Reporting a reduction in capital buying a house

Dark_horse666

Hi I’m so sorry in advance for all the questions! I will be completing on my house purchase soon so I need to update UC to let them know my capital has reduced.

Do I tell them now (I’ve sent the solicitor the funds ready for exchange of contracts) or do I wait until the sale completes? 

Also for example if I reported my capital on Monday 9th and my assessment period is 11th Aug to 10th September do I also deduct the benefits and wages we’ve received during that period from the capital we have in our accounts?

Thank you!

HillStreetBlues

You have to wait till sale is completed, as until then you have the capital but not the property.
The time to report it is at the end of your AP, so if sale goes though on the 9th Sep then report it on the Sep 10th or even the 11th as theoretically your capital could change later on the 10th after you reported it (if you did report on the 11th, it would be capital you held at 11.59pm on the 10th).
If sale goes thought on the 11th Sep or later, then you report it 10th/11th Oct.

Dark_horse666

Thank you it’s not very clear is it as I’ve read you should report changes straight away but then it says you should update capital at the end of your assessment period.

I guess it would benefit me to report the change sooner as my deductions will be less. 

HillStreetBlues

Dark_horse666 said:

Thank you it’s not very clear is it as I’ve read you should report changes straight away but then it says you should update capital at the end of your assessment period.

I guess it would benefit me to report the change sooner as my deductions will be less. 

The trouble with reporting changes straight away is you can get misleading capital.
An example:
Using an AP 2nd to 1st with someone that gets a £1k UC payment on the 8th  and £1k wages on the 20th
At the end of their AP they have £7,900 in monies. So their capital is £7,900 minus the £1k UC & £1k wages paid in that AP as it's classed as income and only becomes capital in next AP, that leave £5,900 as capital, so that can be reported as capital.
Now if it reported early in the next AP say the 4th, the wages & UC from the previous AP are now capital, but there is nothing to deduct because there has been no income so far in that AP. That would be everything is capital the whole £7,900

Yamor

Although @HillStreetBlues is of course correct that what matters is your capital at the end of the AP, I would still be careful to report changes which happened earlier in the AP before the end of the AP, and not the day after.

This is because the general rule is that changes must be reported before the end of the AP. One effect of this rule is that if a beneficial change is reported after the end of the AP, then it would require you to have had good reason for the late reporting for you to see the benefit of the change for that AP.

HillStreetBlues

@Yamor
In practice how reporting capital work? As the only way to be certain of correct reporting is after the AP has actually finished.  

Yamor

My advice would be to report changes on the last day. If a further change occurs later that day, then report that further change the next day.

A beneficial change occuring on the last day of an AP will almost certainly be backdated despite only being reported after the end of the AP.

In a way it is no different to any other change. Say for example you become a carer. You should report that during the AP, even though a further change may occur later that month meaning you no longer are a carer.

Dark_horse666

Thank you both 👍

Newcad

HillStreetBlues said:

@Yamor
In practice how reporting capital work? As the only way to be certain of correct reporting is after the AP has actually finished.  

That is one of the reasons for the nominal 7 days between AP end and payment, so that significant late changes just before AP end can be reported/included and the payment recalculated if necessary.

HillStreetBlues

Newcad said:

HillStreetBlues said:

@Yamor
In practice how reporting capital work? As the only way to be certain of correct reporting is after the AP has actually finished.  

That is one of the reasons for the nominal 7 days between AP end and payment, so that significant late changes just before AP end can be reported/included and the payment recalculated if necessary.

Yes I know, I put a question directly to @Yamor as had a query about his reply  "general rule is that changes must be reported before the end of the AP" and wanted Yamor to clear up their post.