UC & depreviation of assets

I'm looking for some advice please on what constitutes depreviation of assets and how long the time scales are.


I own my home (no mortgage) and despite many years of procrastination I can show that there has always been a plan to spend my savings on an extension.
If I were to go ahead with that plan which would take me below the £16k savings threshold and cost around £60k to do, would I be accused of disposing my savings wilfully and denied UC if I was to try to claim it later, say 12months later.


Also the same question for if I put £20k into premium bonds in my kids names. This is then their asset and no longer mine.
When does it become not considered as disposal for UC claim purposes ?




I'm not planning to claim UC and setting up asset disposal to take this route. That is not what this thread is about. That's fraud and I want to protect myself from being accused of it.



But my current work climate and TBH I expect a global recession in 2020, I'm wondering if I would be suffering despite IMHO having "done the right thing" through my life thus far such as accruing savings.

I'm not paid highly, we just live frugally.
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Comments

  • Sea_Shell
    Sea_Shell Posts: 9,272
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    I don't know, but to me it seems that surely people should be able to live their lives, without having to worry about "what if" I need benefits in the future.

    Anyone's life can change for the worse at any time!!

    As I understand it, it's desposing of assets "on purpose" that's the issue.

    But as you've raised it, and have reason to think you will need to claim benefits in the near future, then I wouldn't be surprised if questions are asked about where your money's gone!
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.47% of current retirement "pot" (as at end February 2024)
  • calcotti
    calcotti Posts: 15,696
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    It is only deprivation of capital if a significant part of the purpose of disposing of the capital was to qualify for benefits or increase the amount of benefit.

    The DWP guidance https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/778104/admh1.pdf says this
    Deprivation of capital
    The law
    H1795 The law says people are treated as having capital they do not have if they deprive themselves of capital to get UC or more UC1. The capital people are treated as having is called notional capital.

    H1796 People are not treated as having capital of which they have deprived themselves if
    1. it reduces or pays a debt owed by the person or
    2. they purchase goods and services and that expenditure was reasonable in the circumstances of that person’s case.

    Have people deprived themselves of capital
    Meaning of deprive
    H1815 The meaning of deprive is not a question of law and should be given its normal every day meaning. So claimants have deprived themselves of capital if they no longer have it even if they use it to get other capital or personal possessions.
    Note: This is subject to the provisions of H1796. So for example a person may have bought a second car but they are single and can provide no reason for why they need 2 cars, so the DM does not think the expenditure was reasonable.

    Have people deprived themselves of capital for the purpose of getting UC or more UC
    Onus of proof
    H1825 DMs have to show the claimant's or partner's purpose was to get UC or more benefit if they decide claimants or partners have deprived themselves of capital. Getting UC or more UC may not be the claimant's or partner's predominant purpose but it must be a significant one. So when claimants give away all their capital to a relative just before claiming UC their
    1. main, or predominant, purpose may be to benefit the relative and
    2. intention, or significant purpose, may be to reduce their capital so they can get UC or more UC.

    H1826 DMs have to decide if the claimant's or partner's significant purpose was to get UC or more UC. The DM has to make such a decision each time claimants or partners deprive themselves of capital. So if a claimant has spent their capital on several things the DM has to decide the claimant's purpose for each act of deprivation.

    H1827 Normally there is no direct evidence to show the claimant's or partner's purpose was to get UC or more UC. So the DM has to consider all the facts of each case when making the decision.

    At the moment you appear to just be expressing a general anxiety about the future (which many of us might share). Unless you have clear reason to think you about to have to rely on the benefit system, deprivation of capital rules should not apply because you are not expecting to have to claim. However if you were to claim in the next 12 months you should expect to be asked about how your capital has been disposed of and the DM has discretion.

    If you are going to be left with very little capital (if any) it might be argued that it was not reasonable to give away so much capital to relatives such that you had nothing left to assist yourself in a time of need. However that's just my observation - I know nothing of your family circumstances etc
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • TELLIT01
    TELLIT01 Posts: 16,366
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    Money spent when there is nothing to indicate any intent to claim Income Related benefits in the period immediately after spending cannot be classed as Deprivation of Capital.

    There is no problem in doing what is outlined by the OP, although I do wonder about the advisability of leaving yourself too short of capital. Spending on an extension wouldn't raise any flags anyway, unless as said above, there was anything to suggest you intended to claim benefits.
  • leviathan
    leviathan Posts: 257
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    Thanks for the replies.
    It's just a general feeling of uncertainty.
    There are others at work who are being out out sourced to Europe for the company can half the wage and not pay pensions.

    There are various veiled alterations taking place for "our benefit" which of course you can look at with suspicion.
    But as ever the boss says no, your position is fine, etc etc..


    It's my hard earned money. That I haven't chosen to spend it yet is, well, my choice. As much as it's my choice (and you might think stupid) not to have ever put it into shares etc but just left it still in poor interest earning accounts. I'm sure with hindsight I could have doubled it if I trusted shares.

    But that's it isn't it, hindsight. I wouldn't want to be taken over the coals for spending my money and not predicting the future accurately !!
    But I (we) reach a point in our life where we have this money, TBH we aint going to spend it because we live frugally we dont do or want flash cars etc.
    Thus "giving it away" to family, to our kids certainly sets them up early in life for good eg a pension pot acrueing for 15yrs before they even get a job is a good starter.
    And possibly close family who haven't had the best of chances but have put in maximum effort only not to be rewarded, sadly.


    Having put into the NI system for some 30 years I would like it to help me if we ever needed it without worrying about having to qualify.
    I think I could make a good case if the eventuality should arise given the info shared. Thanks.
    One would argue that given earnings, spending our capital would not be considered an extreme deviation from the average person in similar situation, etc.


    Martin reccommends 6 months wages in savings. I would ague that was a reasonable level and it's far below the 16K cut off so I would go a bit higher anyway for my comfort. Probably a year.
  • huckster
    huckster Posts: 4,789
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    Depending on how long you have worked for the company and their redundancy scheme, you may have a lump sum of money anyway.

    I agree with you that the UK could be in for a very bumpy ride economically next year and if you are going to have an extension, you might want have this done sooner than later. Otherwise you will be living off your redundancy and savings, until you find the next job.
    The comments I post are personal opinion. Always refer to official information sources before relying on internet forums. If you have a problem with any organisation, enter into their official complaints process at the earliest opportunity, as sometimes complaints have to be started within a certain time frame.
  • TELLIT01
    TELLIT01 Posts: 16,366
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    Another alternative is to put it into a pension pot. That way it wouldn't be spent almost for the sake of spending. If you haven't needed the extension up to now, do you really need it and would you make use of it? I ask simply because we had always talked about wanting a bigger kitchen but couldn't afford it. Once we could afford it our needs had changed and a big kitchen was no longer a priority.
  • If you are expecting to lose your job in the near future it wouldn't be a good idea to spend your savings on an extension or putting them into premium bonds in your kids names, keep the money which by the sounds of it would see you through a year of unemployment and keep your fingers crossed that you aren't out of work that long.
    Perhaps not what you want to hear sorry.
  • I feel your struggle, UC is great but also complicated things. It at times makes me feel limited in saving lots as treated as income. Though I am saving and being frugal anyway. Work our costs for the house work, look at children’s ISAs or trusts (premium bonds are good but in my experience of getting them very rarely come around). Slow down a little and build up an emergency fund for yourself if and when for your main bills n food etc from 3-8 months so you feel powerful over your money. Well done so far on what you have! Look through more on mse as I am not expert. ��
  • @huckster : A good point. Yes they do pay out more than the national minimum and I have been there a while. Something I didn't consider and I would be able to live off that for a fair while. But I would be unlikely to gain employment in the same area without I estimate a 20% paycut and a different direction. Therefore I would see the redundancy as compensation, rightly or wrongly. Having to use it to life off would bite but if it's above the "savings" figure those are the rules.


    @TELLIT01: I'll have to look into that as the system says one off pension payments come from wages,there isn't immediately a way I can see of funding from money I have already paid tax on however that would certainly secure it.
    As for the kitchen we are designing multiple options at present. Entirely inline with what you say on do we need it. I have a design for the current size which totally changes the layout and works better and one which gives us a kitchen/diner/lounge with extension made. The money is there to pay for it and has been for years. The only reason to do so is that we cannot quite afford (without excessive debt in my mind) a step up to the next property, that's coming at 55 with some of the pension pot and expected inheritenace. Thus maximise the property we have now til then.


    @vension: I understand where you are coming from but my stance is that it's my money and I've paid into NI to help me in times of need. Many years ago and single I was breifly unemployeed but claiming was such hassle that I didn't, instead I did contract work, any and all until I found a new job.
    Those that have not "done the right thing" and saved are able to use that safety net. Those like me are effectively punished for saving by not being allowed to claim benefits until their savings are erroded. Those savings have been made by going without for many years and being frugal whilst others not saving have often spent more freely. That is morally wrong IMHO.
    Exactly as @Taran3030 puts it:: "UC is great but also complicated things. It at times makes me feel limited in saving lots as treated as income."
  • calcotti
    calcotti Posts: 15,696
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    leviathan wrote: »
    Those that have not "done the right thing" and saved are able to use that safety net. Those like me are effectively punished for saving by not being allowed to claim benefits until their savings are erroded.
    This is a moral hazard inherent in a welfare system. I think it is unavoidable unless all benefits are not means tested which would be unaffordable (and also objectionable to many).


    Paying everybody a universal basic income, which would be taxable, is thought by some to be a way of reducing this issue but there are many practical difficulties with such an approach (regardless of any questions of affordability). The huge variation in housing costs around the country would inevitably mean there would still be a need for some means testing.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
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