UC and if you go over 16k?

HillStreetBlues

huckster said:

Is this continued arguing about savings whilst on benefits, evidence that benefits being paid are too generous?

Or the capital limits haven't kept up with inflation, if it had the limits would be about £10.5k & £28k

andrewmp

HillStreetBlues said:

huckster said:

Is this continued arguing about savings whilst on benefits, evidence that benefits being paid are too generous?

Or the capital limits haven't kept up with inflation, if it had the limits would be about £10.5k & £28k

I think that's what's causing the issues. 

There are UC claimants with monthly income in excess of the capital limits. It's stupid really. £10k would be sensible and encourage people to keep a rainy day fund.

kaMelo

Whilst what you both say is correct it's important to recognise tax thresholds are also frozen or have been reduced over recent years.

The idea of raising capital limits for benefit claimants whilst simultaneously freezing/reducing tax thresholds for taxpayers would, I suspect, be politically very difficult.

HillStreetBlues

kaMelo said:

Whilst what you both say is correct it's important to recognise tax thresholds are also frozen or have been reduced over recent years.

The idea of raising capital limits for benefit claimants whilst simultaneously freezing/reducing tax thresholds for taxpayers would, I suspect, be politically very difficult.

In the period that the benefit threshold capital  limits been frozen the threshold of paying income tax has risen from £5k to £12.5k. I can't see the capital limits being raised because of the political environment as you pointed out, but can see why this can crop up now more than it did before.

NedS

Coming back on topic, I think it's good that DWP have recognised the distinction in the UC regulations between income and capital.

It would have been nice to have a clearer picture of how they apply that distinction, but at least it's been recognised and the OP has a favourable outcome to their MR.

blackstar

Thank you all.

It was a very hard period going though the MR. Highly time consuming. I wouldn't want to ever go through it again. Wether the MR that went in my favour would be looked at as a guideline or not remains to be seen. A different DM with different ideas and maybe wont notice the previous MR. 

It was a success in that it was simple. All income was removed from the money savings and investments that I declared as it should have been. As it had just been received in that AP. Not difficult to do. However, the process and time was highly difficult.

Originally the DM on first request got it very far wrong. Then the MR got it 100% correct.

However, it was about 6 - 8 weeks procees and there was no time limit. The only reason it was done quickly is because I got my MP involved and made a complaint. If I hadn't done so maybe I would still be waiting. 

We have just submitted our last AD money savings and investments for this AP today.

I haven't yet sent them the spreadsheet of what is income out of that. Honestly I really dont have the stomach to go though all that again at the moment. Will in a day or so. I know if I dont we will loose out on £200 by being underpaid. 

I have a booked a face to face with my MP next week about this issue. 

Anyone want to give any straight to the pont points. I have thought about how I will explain it simply. I am thinking to just say something like UC doesnt consider income as capital until the end of the AP in which it was received H1050. However, when making a money savings and investments declaration there is no box or option to place in your income, instead your income is automatically added to your capital and the final figure is a combination of your income and your capital but system sees it all as capital. The system is faulty as it considers your income as capital as this is the figure that is then used to reduce your UC award as for every £250 theres a £4.35 reduction of your award. 
But theres a percentage of that figure which is income and you shouldn't be getting £4.50 taken off every £250 of your income.
Plus UC already is reducing your UC award based on your earnings, so they are then ontop of that also taking off £4.50 off every £250 of your earnings. 

The UC should have a box for INCOME

EARNINGS 
BENEFITS

then the system can calculate it accurately.

Yes they can say "ohh but the claimant can just request a DM too remove the income" but my argument would be theres no clear process for this and to do this there is no time frame and it can cause financial hardship as the claimants UC is put on hold for numerous weeks. Its a very unfair process for a claimant to have to do this every single month. 

Also there should be a box for Cost of Livjng Payments too. 

What do you all think? Any other points I can make to him? 

Im like a dog with a bone as this is something that needs to be fixed as its broken. So how else can I go about it? The problem is I cant do a tribunal as ofcourse won the MR. As was kind of hoping I wouldn't in a way and was hoping a judge maybe could have instructed the DWP to fix this issue.

So who else can I approach? A solicitor? A Lord? I know theres my MP but want to have as many different angles as possible. 

Spoonie_Turtle

I would also add that the current system relies on people knowing about what's capital and income and knowing that they need to challenge - because the current system takes everything as capital unless there's a specific disregard, AND on top of that the options for putting potential disregards are confusing.  Those options require someone to have an understanding of what general category of benefit certain payments fall into, and even then there's no real way of knowing if you've chosen the right option if it's not one specifically listed.

The system is set up wrong and most people don't even realise it.  Claimants shouldn't be required to have thorough knowledge and understanding of the official guidance for DMs in order to get their real benefit entitlement!  They should be able to rely on the system to ask them for all the relevant information to get their correct entitlement.

I don't quite have the words to put it difficult but I really do worry about the more vulnerable people who accumulate money (because they don't get to live much life to spend it) who won't be aware and may be losing out on significant amounts over the years, and especially those whose money is managed by a deputy who might not be fully conversant with the intricacies of the rules and would never have any reason to question the system.

huckster

Advice must be to have separate savings accounts and not just one main account.

I have seen many examples of people receiving multiple benefits accumulating way more than £16k and they will no doubt be subject to reviews to work out what level of overpayment debt they may owe.

As part of the migration of ESA claims to UC, DWP compliance will have picked up large numbers of cases to be reviewed. 

HillStreetBlues

From everything I’ve seen & heard including this MR the DWP  policy is to deduct all income from monies to leave capital wherever monies are held

Everything I’ve read points that to be incorrect. Money spent from accounts only holding capital, capital is spent, accounts holding only income, income is spent and mixed accounts income is spent first according to case law.

If you look at the guidance and the example it gives

When income becomes capital
H1050 Income becomes capital if it has not been spent by the end of the assessment period after the
one in which it was received.
Example
Pearl makes a claim for UC on 6 February. She declares savings in a bank account of £5,973.00. On 24
February, her earnings of £250.00 are paid into that account. Her assessment period is calculated as 6
Feb to 5 March and the earnings are taken into account as part of her income for that assessment
period. When the next assessment period begins on 6 March, Pearl still has some of the unspent
earnings so the bank account balance is now £6,105.00. In the assessment period from 6 March to 5
April she will therefore be treated as having an assumed yield from that capital of £4.35

Pearl spent £132 but that must have been taken from her £250 income as she only has "some" of it unspent. If spending was from capital she would have all of her income unspent
As pointed out upthread spending in mixed accounts  could come from income and capital in an AP this would require a lot of calculation, as if they get it incorrect then it's an MR  or a tribunal.
 My guess is income is deducted fully as policy as it's far simpler to calculate. The issue is with that  policy can change, also if it ever goes to a tribunal, they aren't interested in policy, it's the law they have to refer too, and I have found nothing either in Regs or further case law that it's always capital spend before income if in mixed accounts.
The only certain way (backed up by case law) is to have income & capital separate and spending coming from the capital account.  

Spoonie_Turtle

HillStreetBlues said:

From everything I’ve seen & heard including this MR the DWP  policy is to deduct all income from monies to leave capital wherever monies are held

Everything I’ve read points that to be incorrect. Money spent from accounts only holding capital, capital is spent, accounts holding only income, income is spent and mixed accounts income is spent first according to case law.

If you look at the guidance and the example it gives

When income becomes capital
H1050 Income becomes capital if it has not been spent by the end of the assessment period after the
one in which it was received.
Example
Pearl makes a claim for UC on 6 February. She declares savings in a bank account of £5,973.00. On 24
February, her earnings of £250.00 are paid into that account. Her assessment period is calculated as 6
Feb to 5 March and the earnings are taken into account as part of her income for that assessment
period. When the next assessment period begins on 6 March, Pearl still has some of the unspent
earnings so the bank account balance is now £6,105.00. In the assessment period from 6 March to 5
April she will therefore be treated as having an assumed yield from that capital of £4.35

Pearl spent £132 but that must have been taken from her £250 income as she only has "some" of it unspent. If spending was from capital she would have all of her income unspent

Despite my previous understanding and interpretation, I agree that does actually make more logical sense.

I just can't work out what the starting point would be for working out the baseline of capital, as even at the start of a UC claim for many people the bank account totals will include income from other benefits (and/or previous wages?).  So unless someone has kept two accounts strictly for savings and income and only spent from the latter, how do you know what's unspent income?  Is there a way of unravelling it that doesn't go all the way back to the start of that person having a consistent income?  That said, I would have more faith in a tribunal panel to get it right (or at least, closer to right) than I would DWP.

[My previous thoughts uninformed by the guidance were that if your bank account never dropped below a certain level, that would be savings because you're obviously not spending it.  But now I know that level itself could include income from a recent payment that you just haven't spent yet, and the same applies every month.  So short of starting from 0 and keeping meticulous records of what's been spent from each income amount, and transferring what's left (if any) from those payments at the end of each following payment cycle for each, I don't see how it could work.  Maybe if I were an accountant I would be able to understand the concept but I'm not!]