Inheritance and universal credit

Bowey123

to what extent is expenditure (eg on a holiday or new car) not regarded as a deprivation of assets for Universal Credit when receiving an inheritance or other windfall?

NedS

Any spending must be reasonable, and not done with the intent of reducing capital in order to claim more benefit

It's impossible to definitively answer, as it's a judgement call made by the DWP Decision Maker.

It is reasonable to take a family holiday. It is probably not reasonable to take a family holiday in the Maldives

It's reasonable to buy a car. It's not reasonable to buy a new car for £40,000 when a second hand car for £4,000 would do the same job of getting you from A to B.

Generally, if you would otherwise have been entitled to £1,000 UC per month (£12k per year), and inherited £100,000, DWP would expect that inheritance to last 7 years before making a claim for UC. If you made a claim earlier, they would look at what you had spent the money on and make a decision if that was reasonable or adjudged to be deprivation of capital.

Remember, it is allowable to pay off any of your own debts, so that is always the first thing you should do.

Bowey123

is there any published legislation about this? I am always confused about “reasonable”

I don’t smoke, so I think spending on fags is a waste of money and unreasonably. Why is that different to spending that money on jewellery, or a holiday?

TELLIT01

It's the role of the Decision Maker to determine what is 'reasonable'. I'm not aware of any definitive list giving precise figures. The purpose of any spending is probably the most important factor.

As suggested by @NedS, clearing debts is permissible, property repairs and updating would also be as long as the spend wasn't excessive. For example replacing ceiling lights with crystal chandeliers throughout probably would be considered excessive. (Daft example but the message is there).

tacpot12

There is no published legislation because the legislators (Parliament) know how difficult it is to define what is reasonable in any given situation. Hence it is left up to the DWP Decision Makers to decide, and the claimant to challenge this decision if they think the Decision Maker has got it wrong.

Taking up smoking when you have never smoked before isn't a deliberate deprivation of capital because cigarattes are not a capital item (it's an example of deliberately making yourself poorer, which is allowed!)

Spending money on jewellery is always going to be unreasonable, because jewellery (and tatoos) are not necessary; they are body adornment. Similarly with any aestetic procedures, unless you have a psychiatrist's letter confirming that without the procedure you are going to remain considerably unwell.

Holidays are seen as a potentially reasonable expense because of how common this is in our society. A holiday for a week to the coast of the UK, especially if no holiday had been taken for many years due to being on benefits for a long time, would be reasonable. As was stated, a holiday to the Maldives or any other 'exotic' destination (USA, Middle East, Far East, Australasia, etc) is likely to be seen as an unreasonable expense, but if it was a visit to Australia to visit your mother on her deathbed for two weeks and you only stayed in the city/town where she was being cared for, then you could argue that it wasn't even a 'holiday' but travel for another purpose.

Appliance and furniture replacements are potential reasonable capital expenses, if the appliances, sofas, mattresses, etc. are old/worn out or have demonstrable faults. But buying a Miele Washing Machine when a Zanussi might not be reasonable. (There is an argument that buying repairable appliances, even if more expense than cheaper non-repairable items, is a reasonable decision. But you would have to have that arguement with the decision maker, who might expect to see some evidence to back the fact that the appliance is repairable and other cheaper appliances are not).

A car that is better than you need (e.g. a sports car with higher insurance cost than a family hatchback) is likely to be ruled unreasonable.

Parliament wanted to leave it up to benefit claimants to decide how to spend their own money, but set the rule that your can't spend your own money in a deliberate attempt to increase your benefits (except to clear debts where the benefit allows this, e.g. Universal Credit). I like this arrangement. It's very British.

Spoonie_Turtle

is there any published legislation about this? I am always confused about “reasonable”

No, because what is reasonable will always depends on the facts of each situation.

A physically disabled person may need certain features in a car which make it more expensive, that a non-disabled person doesn't. But you can't even legislate for that because every single disability is different. A family will have different needs in a car than a single person. Different families will have different needs. A heavier person might need a different car than a lighter person (a neutral observation from family experience, this isn't a judgemental assumption - for context all of our cars have been older, I suppose newer cars might all be more bulky and sturdy - but I mean e.g. a little Citroen Saxo 'tin can' vs a Vauxhall Astra with good suspension).

Holidays, someone who works in a school will find their UK holidays more expensive than someone who can take them during the cheaper term times. A bigger family will need bigger ( = more expensive) accommodation. Someone might be able to find holidays abroad for cheaper than a UK holiday. A very very tall person would likely need to spend more on their flight for legroom than an average sized person. Somebody with a chronic illness might need to fly in the expensive part of the plane (I don't know what it's called) so they can lay down and they may still have a cheaper holiday abroad than in the UK.

You don't think spending money on cigarettes is reasonable but for the person addicted to them who would feel unwell in withdrawal and who doesn't feel in a position to try quitting (especially if, let's say, their money is from an inheritance and they're grieving a close relative), it would seem unreasonable to be forced to make their lives miserable just because the government says so. Some people feel it's unreasonable to spend money on frivolous things like a takeaway drink from the coffee shop every day, or buying lunch out instead of taking your own premade lunch - where do you draw the line?

Where the line is drawn is decided on the facts of each specific case and each person's exact circumstances.

Altior

I'm going through this equation myself, not due to inheritance but as I have a lot of capital and a lot of debt.

Just as an example, my property was a new build in 2010, and it still has the original (new) boiler. The boiler is heading to EOL approaching 16 years old and has needed a repair the last three years. It was covered by insurance (less excess), but is probably less than efficient now and soon to be written off. I will need a new one anyway, and it's sensible to do it before it breaks down permanently.

So going into UC in the future is a consideration, but not the reason. As if I apply for UC, by definition I will have less capital to lean on in emergency, so to me it's incredibly sensible to get a new boiler installed before I apply for UC (whilst I have plenty of capital).

Definitely someone could look at that retrospectively and and try to claim I spent a lot of capital on a new boiler so that I could qualify for UC. It's almost chicken and egg.

My sense is that the nebulous law means more people are likely to over compensate, ie don't spend money in case it's treated as DoC. And genuine guilty cases of DoC are blatant eg lending a relative £10K a week before applying for UC. At the end of the day, the DM might have to defend their decision in a tribunal so they will likely want an irrefutable example,

Personally I'm quite good at building an argument, and able look at different/opposite angles ie I could probably be a DM myself. So my approach will be not to do anything I feel can't be defended as not blatant.

Bowey123

a friend of mine has a very expensive lifestyle. Think, vvvv expensive jewellery, cars, etc etc. a few years ago it looked like her income would be lost. Obviously, once her savings ran out she would have been able to apply for UC. However, if she has continued with her lifestyle this would be quicker than someone like me. But it got me thinking, why would her spending be classed any differently from someone who smoked 2 packs of cigarettes a day.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81903841#Comment_81903841

The answer is in your comment actually, if she didn't change her behaviour it wouldn't be to qualify or get increased means tested benefit. If someone lived a frugal lifestyle and goes on a spending spree that just happens to take them below the capital threshold, then applies for a means tested benefit, that is much harder to defend. They've changed their behaviour in order to qualify (or they'd need to plausibly demonstrate that they didn't).

HillStreetBlues

The best guidance is case law, CIS/1775/2007 is a good one. "held that a tribunal was wrong to find that a claimant is to be expected to spend all of an inheritance solely in paying for living expenses which had previously been covered by income support, housing benefit and council tax benefit".

What a person must do is forget they are on benefits. Would it be reasonable for a person who inherits £100k to spend £20k on a new car? If yes, then that would be reasonable, would that person also go and have a holiday of a lifetime, if yes, then that's reasonable. You DO NOT have to protect that money just because a person is on benefits, but the spending needs to be the same if that person wasn't.

Even if the spending might seem unreasonable case law CH/1752/2011 states even that might not be enough to show DoC.

What needs to be got away from is that the DWP controls the spending and you need to protect that money, case law shows you don't, what you can't do is deliberately spend that money to get back on UC.

Remember it's the DWP job to show that it is DoC, which isn't actually that easy.

born_again

To expand a bit on this

It's reasonable to buy a car. It's not reasonable to buy a new car for £40,000 when a second hand car for £4,000 would do the same job of getting you from A to B.

Except if you were looking after a disabled person & they required a certain type of car/WAV to get around, Where such is not avaiable in the lower price range.

So it is not always as clear cut.

Hence why there can never be any clear figures on what is reasonable 🤷‍♀️