Technical question - UC AP

Yamor

Unfortunately, back payments of NS-ESA are not disregarded for 12 months.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81933012#Comment_81933012

Thanks Yamor. Ironically enough I was just plodding through the capital disregards on the mammoth council tax support detail for my council. And ESA was only noted as income based. I thought I'd read somewhere that ESA arrears were disregarded for 12 months, but I've read so much in general, I don't now recall where I saw it! But CT was the main incentive to go earlier than I'd been planning for.

I think I will return to the original strategy, applying after this year's bonds have matured.

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/comment/81933040#Comment_81933040

I think it's because NS ESA is classed as unearned income for UC, if it was for PIP then it's disregarded as that's not counted as unearned income for UC.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81933104#Comment_81933104

It remains a crazy world to me, even now I'm lifting lids and learning something new, not directly related to what I was originally investigating. I have tidied a lot up now, and if I stick to what I was originally planning (August application), I could probably run with declaring over £6K capital and face the inevitable review. Because of the inadvertent locked bonds issue, I would be effectively down to accessible capital of below £3K for the next 2 years, if I went below £6K in total. But formally over £6K means full council tax (aside from single hh discount).

At least I now definitely have a few months to sleep on the choice!

It's a massive cliff edge, just below £6K is £1K a year in CT support, just above is nothing.

NedS

https://forums.moneysavingexpert.com/discussion/comment/81933144#Comment_81933144

For others reading this thread, I should note that each local authority sets it's own rules for their own Council Tax Reduction scheme. Some local authorities use £16k as the threshold for entitlement to claim council tax reduction and others apply tariff income between lower and upper thresholds (commonly 6K and £16k, or £10k and £16k). Please check with your own LA or use a benefits calculator such as EntitledTo which seems to do a reasonably good job of calculating entitlement to council tax reduction for your LA.

Altior

Indeed, I read that some councils give 100% as well, but mine is max 80% if you're working age, aside from really niche cases (of which I'm not one).

I suppose I am quite lucky to effectively have the choice of how much capital to apply with. Under £6K is quite compelling, as it's worth about £250pcm (compared to £15K capital), and no way can the yield from £9K make up for that.

peteuk

What I find crazy is the fact that the OP is holding off applying for UC because they may have over £6K in capital. So for the sake of a £4.35 reduction in UC the OP has held off applying.

Grumpy_chap

If I have read the thread correctly, the OP may / does have £280 above the £6k threshold where capital reduces the UC award.

The OP is planning to delay a claim until August as the saving can then be released (without interest penalty) and used to reduce debt. So that would be four or more months' UC not received.

If the OP did claim now, then they would have a reduction in UC of £4.35 per £250. The £280 savings above the threshold would mean £8.70 reduction in UC award each AP. That's £52.20 reduction in UC over the period until the savings accounts release the funds to pay off debts.

The OP has not given details of their income but I assume any UC claim would be above the £8.70 per month that would be reduced because of savings?

The OP needs to be aware that it is all capital, not just savings, that count toward the threshold for the purposes of assessing UC eligibility.

Altior

I realise that it is not abundantly clear without the entire context. My financial scenario is rather complex.

I was a significant stoozer when I got very ill, and when I initially claimed NS ESA I had in the region of £60K 'capital' but £40K unsecured debt (ballpark). I wasn't going to be able to work, but during the ESA assessment phase I got basic ESA with no guarantee that I would be in the SG, and obviously no chance of claiming UC, as capital is not net of debt.

Anyhow, there was a possibility I was going to be left with living off savings yield alone after a year, and somehow bridge the gap to pension access. A few weeks ago I got placed in the SG, a bit of certainty, so I could then begin to wind down my stoozing affairs. You're talking dozens of accounts and locked accounts as I've outlined here. So for example I have a 3 year cash ISA that matures in July. Now I could release that, but with 120 days' interest penalty.

The affairs are so complex, with multiple thousands of pounds knocking around 30+ savings accounts, 5 current accounts etc, providing the evidence for a UC review would be an absolute nightmare (and explaining individual lines). The difference between SG and UC with LCWRA is only about £60 pcm, with £15K capital as an example. So I am making more from stoozing.

Added to the complexity, there was potentially a cliff edge with the reduced LCWRA UC rate for new applicants next month. So it looked like I'd really need to be in a position to apply before the end of the current tax year. But that position has subsequently been clarified via law, and I will now always be treated as a pre 2026 claimant if there is no break in the ESA.

I've calculated all the possible/plausible scenarios. My savings are/were yielding 5-7% which more than offset the UC upside. The timing comes in as I have several 0% borrowing rates ending in July, and locked bonds that mature in June and July. I've taken the view that I will almost definitely be applying for UC, so have now sacrificed a lot of my good rates (eg 7.1% Zopa this morning), and winding down many of my savings accounts. And overpaying my mortgage (even though the rate is around 2% until Sept 2028).

I can effectively decide how much capital I want (with a minimum of the unbreakable locked bonds), as I have a number of credit cards that have 0% rates for at least another year. By which time I should have SMI up and running, and a very low mortgage repayment (which is yet another variable as the SMI payment rate is likely to increase soon due to the latest SONIA / swap rates!).

HillStreetBlues

I do bit of stoozing, but not much as have to keep under the £6k limit. it is a bit frustrating that I have to turn down free money even thou my balance sheet would remain the same.