When do gambling winnings become capital for UC?

NedS

huckster said:

I have actually spoken to a few claiming various benefits and they were worried about gradually increasing savings, which would cause them difficulties with means tested benefits.

Bur these tend to be single people living at home with parents. 

I just wonder how many claimants end up exceeding savings threshold on UC, because they are not spending benefits received.

The advice has always been to discuss their situation with their parents/family and to get some advice from CAB or other benefits advice service. Perhaps they could spend some of the money to improve the quality of life. 

Shame there is not some form of ISA or Government investment for those who are are registered disabled where they can invest a small sum which is disregarded by means tested benefits. A possible fund to help with future needs.

A personal pension would be ideal for this as it's fully disregarded, and anyone (even a non-earner) can contribute £3600 gross per year. Whilst they may have spare cash now, living on only a state pension post retirement age will not generally be a pleasant experience, so investing any excess benefit cash now for later in life.

Of course the down side is anything saved is locked away for future needs and is not accessible until age 57, and ideally would not be accessed whilst still on means-tested benefits as would be deducted pound for pound under current rules.

Yamor

HillStreetBlues said:

Yamor said:

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.

As the OP has their answer I thought I would pose a question.
with the CoL payments (Social Security (Additional Payments) Act 2022 & 2023 it states

Payments to be disregarded for the purposes of tax and social security

No account is to be taken of an additional payment in considering a person’s—

(a)liability to tax,

(b)entitlement to benefit under an enactment relating to social security (irrespective of the name or nature of the benefit), or

(c)entitlement to a tax credit.

If the money isn't taken into account then it can it be either income or capital as both of these the money is taken into account and disregarded if appropriate?
Does these Acts mean that the money doesn't exist for the calculation for benefits & tax?

I don't think that the wording "no account is to be taken..." in relation to a particular resource means anything different than "disregarding" it.

If something is not taken into account, then on any analysis that simply means it is disregarded. It doesn't mean it doesn't exist.

In fact, the wording used in the Act of Parliament which provides DWP with the power to disregard particular types of income/capital is actually worded in a third way: "treated as not having..." (WRA 2012 Sched. 1 para 4(3)(a))

I don't think there is any difference between any of these terms.

Yamor

HillStreetBlues said:

Yamor said:

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.

Been wondering with this issue. With tax it wouldn't be income as gambling isn't classed as a trade (so no income tax payable), does UC treat it differently?

I agree with you - my original post isn't correct. The actual earnings from gambling won't ever count as self-employed earnings for UC.

For UC there are three categories of earned income - see Reg. 52(a). Income from gambling clearly doesn't fall within (i). It won't fall within (ii), as that is the same wording as is used in tax legislation, and presumably has the same meaning. I also don't think it can fall within (iii), as I don't think it can be included within the meaning of "paid work". I think "paid work" will only include income from ad-hoc jobs which are not organised enough to be a trade. (For tax purposes, such income is not taxed as trading income, but as other income under Part 5 of ITTOIA 2005.)