Universal Credit - Deprevation of Capital

Voyager2002

Surely this is an unlikely situation. UC is designed for relatively poor people, to top up their incomes to a level where they can afford the basic necessities of life. It is hard to imagine a situation in which a household eligible for UC had an income that exceeded their expenditure by thousands of pounds per month over an extended period, unless the UC claim was fraudulent. 

There was one case where an exceptionally frugal woman was a long-term benefit claimant, and after many years her savings from benefit exceeded the capital limits. That is an unusual situation.

Muttleythefrog

Voyager2002 said:

Surely this is an unlikely situation. UC is designed for relatively poor people, to top up their incomes to a level where they can afford the basic necessities of life. It is hard to imagine a situation in which a household eligible for UC had an income that exceeded their expenditure by thousands of pounds per month over an extended period, unless the UC claim was fraudulent. 

There was one case where an exceptionally frugal woman was a long-term benefit claimant, and after many years her savings from benefit exceeded the capital limits. That is an unusual situation.

I suspect much more common than you think. Bear in mind many on UC are also getting other benefits (or get notable UC elements like LCWRA) and if they include disability related then someone who is quite inactive can end up with monies they cannot spend - some regulars on the boards post about it including one or two who have their money handled by third parties in their interest. In this case they also work - almost half of households getting UC have someone in work. There's also the issue of windfalls - as you might see from threads over recent months there have been quite a few about benefit recipients including on UC who are getting inheritances or gifts. There's also UC recipients who have partners they don't live with who could have independent means of note.

Of course most on UC probably live month to month financially with some difficulties - the basic rates are very low.. less than half that which the poorest pensioners get. But I think particularly those sick or disabled they can be quite inactive yet receive additional monies to the standard.

atlantis187

Reason for taking cash out and paying for stuff with this is often a lot cheaper.
We had our boiler fixed last month and the guy would only take payment in cash and said if it was paid via bank transfer it would be £50 more same again when we had to call a mobile mechanic for the car out who only wanted paying in cash.  

kaMelo

atlantis187 said:

Reason for taking cash out and paying for stuff with this is often a lot cheaper.
We had our boiler fixed last month and the guy would only take payment in cash and said if it was paid via bank transfer it would be £50 more same again when we had to call a mobile mechanic for the car out who only wanted paying in cash.  

I don't think there is any deprivation of capital but I'm pretty sure there is some tax evasion.

HillStreetBlues

atlantis187 said:

Reason for taking cash out and paying for stuff with this is often a lot cheaper.
We had our boiler fixed last month and the guy would only take payment in cash and said if it was paid via bank transfer it would be £50 more same again when we had to call a mobile mechanic for the car out who only wanted paying in cash.  

Hopefully you don't need to get your boiler & car fixed every day.
If ever questioned about where is 3 to 4k of cash is going every month, you will need a better answer than that.

Muttleythefrog

atlantis187 said:

Reason for taking cash out and paying for stuff with this is often a lot cheaper.
We had our boiler fixed last month and the guy would only take payment in cash and said if it was paid via bank transfer it would be £50 more same again when we had to call a mobile mechanic for the car out who only wanted paying in cash.  

Yeah I might be reluctant to tell the DWP this if ever queried as it's likely cheaper since they can keep the work off record and avoid tax... some will also be claiming benefits and saying they don't work... window cleaners are another profession often cash happy.. man and van type services... roofers... builders. As above... thousands spent in cash per month... hmm.. it might be difficult to explain unless you have some consistent big expenses paid that way... but you may never get asked. I mean I'm thinking to myself how could I spend £3k-£4k cash per month consistently and all I can think of is gambling and women (they also like cash payments.. the sort I'm thinking of anyway)...lol.. day out every day to restaurant perhaps... but really I'd have to just start using cash for everything I could.

atlantis187

So we are not really allowed to spend the money how we wish then without having to explain about every penny and required to show receipts for EVERYTHING even though we are still below the allowed 6K threshold. 

Why do the DWP even have a 6K limit then why not just tell people on means tested benefits to upload receipts for EVERY penny spent.

Muttleythefrog

atlantis187 said:

So we are not really allowed to spend the money how we wish then without having to explain about every penny and required to show receipts for EVERYTHING even though we are still below the allowed 6K threshold. 

Why do the DWP even have a 6K limit then why not just tell people on means tested benefits to upload receipts for EVERY penny spent.

Calm down...lol. As explained.. you can spend your money any way you legally desire - we have been absolutely clear about that. We are just pointing out that withdrawing and spending large amounts of cash may raise eyebrows and be difficult to explain or evidence if ever queried. We do not know if you would ever be queried or have statements looked at in some review. Also pointing out if tradespersons and others ask for cash payment over any other for cheaper deals it could well be because they want to evade tax and keep the transaction 'off the books' - i.e. be careful if ever trying to justify/explain cash spending if it involves what could be seen as dodgy.

The important fact is that cash still counts as capital - so it remains capital until spent. The DWP may be suspicious that large amounts of regular cash withdrawals are to hide capital but they'll struggle to ever prove it whether true or not. Cash is typically more difficult to trace and show activity regarding from both the perspective of owner and authorities. With that in mind it is suggested you may want to add traceability yourself in the form of receipts but at that level of cash spending it may prove messy and it may turn out fruitless an exercise.

atlantis187

If it was ever queried and we didn't have any receipts to show what can they LEGALLY do about this? as we've not actually broken any rules.

Muttleythefrog

atlantis187 said:

If it was ever queried and we didn't have any receipts to show what can they LEGALLY do about this? as we've not actually broken any rules.

Not a lot... they couldn't prove you've not spent it (unless they spoke with 3rd parties tracking transactions you'd claimed to spend it with and hadn't) any more than you could prove you have without any receipts available. They have potential for fraud investigations if they think fraud is being committed which could involve being interviewed under caution. That's very unlikely to happen in general sense.

Crucial is to make sure you declare capital relevantly including of course any second homes that become counted as such or investments.

Personally if not doing anything wrong I'd be inclined to add traceability of spending - the easiest way to do that is via using regulated institutions to process the payments i.e. banks and credit cards as most people would for most of their modern day spending and bills. But as stated you are entirely within your rights to use cash.. there are many legitimate reasons people would and you don't need one, but you also take on the lack of traceability usually associated with that and the suspicions it can raise (large amounts of cash spending or depositing is often associated with crime like elicit drug transactions or indeed tax evasion). It's your choice at the end of the day but ensure you are making correct declarations on capital if and when it would affect entitlement - that's a responsibility you've signed up to in getting UC.