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Thread: Deprivation of capital?

  1. #1
    Member Pinklover's Avatar
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    Deprivation of capital?

    Hi. I currently claim contribution based ESA. Previously I was on income related, however, after receiving a pension lump sum I was switched to contribution based. This is totally fine and I am satisfied with this. My question is that in within the next couple of years I plan to sell my house (I have to as my ex husband is due some equity from it and the mortgage will be too much when my children reach an age that stops me being entitled to child related benefits) So I will sell my house and then use my equity and existing savings to buy myself as small flat with no mortgage. At this point I will have no savings. Will I have to then carry on claiming contribution based ESA OR will I be allowed income related? Will it be seen that buying a home deprived myself of income? If that's the after how long would I have to wait until the "notional" income is spent? Do the have a figure they deduct on a yearly basis, E.G. 5k a year until said savings would be gone. So after 4 years 20k would be considered spent and then you can claim? (That's just random figures I've used to explain my question!!) Either way I think owning a property is safer than relying on benefits as I would have my own home for life. I'm just curious as to how the DWP will treat this. Any advise will be gratefully received. Thank you.

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    I was in a similar position after I split with ex. I had been on income based ESA but my share of house equity took me over limits. I had no savings or insurance and unable to work. I didnt have enough to buy another property without a mortgage that I couldnt get. I spoke to someone at CAB who mentioned Disregarded Income. I spoke to a really nice person at DWP who advised me to put everything in writing with bank balances etc. The money from sale of house was put into a separate account that was marked for house purchase. I was at first given six months without it affecting my benefit but because of MH issues It was extended to 14mth when I finally was able to get a shared equity flat. I just had to keep them in the loop and be honest with finance.

  3. #3
    Senior Member nukecad's Avatar
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    Your main home is disregarded from any calculation of capital for means tested (Income Related) benefits.
    And you are able to sell your home and use the money to buy another provided you do it within a certain time.

    But as you are on Contribution Based benefits it does not matter what your capital or savings are.
    (So it would not matter if you had 2 or more houses at once, or millions in the bank).

    I'm not sure what you mean by switching from IR ESA to CB ESA after you got a pension lump sum?
    You can't just switch from IR to CB like that.
    (In fact I only know of one circumstance (well 2 but they are basicaly the same reason) where you can go from IR ESA to CB ESA and that's fairly unusual, but see below*).

    I've just looked back through your previous posts but I can't find what you were awarded- would I be correct in thinking you are now in Support Group?

    I see that your assessment took a long time and you were worried about the 365 days rule, was it more than a year before you were awarded a group?
    (*That could explain going from CB to IR and then back to CB if you were awarded Support Group after more than a year in assessment).

    Anyway, whatever you do with your house and/or savings it will not affect payment of Contribution Based ESA.

    Or are you asking if you could start claiming an IR top-up once you have bought the flat?
    I would have to double check the Decision Makers guides, but I think that should be possible, depending on how much savings you have left and if you are still getting any pension payments.
    Let me know if you want me to look it up.
    Last edited by nukecad; 11-03-2016 at 04:04 PM.
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    Member Pinklover's Avatar
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    Hello Nukecard. Thank you for your help. In answer to your questions I am in the support group. I used to have contribution based with income related too Up. However, my pension lump sum took me over the 16k so the DWP simply removed the income related top up and the mortgage support I was getting. Consequently I receive the lower contribution based element. So yes, if I add my savings to my equity to buy a small flat, would I be allowed to apply for the income related top up again? ( I get higher care and higher mobility on PIP so used to have top ups on my ESA) or would they say I'd chosen to spend my savings so can't have it. Then how long would my savings be classed as notional income? I'm going to go ahead with my plan regardlsss but wondered where I stand. Thank you for taking the time to help me.

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    Member Pinklover's Avatar
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    I posted a reply but it's disappeared!

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    Member Pinklover's Avatar
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    Nukecard my reply has gone to moderation. Forgot to say in that long reply that I get a small monthly pension of £400. The rest of the answers will show when moderated!! Thank you.

  7. #7
    Senior Member nukecad's Avatar
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    Thanks for the clarification,

    I had thought it might have been an IR top-up that had stopped when you got the lump sum.

    So there are 2 questions now.
    How would the purchase of a house affect things.
    How would the £400/month pension affect things.

    Firstly your home itself is disregarded as capital so that is not a problem.

    I'm assuming you will have to sell your current home partly because you are divorced and your ex wants his share of the equity?
    And then you are proposing to use your share of the equity, plus (some of) your savings, to buy a new home.

    I'm not sure just how the Decision Maker would see this unless your ex has a legal right to make you sell up.
    (I think they would class this as a debt to your ex; and normally only 'immediately enforcable' debts are allowed to be paid without it being deprivation).

    The Descision Makers Guide- DMG52535 says:
    Money from the sale of premises which were lived in as the home is disregarded to
    give a person time to buy other premises if the person is going to

    1. use the money to buy premises and
    2. live in those premises as the home.

    The period of disregard is 26 weeks or longer if it is reasonable from the date of
    sale.
    It does not mention the situation of adding savings to purchase the new home, or of having to split the proceeds from the sale with an ex partner. (This is probably covered elsewhere in the DM guides).
    I'm pretty sure that using savings to buy your own home is not deprivation of capital (I just can't find the right bit of the guide) though I would advise checking with the DWP.

    In any case this is accademic in your case - as said in my previous post none of this affects Contribution Based benefits, it would only affect Income Related benefits.


    Income from the pension.
    Again if this pension income is not currently affecting your CB ESA then it will not do so in future.
    If you were getting this in the past and it was not affecting your IR top-up then again it should not affect getting one in future.
    (That assumes that you were getting this before the lump sum was paid).

    So the best that I can say at the moment is that none of what you are proposing should affect the amount CB ESA that you currently get paid.

    In your situation I would do as you are proposing, it will not reduce what you are currently getting as CB ESA.
    Once you have bought your new place you can then take stock of just what savings you have left, and if these are below £16,000 then consider applying for the IR top-up to be reinstated.


    You may want to take further advice from a professional welfare advisor (CAB or similar).
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  8. #8
    Member Pinklover's Avatar
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    Thank you so much for your advise Nukecard. The selling of my house is necesssry as it was an order of the court during my Divorce that I had to sell up when my children finish school and pay him his equity. I have the court order at home so can easily prove this to the DWP. I wasn't claiming my pension when I originally had my IR top up. However, with all the disability top ups I would still be better off with the IR top up. I just hope they don't say I've deprived myself of capital by purchasing a home. Thank you again for all your help.

  9. #9
    Senior Member nukecad's Avatar
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    That should be fine then if you have that court order.

    That makes it an immediately repayable debt by court order, paying it cannot be deprivation.

    Which means anything left from the sale can be used to buy a new home without that being deprivation either.
    And like I say I'm pretty sure using any savings to buy a main home is not deprivation.
    (Provided of course you don't move from a terrace to a large mansion).

    There again none of that affects CB benefits.

    The pension may however prevent the IR top up.
    A lot depends just what kind of pension it is.
    Last edited by nukecad; 11-04-2016 at 05:30 PM.
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    But I'm good at searching for, and finding, stuff.

  10. #10
    Member Pinklover's Avatar
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    Hahaha, I wish! I'll be moving from three bed house to a two bed flat! Thank you again for helping me.

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