UC and deprivation of capital... Need some advice :/

andrewmp

HillStreetBlues said:

WelshPaul said:

The basics is this, UC want to know what happened to the £3608.58 I transferred out of my savings account during the month of January 2025. The basic answer is this, I paid a large balance off my credit cards with it. 

If that's all they want to know, it should be very simple, it was to pay a debit and you have nothing to worry about.
Sadly some DWP staff aren't always knowledgable with that actual UC law, so might take a while, if they faff around get them to refer it to a Decision Maker.

Even DMs make daft mistakes as they're too accustomed to the legacy benefit rules.. It's annoying as it could cause someone to lose money while they appeal.

WelshPaul

I have been doing some research…

https://www.legislation.gov.uk/uksi/2013/376/regulation/50

Notional capital
50.—(1) A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.
(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.
(3) Where a person is treated as possessing capital in accordance with this regulation, then for each subsequent assessment period (or, in a case where the award has terminated, each subsequent month) the amount of capital the person is treated as possessing (“the notional capital”) reduces—
(a)in a case where the notional capital exceeds £16,000, by the amount which the Secretary of State considers would be the amount of an award of universal credit that would be made to the person (assuming they met the conditions in section 4 and 5 of the Act) if it were not for the notional capital; or
(b)in a case where the notional capital exceeds £6,000 but not £16,000 (including where the notional capital has reduced to an amount equal to or less than £16,000 in accordance with sub-paragraph (a)) by the amount of unearned income that the notional capital is treated as yielding under regulation 72.

50.(2) clearly states:

A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.

So I shouldn’t be penalised for my actions as they were lawful and within the rules of UC.

andrewmp

WelshPaul said:

I have been doing some research…

https://www.legislation.gov.uk/uksi/2013/376/regulation/50

Notional capital
50.—(1) A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.
(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.
(3) Where a person is treated as possessing capital in accordance with this regulation, then for each subsequent assessment period (or, in a case where the award has terminated, each subsequent month) the amount of capital the person is treated as possessing (“the notional capital”) reduces—
(a)in a case where the notional capital exceeds £16,000, by the amount which the Secretary of State considers would be the amount of an award of universal credit that would be made to the person (assuming they met the conditions in section 4 and 5 of the Act) if it were not for the notional capital; or
(b)in a case where the notional capital exceeds £6,000 but not £16,000 (including where the notional capital has reduced to an amount equal to or less than £16,000 in accordance with sub-paragraph (a)) by the amount of unearned income that the notional capital is treated as yielding under regulation 72.

50.(2) clearly states:

A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.

So I shouldn’t be penalised for my actions as they were lawful and within the rules of UC.

Yeah, that's correct. 

Had you paid direct from your capital then reasonableness would have came into play. I think you would have been fine there anyway. It sounds like a reasonable purchase and from what you've said you bought it for other reasons, not to increase benefit entitlement. 

Regardless though, you didn't deprive yourself if capital because you paid off debt.

WelshPaul

I really should have done my research prior to doing what I did. It's a lesson learnt! 

We don't get much from UC. Our December payment was £178.47. If our youngest child didn’t have a disability and in receipt of DLA, we wouldn't be entitled to anything. I spend the extra money we get from UC on my son.

Thanks for your help.

WelshPaul

I just received the following letter in my Journal:

Dear xxx,

Your declared capital totals £10,142.63, this capital reduced from £13,751.21. Capital is money available to you from things like savings, a property that isn't your main home, a trust fund or stocks and shares.

When calculating your level of capital the question of deprivation of capital has to be considered.

The law says people are treated as still having capital they do not have if they deprive themselves of it in order to get Universal Credit or more Universal Credit. This capital is called notional capital.

We have looked at the information provided and we are satisfied with your reasons for the reduction in your capital 

If your circumstances change

You must tell Universal Credit straightaway if there is a change in your circumstances. If you give wrong or incomplete information or you do not report changes straightaway you may:

• be prosecuted

• need to pay a financial penalty

• have your Universal Credit payments reduced or stopped

• be paid too much money - you will have to pay back overpaid money when told to do so.

Yours sincerely

Universal Credit

HillStreetBlues

Glad it's sorted even if it was the wrong reason.

pmlindyloo

Just to confirm....

Advice for Decision Makers UC  Capital Disregards

Funeral plan contract H2057

The value of a funeral plan contract is disregarded indefnitely. “Funeral plan contract” means a contract where a person makes payments to secure the provision of a funeral in the UK for the person on their death and where the sole purpose of the plan is to provide for a funeral1 . 1 UC Regs, Sch 10, para 11

Muttleythefrog

Sense prevails... pleased you've got a quick decision

HillStreetBlues

pmlindyloo said:

Just to confirm....

Advice for Decision Makers UC  Capital Disregards

Funeral plan contract H2057

The value of a funeral plan contract is disregarded indefnitely. “Funeral plan contract” means a contract where a person makes payments to secure the provision of a funeral in the UK for the person on their death and where the sole purpose of the plan is to provide for a funeral1 . 1 UC Regs, Sch 10, para 11

Although that is a different issue to what this thread is about
 

Spoonie_Turtle

HillStreetBlues said:

pmlindyloo said:

Just to confirm....

Advice for Decision Makers UC  Capital Disregards

Funeral plan contract H2057

The value of a funeral plan contract is disregarded indefnitely. “Funeral plan contract” means a contract where a person makes payments to secure the provision of a funeral in the UK for the person on their death and where the sole purpose of the plan is to provide for a funeral1 . 1 UC Regs, Sch 10, para 11

Although that is a different issue to what this thread is about
 

Or is it* technically moving capital into a disregarded form rather than disposing of it (like paying into a pension is)?

*Although perhaps it's more accurate to ask 'would it be, if there weren't the credit card and paying off debt step in the middle?'