UC/Interest

Yamor

HillStreetBlues said:

Yamor said:

As long as the money is held on trust, then that is sufficient. So, it could be in a regular bank account in someone else's name, as that person would then be holding the money on trust for you.

The Sweet and Maxwell commentary to the legislation suggests that even a regular joint bank account where you are one of the account holders will also be sufficient, as there is still technically a trust relationship.
This is supported by the case law here:
https://assets.publishing.service.gov.uk/media/5e68fab7d3bf7f269e22a12e/CJSA_2628_2017-00.pdf

thought it easier to tack on my question that to start a new thread as it's PI related

@Yamor
With that case law my reading of it is that while Q was joint legal owner of the money (with the parent named on the account) Q remained sole beneficial owner of that money (48).

Two people (A&B) on IRB  both have an PI payout.
A puts their payment in a joint account(1) with B,  B puts their payment in another joint account(2) with A

Account 1 the money would be ignored for person A as it's in trust, it would also be ignored for person B was although legal owner they aren't the beneficial owner
Account 2 the money would be ignored for person B as it's in trust, it would also be ignored for person A was although legal owner they aren't the beneficial owner

Is that correct, or am I missing something?

Yes, that sounds correct to me...

HillStreetBlues

Yamor said:

Yes, that sounds correct to me...

Will be putting it to the test I expect some point this year.

Yamor

Yamor said:

I would argue that interest received in the trust account is derived from the sum of compensation, so should also be disregarded.

I have now come across a letter from DWP which suggests that income from such a trust is not disregarded. Doesn't mean it's legally correct though!

See the second bullet point in the answer to Q1 in the letter in Annex C of this document:

https://assets.publishing.service.gov.uk/media/631af6838fa8f5020ac91004/ssac-minutes-8-december-2021.pdf

HillStreetBlues

Yamor said:

Yamor said:

I would argue that interest received in the trust account is derived from the sum of compensation, so should also be disregarded.

I have now come across a letter from DWP which suggests that income from such a trust is not disregarded. Doesn't mean it's legally correct though!

See the second bullet point in the answer to Q1 in the letter in Annex C of this document:

https://assets.publishing.service.gov.uk/media/631af6838fa8f5020ac91004/ssac-minutes-8-december-2021.pdf

I agree it doesn't mean it's legally correct. I can see the logic on how Reg 75 (4) is written. Capital made from capital is disregarded. And income is disregarded as unearned income, but it doesn't expressly state that when that income becomes capital that capital is  disregarded.

If that capital remains in a interest bearing account, then any interest earnt also becomes disregarded. If the money generates income, then maybe a test case would show if  if that answer is correct.

Hopefully that's correct.

HillStreetBlues

I found the answer to Q2 interesting.

Wherever a claimant has received a payment of capital which is disregarded, whether indefinitely or for a
prescribed period, their capital threshold is effectively increased by the amount of
the original payment for the duration of that period. This is regardless of whether it
was simply paid into a bank account with other funds or held or invested
elsewhere

That would mean the disregarded capital will always be the last to be spent no matter what account it is in.

HillStreetBlues

UC Reg 75.6

(6) If the sum is not held in trust or has not been used to purchase an annuity or otherwise disposed of, but has been paid to the person within the past 12 months, that sum is to be disregarded in the calculation of the person's capital.

This question won't affect me, but the wording has me thinking.

What about interim payments? Say you take a interim payment payment of £20k in Jan and then take £50k final payment in June, does the clock start ticking on the whole £70k in Jan,  or does the Jan payment get 12 months, and the June payment get 12 months?

NedS

HillStreetBlues said:

UC Reg 75.6

(6) If the sum is not held in trust or has not been used to purchase an annuity or otherwise disposed of, but has been paid to the person within the past 12 months, that sum is to be disregarded in the calculation of the person's capital.

This question won't affect me, but the wording has me thinking.

What about interim payments? Say you take a interim payment payment of £20k in Jan and then take £50k final payment in June, does the clock start ticking on the whole £70k in Jan,  or does the Jan payment get 12 months, and the June payment get 12 months?

(6) If the sum is not held in trust or has not been used to purchase an annuity or otherwise disposed of, but has been paid to the person within the past 12 months, that sum is to be disregarded in the calculation of the person's capital.

Try just reading the part in bold, removing the parts that don't apply. Does that answer your question?

HillStreetBlues

NedS said:

HillStreetBlues said:

UC Reg 75.6

(6) If the sum is not held in trust or has not been used to purchase an annuity or otherwise disposed of, but has been paid to the person within the past 12 months, that sum is to be disregarded in the calculation of the person's capital.

This question won't affect me, but the wording has me thinking.

What about interim payments? Say you take a interim payment payment of £20k in Jan and then take £50k final payment in June, does the clock start ticking on the whole £70k in Jan,  or does the Jan payment get 12 months, and the June payment get 12 months?

(6) If the sum is not held in trust or has not been used to purchase an annuity or otherwise disposed of, but has been paid to the person within the past 12 months, that sum is to be disregarded in the calculation of the person's capital.

Try just reading the part in bold, removing the parts that don't apply. Does that answer your question?

I first thought (maybe I read somewhere)  that it was date from first payment  but now think I was wrong as it's when you receive them, so each payment can have a different 12 months.
I'm not taking a interim payment, but want to check which is correct for future reference if any one else seeks advice on this issue.

NedS

HillStreetBlues said:

NedS said:

HillStreetBlues said:

UC Reg 75.6

(6) If the sum is not held in trust or has not been used to purchase an annuity or otherwise disposed of, but has been paid to the person within the past 12 months, that sum is to be disregarded in the calculation of the person's capital.

This question won't affect me, but the wording has me thinking.

What about interim payments? Say you take a interim payment payment of £20k in Jan and then take £50k final payment in June, does the clock start ticking on the whole £70k in Jan,  or does the Jan payment get 12 months, and the June payment get 12 months?

(6) If the sum is not held in trust or has not been used to purchase an annuity or otherwise disposed of, but has been paid to the person within the past 12 months, that sum is to be disregarded in the calculation of the person's capital.

Try just reading the part in bold, removing the parts that don't apply. Does that answer your question?

I first thought (maybe I read somewhere)  that it was date from first payment  but now think I was wrong as it's when you receive them, so each payment can have a different 12 months.
I'm not taking a interim payment, but want to check which is correct for future reference if any one else seeks advice on this issue.

Sorry, I don't have any documentary evidence to support either way, but my interpretation of the guidance you quoted would be that each sum would be disregarded for 12 months from the date received.

Can I ask - under what circumstances may the payment not be made as a single payment?

HillStreetBlues

NedS said:

Sorry, I don't have any documentary evidence to support either way, but my interpretation of the guidance you quoted would be that each sum would be disregarded for 12 months from the date received.

Can I ask - under what circumstances may the payment not be made as a single payment?

With a PI there may be agreement that there will be compensation due, in my case the other party have admitted liability so I will get a payment, what has be be decided is the amount. I haven't actually had a talk about  what my case is worth, but having researched it it should be upwards of £50k  If I needed money  I could have requested an interim payment and then when the final was settled, I would get the balance.
As I didn't need the money, I told my solicitors that I will just wait till the end.