Migrating from ESA to UC after receiving backpayment

Robbie64

Again, just checking: on 5 March 2023 your capital was £7k. By September 2024, it was back up to £14k to £15K. Was this a gradual increase, simply due to you not spending your benefit? What was the actual amount you had in the bank on 5 March 2023? There may still be scope to disregard enough capital to get it below the £6k limit.

MrHeisenberg

Spoonie_Turtle said:

You are allowed to spend your income as you see fit; deprivation of capital only starts to apply if you unreasonably spend savings over £6,000. 
So within the rules it's permissible to spend enough of your income each month to ensure your savings don't go above £6,000 (or to ensure they don't increase, if they are above £6,000).

Sincere thanks. Hope you are right. The House of Commons Library suggests as follows:

"What is deprivation of capital? 

If a person deliberately gets rid of capital in order to secure or increase their entitlement to a means-tested benefit, it may still affect their benefit. This is known as “deprivation of capital.” A person may be caught by this rule if, for example, they transfer the capital to another person, use it to buy a house, or (unless the benefit claimed is Universal Credit or they are over State Pension age) they use it to pay off a debt which does not need to be paid off immediately.  

If it’s decided a person has deliberately deprived themselves of capital, they’re treated as still possessing it, and their benefit may be reduced or stopped accordingly. This is known as “notional capital.”

MrHeisenberg

Robbie64 said:

Again, just checking: on 5 March 2023 your capital was £7k. By September 2024, it was back up to £14k to £15K. Was this a gradual increase, simply due to you not spending your benefit? What was the actual amount you had in the bank on 5 March 2023? There may still be scope to disregard enough capital to get it below the £6k limit.

Yes, it was £6,800.80 on 15 March 2023.

These are the figures on the top of the March to April 2023 statement though:

Opening Balance £7,577.94
Payments In £2,314.16
Payments Out £1,937.88
Closing Balance £7,954.22

Yes, it slowly crept up in that way it seems. I do note, however, that I have had compensation payments due to Ombudsmen finding in my favour. I had one recently (around 2 or 3 weeks ago), so my local Council paid me £250, which is another reason why I have been pushed into the danger zone. I also had one or two via the Legal Ombudsman over the course of the past 3 or 4 years. One was around £300 and another around £200 if I remember correctly. It seems certain types of compensation can be disregarded? 

These are the figures on the top of the September to October 2024 statement: 

Opening Balance £14,318.29

Payments In £2,426.52

Payments Out £2,023.23

Closing Balance £14,721.58

MrHeisenberg

I have just called the UC Migration Notice helpline to get confirmation, and the lady that I spoke to didn't seem to know the answer (she only knew about the £6K and £16K limits and not much else), so she transferred me to the UC helpline (0800 328 5644), so I asked them what figure I should be using for the back payment question, and what the correct formula is to work that out. I explained that I received a £16K backpayment in 2021, which took my account balance to £20K. I explained that my account balance has fluctuated by a few thousand pounds since then, but it is now around £14K. She said that I should just input £10K, which it seems she worked out by looking at my starting balance in 2021 before the back payment (£4K), my bank balance now (£14K), and worked out that the difference is around £10K, but I am not sure that is the correct formula, and arguably she was just having a bit of a guess. If she doesn't really know, as someone who advises claimants on behalf of the DWP, then that goes to show how unfair this issue is. As those calls are recorded, perhaps I should just enter the £10K figure, and say that that is the figure that I was advised by the DWP to use? 

kaMelo

But that would not be correct, as explained in this thread because your balance dropped to £6800 in 2023, £6800 is the maximum amount you can declare as backpay that you still hold. 

The backpay disregard only applies to money you have never spent, once it is spent you can't apply the backpay disregard to any money you added afterwards.

Robbie64

When you phone the DWP helplines, more often than not you will get through to an agent who is working from a script. They aren't trained benefit advisers. The agent on the UC helpline was basing her answer on a simple mathematical formula.

I don't know what evidence of what you have left of your benefit arrears will be asked for when you make your UC claim.I'm assuming the DWP will ask for some bank statements but for how long into the past I can't say. When I claimed UC (managed migration) I expected the DWP to ask for bank stamenets and had them ready to send but was never asked for any. However, my savings were very small and there were no savings to be disregarded so possibly this explains why I wasn't asked for any. I'm assuming they'll ask you for statements as you will be asking for some of your savings to be disregarded but I could be wrong. You could follow what you were advised to do on the helpline but if you are asked for bank statements, will the statements back this up? The DWP might only ask for recent statements (e.g. from the past 4 months) so you could be worrying unnecessarily in any case.

Looking back at what I was posting above, and the figures you provided, you could easily ask for the following to be disregarded:

Capital (lowest figure, as of 5 March 2023): £6,800

COLP: £1050

Current benefit amounts, to be disregarded until next benefit payments are received: £1175

Total: £9025

If your capital in total is around the £14k mark, this would reduce the amount to be taken into account to under £6k.

What is the latest date you have to migrate to UC by? You might find it better to spend what is reasonable to spend rather than having your savings constantly increasing in advance of this date.

MrHeisenberg

kaMelo said:

But that would not be correct, as explained in this thread because your balance dropped to £6800 in 2023, £6800 is the maximum amount you can declare as backpay that you still hold.

Yes, that's essentially my worry. 

HillStreetBlues

kaMelo said:

But that would not be correct, as explained in this thread because your balance dropped to £6800 in 2023, £6800 is the maximum amount you can declare as backpay that you still hold.

If wanting to calculate it 100% correctly the capital would actually be less than that.
The £6,800 money in the bank would be made up of both income and capital. If OP receives £1175 benefits the actual capital would be made up of  £5625 capital & £1175 income to get the total monies of £6,800.

I doubt the DWP would got into that much detail or some even know how to calculate it correctly,

Edit as pointed out a person can spend that income leaving just capital.

MrHeisenberg

Robbie64 said:

When you phone the DWP helplines, more often than not you will get through to an agent who is working from a script. They aren't trained benefit advisers. The agent on the UC helpline was basing her answer on a simple mathematical formula.

I don't know what evidence of what you have left of your benefit arrears will be asked for when you make your UC claim. I'm assuming the DWP will ask for some bank statements but for how long into the past I can't say. When I claimed UC (managed migration) I expected the DWP to ask for bank statements and had them ready to send but was never asked for any. However, my savings were very small and there were no savings to be disregarded so possibly this explains why I wasn't asked for any. I'm assuming they'll ask you for statements as you will be asking for some of your savings to be disregarded but I could be wrong. You could follow what you were advised to do on the helpline but if you are asked for bank statements, will the statements back this up? The DWP might only ask for recent statements (e.g. from the past 4 months) so you could be worrying unnecessarily in any case.

Looking back at what I was posting above, and the figures you provided, you could easily ask for the following to be disregarded:

Capital (lowest figure, as of 5 March 2023): £6,800

COLP: £1050

Current benefit amounts, to be disregarded until next benefit payments are received: £1175

Total: £9025

If your capital in total is around the £14k mark, this would reduce the amount to be taken into account to under £6k.

What is the latest date you have to migrate to UC by? You might find it better to spend what is reasonable to spend rather than having your savings constantly increasing in advance of this date.

Yes, I suspect you are right regarding the DWP helplines, but if they don't know the answer, it seems to me that they should really transfer claimants to the DWP staff who can help them properly, and who can properly deal with the issue, rather than make guesses.

The major problem that I am facing is the backdated payment question on the UC online form. If I enter £6,800.80 (which seems very likely to be the correct amount, however, I am not absolutely certain) on that, that they will probably compare that to the bank balance that I provided in an earlier question (around £15K, and can't amend that now it seems, which is odd as people often make mistakes, or need to revisit figures), and therefore conclude that my current capital is around £8K, which is well over the £6K lower limit. They may then accuse me of not declaring that I (inadvertently) exceeded the threshold, as presumably they won't factor in things like cost of living payments etc., even though they apply in terms of disregarding capital.  

Interesting that they didn't ask you for bank statements.

This poor person was put through hell it seems after declaring a backpayment, and was asked to produce bank statements:

https://www.benefitsandwork.co.uk/forum/10-dla-esa-queries-results/148694-uc-migration-and-a-pip-backdated-payment

It seems they only asked for statements covering the last 3 months in that case, which begs the question as to how they factored in cost of living payments etc. It seems like they don't really know what they are doing, which is concerning.

Yes, what worries me is that we can't predict with absolute certainly what they are going to do whatever figure I use.

I think I may have inadvertently gone over the lower limit over the past three months using the £6,800.80 figure, which is what worries me, even when those figures you factor in are taken into account. I received another HB payment today, so my balance now is around £15300.00 too.

It seems I have another 25 days to finish the online application, but the migration notice says that I have until September to migrate.

MrHeisenberg

HillStreetBlues said:

kaMelo said:

But that would not be correct, as explained in this thread because your balance dropped to £6800 in 2023, £6800 is the maximum amount you can declare as backpay that you still hold.

If wanting to calculate it 100% correctly the capital would actually be less than that.
The £6,800 money in the bank would be made up of both income and capital. If OP receives £1175 benefits the actual capital would be made up of  £5625 capital & £1175 income to get the total monies of £6,800.

I doubt the DWP would got into that much detail or some even know how to calculate it correctly,

The last bit is worrying, as I may suffer the consequences of their miscalculations.

One also wonders how they ensure that deductions are applied correctly given how bank balances fluctuate etc.