppy12345

BACKTOBACK said:

So if i am claiming contribution based ESA old type. Have done for years. I used to claim income related ESA when i was entitled to it.
Can i reclaim income related ESA when capital is below £16k? Or would it now have to be income support to top it up?

You can reclaim the Income Related top up. However, unless you’re entitled to severe disability premium in your ESA it will be worth using a benefits calculator to check entitlement to UC. LCWRA for UC pays more than ESA Support Group providing the SDP isn’t included in the ESA. 

HillStreetBlues

Muttleythefrog said:

Bear in mind that deprivation of capital can be an issue if it appears there has been unreasonable spending to gain benefits so sensible for no sports car, round the world cruise or generous gifts to family etc just before claiming U/C!

Just to expand on this a bit,  it would be up to the DWP to show that was the reason.  So with a holiday for instance  the DWP to need to prove (within reason) that the sole intention is to deprive yourself of the money. 

fatbelly

HillStreetBlues said:

fatbelly said:

It's called stoozing. It can work well for some people, in high-interest times.
But it doesn't work for people on means tested benefits!

I never knew there was a term for it.
It's what I'm currently doing with £4.5k. With that amount I'm able to keep my capital under £6k and get about £17 pm interest, so pays for my internet and phone.

There is a board for it - a sub-board of credit cards