When do gambling winnings become capital for UC?

LateStageCrapitalism

Hi,

So under the universal credit capital rules, income does not become capital until the assessment period after it is received. However, I can't find any information about whether this is also true for gambling winnings. Does anybody know?

kaMelo

Gambling winnings are not income, it is capital as soon as you have won them even when held in the gambling account.

LateStageCrapitalism

Hi kaMelo, I understand that gambling winnings are not classed as income. When you say that they are counted as capital as soon as you have won them, could you tell me what you are basing this on. I am not saying you're wrong, I'm just wondering if this is actually written down somewhere or whether this approach could be challanged, e.g., at tribunal, as gambling winnings seem to be a very grey area. 

DullGreyGuy

LateStageCrapitalism said:

Hi kaMelo, I understand that gambling winnings are not classed as income. When you say that they are counted as capital as soon as you have won them, could you tell me what you are basing this on. I am not saying you're wrong, I'm just wondering if this is actually written down somewhere or whether this approach could be challanged, e.g., at tribunal, as gambling winnings seem to be a very grey area. 

On what grounds do you think it could be challenged may be an easier starting point. Capital is basically everything thats yours excluding certain things like your main residence. Gambling winnings are simply cash irrespective if it's in your online gambling wallet or in your bank account. 

LateStageCrapitalism

So my thinking is this: First of all, if there is nothing in the relevant legislation about what gambling winnnings are (they are not earned or unearned income), then it would seem to me that any practices relating to them that the DWP adopt could be challenged as having no legal basis. 

I honestly believe that treating winnings as capital immediately would be unreasonable and impractical. For example, if that were the case then I could take my monthly UC payment and gamble it all in a single bet and that would be fine, but if I won and then placed a further £1 bet then that would technically be capital deprivation, as the second bet would have been placed with the winnings (capital) of the first. That clearly seems ludicrous. Interestingly, the DWP don't actually treat such bets as capital deprivation, which implies that they too don't see such bets as involving capital.

Rather, it seems to me that winnings, like earnings, should be treated as capital if they are still unspent by the start of the assessment period after they are won. In practice, this would mean nothing in a gambling account involving high betting activity (the funds frequently being re-bet) would become capital, but any winnings sent to a bank account would become capital in the next assessment period. If someone just parked money in their betting account and wasn't betting with it or not much, then that too would become capital in the next assessment period. This approach seems reasonable and practical (easy to assess for both the DWP and the claimant), and my point is if there is nothing in the legislation to say what approach should be adopted then legally surely either could be argued as valid. 

Yamor

The rule in social security, supported by a lot of case law, is that all of a person's resources are either income or capital. There is nothing in between, and the same resource cannot be both income and capital at the same time.

Therefore, something which is income in the first instance will not be capital until some later stage when it changes from income to capital. Current UC guidance states that this happens in the following AP. However, something which is not income in the first instance will be capital immediately.

Of course, if the gambling is carried out professionally, in an organised manner, and with a view to making a profit, then it may well be treated as self-employed earnings, and then will be income in the first instance.

LateStageCrapitalism

Thank you Yamor. This is a very clear and definitive answer. It's not the one I was hoping for but at least it gives me a clear basis on which to move forward.

Muttleythefrog

LateStageCrapitalism said:

So my thinking is this: First of all, if there is nothing in the relevant legislation about what gambling winnnings are (they are not earned or unearned income), then it would seem to me that any practices relating to them that the DWP adopt could be challenged as having no legal basis. 

I honestly believe that treating winnings as capital immediately would be unreasonable and impractical. For example, if that were the case then I could take my monthly UC payment and gamble it all in a single bet and that would be fine, but if I won and then placed a further £1 bet then that would technically be capital deprivation, as the second bet would have been placed with the winnings (capital) of the first. That clearly seems ludicrous. Interestingly, the DWP don't actually treat such bets as capital deprivation, which implies that they too don't see such bets as involving capital.

Rather, it seems to me that winnings, like earnings, should be treated as capital if they are still unspent by the start of the assessment period after they are won. In practice, this would mean nothing in a gambling account involving high betting activity (the funds frequently being re-bet) would become capital, but any winnings sent to a bank account would become capital in the next assessment period. If someone just parked money in their betting account and wasn't betting with it or not much, then that too would become capital in the next assessment period. This approach seems reasonable and practical (easy to assess for both the DWP and the claimant), and my point is if there is nothing in the legislation to say what approach should be adopted then legally surely either could be argued as valid. 

There is no assessment period for gambling proceeds as such. You could argue with them but I would imagine they will argue it is cash... capital... at end UC assessment period.

"‘winnings obtained from gambling activity do not meet the definition of earnings within Universal Credit Regulation 52 and are not taken into account as an unearned income", "Any profit made from gambling activity will be considered within Universal Credit as part of a person’s capital"  - DWP spokesperson

Importantly gambling winnings are not in the regulations defined as earned income so they will almost always likely be considered capital. I think there is a legacy benefit case law showing same.

ChatGPT (make of it what you will for further research) "Gambling winnings are explicitly not treated as income, as per Reg 52.They’re thus classified instead as capital, which brings them under the rules in Regulations 49‑50, 72‑74, and Schedule 10 for capital treatment."

born_again

I would guess then that money in the gambling account. Would be treated in the same way as money in a PayPal account.
ie, can't put funds there to hide you capital. 

LateStageCrapitalism

Hi born_again, Yeah but there's a difference (at least there should be in my opinion) between someone who puts a large amount of money into a betting account and then leaves it dormant (effectively using the betting account as a savings account), and a person who puts a small amount in and turns it into a larger amount through gambling. Unfortunately, it seems from Yamor's and Muttley's comments that both are treated the same. 

Northern_Wanderer

Any money that you have in any bank account or indeed the gambling account is capital. It doesn't matter the intention or if you win big.

What is the real issue here? Why did you need to ask such questions?