Technical question - UC AP

Spoonie_Turtle

https://forums.moneysavingexpert.com/discussion/comment/81936970#Comment_81936970

You could have a stroke or a massive heart attack or a serious accident within your house, or get caught up in a house fire or be attacked in a burglary, etc. While the chances of any of those are hopefully remote, they are still real possibilities and if something DID happen that meant you couldn't carry out your plans, you would then have a different amount of capital than intended.

As far as I understand: The bit about capital being lower than the total showing in the account applies if you would be able to withdraw it before the set period ends, in exchange for a penalty. E.g. if it's 'locked away' in an account for 2 years but you can access (most of) it early for a % penalty, the value on the date of reporting the capital is how much you would be able to access if you did withdraw it on that date, rather than the full amount currently in there.

From ADM H1:

Current surrender value

H1612 Current surrender value means the money people would get if

1. they withdraw their capital on the date of claim, revision or supersession and

2. that date is before the date a person gets the capital under the terms of the agreement and

3. the terms of the agreement lets a person withdraw the capital before the agreed date.

H1613 The DM accepts the money people would get on the date of claim, revision or supersession as the value. If the agreement does not let a person withdraw capital before the agreed date the value of the capital is its current market value.

Note: I do not know whether that applies to any of your capital. But I think that's probably what Yamor was thinking of. (Also no idea how the council would treat everything, this is just for UC.)

Altior

That definitely applies to the ISA, with the access penalty. But then the final year's interest would be added early, so the surrender value is actually higher than what the account is showing now!

That section is quite clear that if it's 'locked', the value is the current market value. There's no market for locked cash bonds, I suppose it accounts for gilts where there is.

I appreciate everyone's input on this. It's good to bash my thoughts around, and every day is a learning day in the benefits space. I have concluded that there is no real good reason to add any additional complexity to my particular scenario, that already has plenty. Or any theoretical risk of falling foul of the rules. The accountant in me means I can't disclose a position that isn't entirely accurate, even if it's effectively redundant. So I'm going with August and that should be the last you hear from me with regard to an UC application (with any luck!).

NedS

https://forums.moneysavingexpert.com/discussion/comment/81937278#Comment_81937278

It's called ATLAS - Automated Transfer to Local Authority Systems

It's a DWP system that sends notification about benefit changes to local authorities for the purpose of HB and council tax reduction claims. So the LA should receive earnings data (as UC does) and the status of any benefit claims, when the claimant is no longer entitled etc which may then trigger an end to entitlement to CTR.

There may be a way to make (automate) a claim for CTR at the point of making a UC claim, but when a UC claim has a change in circumstances (for instance, employment ends), a manual application to the LA for CTR would be required. Different Local Authorities may have different processes for initiating a claim for HB/CTR, but all use the ATLAS system for updates as far as I'm aware.

Additionally, schools (that also fall under the LA) also use the system to verify entitlement to things like free school meals where they are means-tested.

Yamor

https://forums.moneysavingexpert.com/discussion/comment/81937287#Comment_81937287

Surrender value is actually a separate point which I wasn't going to mention because I don't think it applies in OPs case (as it sounds like he can't get anything until the date it matures).

As such, only the market value basis can apply, and all I can say is that that will be some value between zero and the amount in the account!

Grumpy_chap

That section is quite clear that if it's 'locked', the value is the current market value. There's no market for locked cash bonds, I suppose it accounts for gilts where there is.

Well, you mentioned this upthread:

This is an example:

Investec
36 months fixed | Matures 29/06/2026
AER / Gross
5.76% 6.10%
Balance
£2,000.00

Can I withdraw money?
No.
You cannot make withdrawals or close the product before
29/06/2026.
At the end of the term we will return the money to the cash hub.

Absolutely nothing I can do to crack this :(

I would pay you £1.5k cash today for the legal rights to that fund when it releases in June.

Others might well pay you more.

To say there is no market and thus the value is zero is disingenious.

Also, the whole idea of zeroing out the value of "locked" funds would simply be the largest loophole to UC capital limits that there could ever be.

I always understood that the cases where value of an asset could be lower than open market value was such as when there are shares which have a genuine trading cost or property (land) which cost money to dispose.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81937524#Comment_81937524

I don't know why you are continually trying to catch me out it appears, I am NOT planning not to declare it, as I have stated in my most recent post :) What I was saying was that I can't find any test cases or even answered queries in regard to the capital reporting of bonds of this nature. Though instinctively, it seemed quite unlikely that I would be able to completely disregard them.

How do you propose that I have it changed over into anyone else's name in any legal sense? Yamor knows what they are talking about, but there is no capital risk in regard to these cash bonds as their capital value is covered by FSCS protection. My bonds have a higher 'dirty' price as the interest secured on them is higher than the prevailing market interest, ie if there was a legal way to transfer consumer cash bonds between individuals, which there isn't, their market value would be slightly higher than the 'face' value (the principal).

It's just a coincidental set of circumstances, of which I have been trying to identify a route to navigate around, to potentially expedite my UC application, staying within the rules. I've spent much of my working life conquering similar changes, but this one has defeated me! I'm pretty sure it could be done, but I don't need the potential hassle, even if the risk of it is negligible.

Yamor

Although there could well not be any way to transfer legal ownership of the bonds, it would be possible to transfer beneficial ownership using a trust deed of some kind.

But yes, that would depress the value still further, as the risk of having to sue you to comply with the trust deed would have to be priced in.

born_again

https://forums.moneysavingexpert.com/discussion/comment/81937460#Comment_81937460

OP bonds are fixed term savings.

So their value is what was placed in there at the start of the term. They will not go down in value. Given the interest rate is given, you could work out the final value.

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/comment/81937772#Comment_81937772

It's what they are worth today. OP can't cash them in to they mature, to get the money now OP would have to sell the rights to them, but that sale would be less than the maturity value, as many factors involved and a risk to the buyer, the issue is how much is the current value? all that can be said it's less than the maturity value but no one knows how much less.

Yamor

https://forums.moneysavingexpert.com/discussion/comment/81937772#Comment_81937772

As @HillStreetBlues says, it is the value TODAY that matters (or surrender value TODAY, if applicable). There is plenty case law to back this up.

The DWP have a contract with the VOA to provide valuation services for difficult cases, so if this question were to arise in practice, they are likely to refer it to an expert valuer from the VOA, who would provide a current value for the asset.