Which of these two unspent back payment calculations is used by the DWP?

MrHeisenberg

Hi all,

Does anyone know which of the following methods the DWP typically uses to calculate unspent backpay?

Claimant's starting bank balance is £4,000. A back payment of £10,000 is received, which takes the Claimant's bank balance to £14,000. The Claimant spends £4,000 of his money, which takes the Claimant's bank balance to £10,000. Is the unspent back pay £10,000 (no back payment spent) or £6,000 (£10,000 initial back payment - £4000 back payment spent)?

Robbie64

As long as you don't go under the full amount of the back payment then the whole of the back payment should be disregarded. You would be spending your original £4,000 first, leaving the £10,000 back pay. If you then went below the £10,000, your disregarded benefit arrears would then be the total of your savings. If you subsequently increased your savings, then the amount of the increase wouldn't be disregarded (ie you can't go back to having £10,000 disregarded).

MrHeisenberg

Robbie64 said:

As long as you don't go under the full amount of the back payment then the whole of the back payment should be disregarded. You would be spending your original £4,000 first, leaving the £10,000 back pay. If you then went below the £10,000, your disregarded benefit arrears would then be the total of your savings. If you subsequently increased your savings, then the amount of the increase wouldn't be disregarded (ie you can't go back to having £10,000 disregarded).

Sincere thanks. So, if £8,000 were spent, the disregard amount would be £6,000 (£14,000 - £8,000 = £6,000)?

Robbie64

MrHeisenberg said:

Robbie64 said:

As long as you don't go under the full amount of the back payment then the whole of the back payment should be disregarded. You would be spending your original £4,000 first, leaving the £10,000 back pay. If you then went below the £10,000, your disregarded benefit arrears would then be the total of your savings. If you subsequently increased your savings, then the amount of the increase wouldn't be disregarded (ie you can't go back to having £10,000 disregarded).

Sincere thanks. So, if £8,000 were spent, the disregard amount would be £6,000 (£14,000 - £8,000 = £6,000)?

It would be. Once your overall capital, included the disregarded amount, goes below the full amount of the disregarded capital (in your case, £10,000), the amount now to be disregarded is the amount of your remaining overall capital.

In your example, if £8,000 in total was spent, £6,000 would be the disregarded amount. if you then increased your overall capital by, for example, £4,000 with an overall balance of £10,000, then the disregarded amount would remain at £6,000.

Newcad

@MrHeisenberg

I'm uncertain  just what the "backpay" is?

The answers above assume that is a backpayment of benefits - but you haven't stated that.

If It's a backpayment of wages, or anything other than benefits, the the answer would be different.

We need to know just what the "backpay" was for to be able to give the right answer.

Edit - After looking at your previous posts it looks like this may be a backpayment of benefits, if it is then the answers above are what you need.

MrHeisenberg

Newcad said:

@MrHeisenberg

I'm uncertain  just what the "backpay" is?

The answers above assume that is a backpayment of benefits - but you haven't stated that.

If It's a backpayment of wages, or anything other than benefits, the the answer would be different.

We need to know just what the "backpay" was for to be able to give the right answer.

Edit - After looking at your previous posts it looks like this may be a backpayment of benefits, if it is then the answers above are what you need.

Yes, it's a back payment of benefits. 

I may be wrong, but I think if the money is all in one account, the DWP probably use the method of calculation Robbie64 uses. It gets more complicated when the money is moved to another account, such as a savings account. In my case, however, there was only one account involved.

My worry, though, is that there are no hard and fast rules on this, so arguably the respective decision-maker could use any method they choose, and I'm not sure how one would challenge the decision if they decide on the least generous option.

Robbie64

^

I personally would have opened an online savings account with my bank and put the back payment into there, leaving it untouched as long as possible. My way of thinking is that it would make it easier for the Review team to see that the amount of savings I had never went down below the amount of the back payment (until of course I started to spend some of it).

The type of savings account I was thinking about is the type banks offer where all transactions for the savings account have to go through the main bank account to make a deposit into and a withdrawl from the savings account, creating a straightforward paper trail.

MrHeisenberg

Robbie64 said:

^

I personally would have opened an online savings account with my bank and put the back payment into there, leaving it untouched as long as possible. My way of thinking is that it would make it easier for the Review team to see that the amount of savings I had never went down below the amount of the back payment (until of course I started to spend some of it).

The type of savings account I was thinking about is the type banks offer where all transactions for the savings account have to go through the main bank account to make a deposit into and a withdrawl from the savings account, creating a straightforward paper trail.

Interesting. They could still probably argue that some of your pre-existing capital went into the savings account. E.g. you initially had £4K, received £10K in a back payment, then transferred £10K to the savings account, £4K of which was your initial capital.

Spoonie_Turtle

MrHeisenberg said:

Robbie64 said:

^

I personally would have opened an online savings account with my bank and put the back payment into there, leaving it untouched as long as possible. My way of thinking is that it would make it easier for the Review team to see that the amount of savings I had never went down below the amount of the back payment (until of course I started to spend some of it).

The type of savings account I was thinking about is the type banks offer where all transactions for the savings account have to go through the main bank account to make a deposit into and a withdrawl from the savings account, creating a straightforward paper trail.

Interesting. They could still probably argue that some of your pre-existing capital went into the savings account. E.g. you initially had £4K, received £10K in a back payment, then transferred £10K to the savings account, £4K of which was your initial capital.

In theory perhaps, they could try if they really wanted, but it defies all logic and I can't imagine it would ever stand up at tribunal.

Robbie64

^

Plus the £10k would have been paid into the main bank account by the DWP. I would then have opened an online savings account and immediately transferred £10k to the newly created account. As long as the £10k remained untouched that would have been the amount of capital to be disregarded.

MrHeisenberg

Spoonie_Turtle said:

MrHeisenberg said:

Robbie64 said:

^

I personally would have opened an online savings account with my bank and put the back payment into there, leaving it untouched as long as possible. My way of thinking is that it would make it easier for the Review team to see that the amount of savings I had never went down below the amount of the back payment (until of course I started to spend some of it).

The type of savings account I was thinking about is the type banks offer where all transactions for the savings account have to go through the main bank account to make a deposit into and a withdrawl from the savings account, creating a straightforward paper trail.

Interesting. They could still probably argue that some of your pre-existing capital went into the savings account. E.g. you initially had £4K, received £10K in a back payment, then transferred £10K to the savings account, £4K of which was your initial capital.

In theory perhaps, they could try if they really wanted, but it defies all logic and I can't imagine it would ever stand up at tribunal.

I think there is still a bit of a problem in that the rules simply state that the capital should be disregarded, but they don't state how to make that calculation, so its wide open to interpretation.

Looks like accountants even stay away from this stuff:

https://www.accountingweb.co.uk/any-answers/universal-credit-advisory