Universal credit i have really messed up and misunderstood capital

Fudge1705

I claim universal credit after marriage breakdown. I had £6757 cash in my account and a property I rent out. Which I believe at the time of the claim was £9k equity. So under 16k my cash savings were over £6k for 5 months over the past 3 years and then the property. I got a note for a review and uploaded the relevant documents that night, as I’ve never had one before I googled it and realised I made an error in my claim I genuinely thought I only had to report if capital was over 16k. I have realised my mistake now and how I had little understanding of how uc works and submitted information in error without knowledge and understanding. So I never declared the cash savings or the property I put no on the claim for another property thinking I didn’t neee to. I now have no cash savings and only the property so I recon still under the 16k, but this will depend how they would out the market value. Will I be prosecuted? I was an honest mistake and I’ve reported everything now on my journal. I’ve not had anything back on the journal to say I’m being investigate will this happen? Only I’ve to go hand documents in to job centre. I’m a single mother of 3 and really worried

Grumpy_chap

Fudge1705 said:

I claim universal credit after marriage breakdown. I had £6757 cash in my account and a property I rent out. Which I believe at the time of the claim was £9k equity. So under 16k my cash savings were over £6k for 5 months over the past 3 years and then the property. I got a note for a review and uploaded the relevant documents that night, as I’ve never had one before I googled it and realised I made an error in my claim I genuinely thought I only had to report if capital was over 16k. I have realised my mistake now and how I had little understanding of how uc works and submitted information in error without knowledge and understanding. So I never declared the cash savings or the property I put no on the claim for another property thinking I didn’t neee to. I now have no cash savings and only the property so I recon still under the 16k, but this will depend how they would out the market value. Will I be prosecuted? I was an honest mistake and I’ve reported everything now on my journal. I’ve not had anything back on the journal to say I’m being investigate will this happen? Only I’ve to go hand documents in to job centre. I’m a single mother of 3 and really worried

How did you report the rental income received from the BTL?
Rental income is not income (for UC) but increases capital (after allowable expenses).

Fudge1705

The flat doesn’t make any income mortgage is £267 and factor fees is £24 per months. Tenant pays £300  

marcia_

 It was my understanding if you own a home you don't live in you would not be entitled to UC. 

Grumpy_chap

marcia_ said:

 It was my understanding if you own a home you don't live in you would not be entitled to UC. 

I don't believe that is an absolute.

If you own a home you don't live it, then there is no entitlement to housing element of any UC eligibility.

I understand that the BTL is then assessed as capital value which is determined as the value of the property less any secured debt (mortgage) less an allowance for the costs of selling the property.
Income arising from the BTL is not assessed as income but the value received (after allowable expenses) is considered as increased capital.  That works even if the income has reduced the mortgage debt.

The treatment of income arising from BTL is different for UC than for Income Tax.

Northern_Wanderer

Fudge1705 said:

The flat doesn’t make any income mortgage is £267 and factor fees is £24 per months. Tenant pays £300  

Does the tenant have a Tenancy agreement? £300 seems extremely cheap per month. So you are making a loss? Because you must have plenty of other costs like maintenance, safety checks, insurance etc. Are you a registered landlord? Let me guess, you didn't think you needed to declare the rental income, just like you didn't think you needed to declare the second property? Did you do a managed migration from tax credits? If so, when? 

Why did not answer the questions about savings and property honestly? You clearly did not declare all bank accounts that you hold. This is benefit fraud. If you have been overpaid, you will have to repay it. UC could decide you were never entitled to UC and require the whole amount to be repaid since you first made a claim for UC.

Muttleythefrog

Suggest fully disclosing excessive capital held over the years... and the property ownership matter along with details like equity and rent... as it sounds like you have done already. Let them come to a figure for any overpayment and offer to repay. Being blunt you've likely committed benefit fraud - you chose to deliberately make false declarations when asked direct questions that usually affect entitlement and trying to muddy that reality (by claiming you didn't understand the benefit rules so made them up yourself to determine your additional property was not such and your capital didn't exist) won't wash here any more than with DWP (who will see the false declarations as an attempt to gain benefits or benefit levels you may not have been entitled to) so suggest you avoid that kind of line of defence which is not credible unless you have some significant relevant disabilities. (Trying to be straight with you here.. not nasty... reality check.. so no further mistakes are made of judgement when claiming benefits that leave you in distress and having a family to look after.) Honesty is your best policy here to avoid any serious potential problems further ahead with DWP such as indeed a fraud investigation and potential prosecution which is usually their last resort when resolution otherwise is possible. Calculations of overpayment (if any) over the years may be complex month to month.... we've even seen in recent apparently simple cases where there is no overpayment that this can be complex and argued over (between DWP and claimant) for just a few months of statements.

(Strong suggestion generally for readers claiming UC and other means tested benefits. We've had a major glut of similar threads on MSE regarding standard randomised reviews of UC triggering claimants to realise (in many cases they already knew and it is obvious but we try to be polite to moneysavers!) they've not been making suitable declarations of particularly savings and sometimes property for months or even years. The information coming from DWP suggests they are detecting large amounts of overpayments in claims using this strategy and I imagine they're using AI increasingly to target their efforts and possibly in line with government assisted changes accessing more information to do so. My view is if people have failed to declare excess capital etc then there is a decent chance they will get around to you.... and first strike is best tactic.... offer up the information ASAP and repay any overpayments before they send you the 'can you provide bank statements and ID documents' message.... the stress alone must be worth doing that to avoid.)

sheramber

Why are you renting it out at a loss? 

 Have you registered with  HMRC and submitted tax returns declaring your income from renting.? 

Capital repayment if your mortgage is not an allowable expense for tax.

Tiu can only claim for the interest paid and that is given as a tax credit against your tax due. 

Grumpy_chap

sheramber said:

Tiu can only claim for the interest paid and that is given as a tax credit against your tax due. 

Even this has changed - no longer possible to claim the full interest paid against tax relief.
I am sure the OP will be fully aware of the rules and tax declarations for having the BTL.
It is only the UC they claim to have misunderstood.

Northern_Wanderer

Grumpy_chap said:

sheramber said:

Tiu can only claim for the interest paid and that is given as a tax credit against your tax due. 

It is only the UC they claim to have misunderstood.

"Claim" being the relevent word. The questions are very easy, like "What sort of money, savings and investments do you have? and checkboxes to tick, please see the Step by Step guide to making a UC claim video at 4.04 minutes https://www.youtube.com/watch?v=_qzBUZt99iE I fail to see how the majority of people could misunderstand. 

Northern_Wanderer

Also, if the OP is found to have been overpaid or not entitled, if they are/ were in receipt of other benefits because of the UC award, they may have to pay those back as well. Like Council Tax Reduction or Scottish Child Payment in Scotland. I have seen people being asked to repay almost £100k, and that was just the UC.