Capital reduction for LCRWA recipients

larkim

As I understand it, the capital reduction is effectively £4.35 reduction for every £250 of capital above £6000 up to £16000, which effectively means that the maximum deduction is £10000/250 = 40, 40 x £4.35 = £174 which would leave someone who had £15,750 savings with a UC of £393.45 - (39*£4.35) = £223.80.  Presumably £1 above the £16,000 threshold and that £223.80 becomes £nil (at which point, the assumption is the individual uses their savings to fund their life, their savings then deplete lower than £16,000 and they can once again apply for UC).

If the individual is also in receipt of LCWRA payments of £416.19 per month too, does it mean that the "cliff edge" of having savings above £16,000 immediately becomes £223.80 + £416.16 = £639.96?  Or is there some protection of the LCWRA element?  (I can't see a reason why, just couldn't see that clearly set out in a helper doc anywhere).

I'm trying to set up a spreadsheet to project the likely financial future for a relative who has LCWRA and limited outgoings as they don't live independently, so just trying to bake the rules into my spreadsheet as well as get my head around things!

Spoonie_Turtle

No exceptions for LCWRA.

But bear in mind income during an assessment period does not become capital until any of it remains unspent by the end of the next assessment period.  So if a UC payment takes the entire total above £16,000, that doesn't count.  Same for any other payments that are treated as income such as PIP.  - not relevant to the question after all but still worth knowing.

Edit: d'oh, seems I've done it again and totally misread the post.  My apologies, OP.

peteuk

For every £250 or part of, over £6K the reduction is £4.35.  So if you have £6,001 in capital then the £4.35 deduction starts.  £6251 it becomes £8.70 etc. etc.

My basic math's and excel skills says at £15751 the reduction is £174. So I concur with your figures above. 

However at £16K the entitlement to claim UC stops and yes once below the £16K they can reapply. I would suspect that given the info you've supplied once they have dropped below £16K it wont take long to then go back over this limit. 

You can deplete the capital in ways that is not seen as depletion and would be expected of someone living their life.  Again given the info provided I appreciate that this will be further limited. Hopefully someone with better knowledge of this will be able to advise you further. 

larkim

Thanks both.  That "bounce" in and out of the threshold (potentially) looks odd, and there's a similar one for contribution to care costs (though the savings thresholds are higher there for capital).  I guess what Spoonie_Turtle is saying is that if the periods of assessment are done, say, annually, you basically bounce in and out of the thresholds only once a year, and following that there's stability.

I'm aware of the deprivation of assets stuff.  Really intrigues me; I mean, how do they judge if a £5000 Disney holiday that a learning disabled 25yo wants to go on would be a deprivation of assets when clearly if that same sort of spend was made by someone who was simply unemployed and unable to find work it would certainly look like a poor decision at best, and a deprivation of assets at worst.

marcia_

larkim said:

Thanks both.  That "bounce" in and out of the threshold (potentially) looks odd, and there's a similar one for contribution to care costs (though the savings thresholds are higher there for capital).  I guess what Spoonie_Turtle is saying is that if the periods of assessment are done, say, annually, you basically bounce in and out of the thresholds only once a year, and following that there's stability.

I'm aware of the deprivation of assets stuff.  Really intrigues me; I mean, how do they judge if a £5000 Disney holiday that a learning disabled 25yo wants to go on would be a deprivation of assets when clearly if that same sort of spend was made by someone who was simply unemployed and unable to find work it would certainly look like a poor decision at best, and a deprivation of assets at worst.

 A disabled 25yr old an unemployed adult are treated exactly the same when it comes to deprivation of assets. If you spend or get rid of money frivolously it can be seen as deprivation. 

larkim

Yes, but "frivolously" is a very subjective concept.  Is a holiday to a caravan in N Wales frivilous?  Or Devon? Or Northern France? Or Portugal? Or Florida? Or Australia?  Where is the line drawn?  
Maybe my example isn't the best one, but there is a grey area in the middle surely where taking into account the individual there might be a different perspective?
e.g. in our family, we have a learning disabled son adjudicated for UC purposes as eligible for LCWRA.  Since he was 10yo he's come on family skiing holidays with us, and to accommodate his needs he has accessed private skiing lessons, which are not cheap.  Now he's 25yo and still living with us would going on a skiing holiday, paying for his accommodation & food, ski hire, private skiing lessons, ski pass etc at a cost of say £1200 from his savings as a UC claimant be judged to be frivolous?

poppy12345

larkim said:

Now he's 25yo and still living with us would going on a skiing holiday, paying for his accommodation & food, ski hire, private skiing lessons, ski pass etc at a cost of say £1200 from his savings as a UC claimant be judged to be frivolous?

I would say highly unlikely. The same would apply to everyone, not just someone with LCWRA. If it was something like several thousand then that maybe different. 

kaMelo

Deprivation of capital is always going to be a judgment call and bar a few exceptions there are no set rules about how much is or isn't allowed to be spent or on what it can be spent on. .

The guiding principle is whether it was done deliberately in order to maintain or increase benefit entitlement as that is what the DWP or local authority would have to prove at a tribunal should it get that far. 

. So yes, it's possible that two claimants doing the same thing could be viewed differently because of their underlying circumstances