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Housing benefit and capital. Advice please

I’m currently in receipt of housing benefit and council tax. I have deductions because i have have £7500 in capital. My mum has £2000 left to pay on her morgage. I’ve said that i will give (not lend) her the money to finally pay it off. She’s helped me out in the past so i’m returning the favour. H/B allow up to 6k in capital before deductions are made, but when i give her this money it’ll take me under, therefore no deduction will be made. Question is will this be allowed?

im sure you wont have to explain to them that you have spent some money. its your money after all. got nothing to do with them if you gift it , gamble it , drink it or burry it.

its yours and non of their damned buisness

I’m pretty sure the above is NOT true. Otherwise everyone would divest themselves of capital (lend/give within the family etc.) to make sure they fall below the threshold. I think you may well be questioned as to where the money has gone, and I’m not sure “I gave it to my mum” will be viewed as a satisfactory answer. It could be seen as a ruse to avoid the deductions (although I’m not suggesting for a moment that IS your motive), as presumably you’ll stand to inherit the money back again at some point, anyway? So it looks like asset-stripping of money that will eventually come back to you, which I’m pretty sure is not allowed. I don’t think blowing it on a luxury holiday would be either, for that matter. You may be required to account for what you spent it on, and that it was “reasonable”. Not sure large gifts to relatives are. Tina

[quote=“mickthetrick”]

im sure you wont have to explain to them that you have spent some money. its your money after all. got nothing to do with them if you gift it , gamble it , drink it or burry it.

its yours and non of their damned buisness

[/quote] I hope youre right and i won’t be penalised. They are a set of nosey bleeders though. I went below 6k last year when i paid for a holiday and they wanted to see the reciept.

I think you need expert advice on this: there might be ‘deprivation of capital’ issues. I think (but am not sure) that you are allowed to spend capital to reduce your own debt and to buy goods and services that are reasonable for you. I do not know whether this would cover such a gift. Alison

I’m not doing it to reduce my h/b deduction. If i was i’d have done it a few years ago. I have the money spare and the house will eventually be mine anyway.

I wasn’t suggesting you were doing it for that, and I did try to stress that it my answer (sorry if you thought I was being sarcastic - I wasn’t). However I’m not convinced it will be accepted as a “legitimate” personal expense, as per Alison’s answer.

Otherwise everyone would be at it - it would be a really easy way to get round the reductions, and risk free, because you get it back with your inheritance anyway. Not allowed, I’m thinking.

Tina

[quote=“Anitra”]

I wasn’t suggesting you were doing it for that, and I did try to stress that it my answer (sorry if you thought I was being sarcastic - I wasn’t). However I’m not convinced it will be accepted as a “legitimate” personal expense, as per Alison’s answer.

Otherwise everyone would be at it - it would be a really easy way to get round the reductions, and risk free, because you get it back with your inheritance anyway. Not allowed, I’m thinking.

Tina

[/quote] Yes i think you’re right. That’s why i asked for some advice. I’ll just have to lend her it then.

Thanks :slight_smile:

I’m not sure lending will be any better, because it’s still not a necessary expense, for YOUR benefit. It would have the same effect as outright giving - i.e. you’d reduce your capital, in the expectation of getting it back someday anyway.

Tina

Sorry, i meant i’d lend her it without them being informed. Surely that’s ok?

It would be seen as taking advantage of the benefit system and would be looked into. If you lend it to your mum it will still be taken that you have this money, if you give it away again it will be included as if you still have this capital. My wife works in housing benefits so I have this on good authority. If the money is spent on things for yourself, they may well ask to see proof ie receipts etc but this is just looking after the public purse. Unfortunately you are in a catch 52 situation.

Regards

Mark

[quote=“Mdicker5”]

It would be seen as taking advantage of the benefit system and would be looked into. If you lend it to your mum it will still be taken that you have this money, if you give it away again it will be included as if you still have this capital. My wife works in housing benefits so I have this on good authority. If the money is spent on things for yourself, they may well ask to see proof ie receipts etc but this is just looking after the public purse. Unfortunately you are in a catch 52 situation.

Regards

Mark

[/quote] Can i not lend her the money with the deduction still being made?

Hi Anon, they start making reductions on your housing benefit if you have over £6,000 and stop housing benefit altogether if you are over £16,000 (at working age).

When I sold a flat I was told I could use my capital to buy things that I needed for my new flat (in sheltered accomodation) or things that I needed for disability… hence I bought mobility scooter, recliner chair, etc etc… new carpet, TV, other funiture, moving expenses and a carer to help me move.

I was told to keep all receipts and produce them when I made housing ben application… which I did.

You cannot give capital away or blow it on a luxury holiday or anything like that.

Be careful.

Someone wrote that it’s not their business. Well of course it IS their business. Why should they pay housing benefit if you have savings??? Any rich so-and-so could claim and have a fortune in the bank.

Not saying you’re rich anon, you’re not… but of course there has to be restrictions.

Pat x

PS… if you lend her the money they will probably make the deduction. But if you are repaying a debt you might be ok…

Well Pat I was given very different advice from CAB when I sold a flat… and housing benefit did want the receipts showing how I had spent the money… although whether anyone actually looked at them I don’t know… but I was given the same advice by someone on the Benefits and Work forum.

So really it’s hard to know and very hard to find anything on the internet about it.

Anyway Anon… if you get DLA there is also a disability premium on housing benefit… so even with savings over £6,000 you may get full housing benefit. Here’s a link that sort of explains it:

http://www.nidirect.gov.uk/change-of-circumstances-disablement-housing-benefit

Anon you might be better talking to CAB or phone housing benefit and ask them (esp about the disability premium).

Pat x

It’s too obvious a loophole for there not to be ANY restriction on it. I don’t believe you can just give your money away “because it’s yours”, and then plead poverty. I’m not sure it even matters very much if it’s a relative. If I decided to give my “excess” capital to the cats’ home, and then claim housing benefit, would that be fine? I don’t think so. It’s not a necessary or justified personal expense.

Similarly, if I decided to tie my money up for years - ploughing it into a ten year bond, or some such (the equivalent of loaning it to someone), could I then claim the money was no longer mine, and get means tested benefits? Obviously not. Believe me, if it was that simple, I’d be first in the queue! No such thing as a free lunch.

Tina

I regret to say that it is a problem as deprevation of capital could be a problem.

Unless you have proof that you are repaying a debt it could be deemed a gift for hb reasons.

Be upfront with them and dont request an increase in benefit.

Neil

Just to wade in on this debate.

What you do with your own money is of course your own affair and nobody’ s business but your own UNTIL you claim a means tested benefit.

If you have informed HB that you have X capitol and later say it is X minus however much you gave away. The council will want to know that you have not just given the money away in order to increase your benefit claim. In that respect it IS their business and they have every right to ask. There are things you can spend the money on legitimately to reduce your capitol but giving it away is not one of them.

What would happen to the claim is that you would be deemed to still have the money. It is a factor in all means tested benefits and also debt resolution like bankruptcy.

Pat (Spud) had an unusual experience because the council did not ask where her money had gone but it is not the norm. Generally they need receipts and explanations.

Jane

I’m sorry to disagree Pat but if you apply for a means tested benefit your finances ARE the council’s business. Do what you want with your own money – rip it up and burn it if you like but not when you want a benefit that is based on your circumstances.

The rules for HB (and all means tested benefits) are very clear. If you suddenly spend £7K you can expect some questions. You were not scrutinized but it would have been perfectly reasonable if you were. The things you spent your money on would have been considered legitimate but giving £2000 to your Mum would not.

Just to be clear I am not suggesting that the OP is doing anything wrong. It is laudable to help out Mum just that the rules for claiming benefit are clear and set in stone – giving money away is considered dissolution of capital and the council are within their rights to consider the claim as though the money was still in the claimants bank

I absolutely agree with Jane (Wendels).

I was just talking about it to the scheme manager here in the sheltered housing I live in. She says they always advise new residents to keep all receipts of money they spend when moving into a new flat to show to HB and other means tested benefits… otherwise it might be considered as dissolution of capital.

When I moved in I had already had that same advice from CAB.

And rightly so!

Someone could easily ‘give away’ a chunk of their savings to get below the ‘income ceiling’ to claim benefits… which of course would be an abuse of the system.

Not saying that Anon is doing that… but that is the rule which is why I advised Anon to be careful in the first place.