Client applying for PC mentioned she had a very large and valuable stamp collection built up over many years. She did not have a valuation for it but asked if it would impact on her claim.
We have put in on the application but not sure how it would be treated,
Any thoughts?

It should count as a personal possession and thus disregarded.

Paul

Your reply makes me curious. I can't see it in the same category as, say, a TV or washing machine or car.

Yes, it can be a hobby but can it not also be a form of investment? To take a different example, if someone had a collection of classic cars they might regard it as a hobby but the collection could grow in value & conme to be worth £000,000s. Where do you draw the line?

I would be interested if you could elaborate a little please.

The Sweet and Maxwell vol II commentary on this disregard in para 10 of Sch 10 of the Income Support Regs, which ought to be the same anyway, talks about "investments like paintings, stamps and furniture (apparently disregarded)." This implies there's no case law on the subject.

I suppose the point is that if it was not acquired as an investment, but built up by the claimant as a hobby, or inherited (in which case it might need to be valued for probate purpose, as my father's collection was) it might be different, but if there's no case law....

Yes, that was my reference. I had always regarded paintings as personal possessions so I considered stamps along the same lines but I checked the commentary for further guidance.

In a joined up way it may be worth considering what the tax man has to say about personal possessions.

.....Personal possessions that may be liable to Capital Gains Tax when you sell or dispose of them include:

jewellery
paintings
antiques
coins and stamps

These are examples of assets that you can physically touch and move, ie they're tangible and moveable - and special rules apply.

The special rules mean that you don't pay Capital Gains Tax on:

Your private car ,Personal possessions that are individually worth £6,000 or less at the time you sell or otherwise dispose of them - this covers many household articles such as fridges and sofas. But there are slightly different rules for assets that form part of a set - see the section on 'sets of possessions' below. Most personal possessions that are 'wasting assets' - these are assets with a limited lifespan that often lose their value over time......

Whilst they're in your possession they're personal possessions and on relinquishment they're capital.

SPC Regs, Sch V, Part I, para 8
Capital disregarded for the purpose of calculating income
8. All personal possessions.

I can't see how you could argue that a stamp collection was not a personal possession if were actually in your possession, for private use.

If the stamps were part of a collection that was open for viewing and someone else had control of them then they would cease to be personal possessions and simply possessions that could be sold and have a capital value.

on the other hand...

a bit of a difference between, say, an antique dining table that is in use every day as a dining table, and a stamp collection that has no function other than as a stamp collection.

and it's surely a matter of scale/value as well.

say for the sake of argument that stamp collection included a Penny Black. is that disregarded?

or say on your wall you had a Lucien Freud?

i could see someone arguing that the value of that asset should be realised...

and would it be different if the aforesaid artwork was in fact of you or your children? would you then be forced to sell it?


the whole debate could become a can of worms...

Fri 13-Nov-09 11:41 AM by nevip

I don’t think it is helpful or desirable to start drawing distinctions between what might be in day-to-day use or not or between functional/non-functional or between taxable/non-taxable. In my view this puts an unnecessary gloss on the regulations.

In R(H) 7/08 commissioner Jacobs said:

“53. My conclusion is that “personal possessions” mean any physical assets other than land and assets used for business purposes. This is broadly the same conclusion as that reached by the deputy Commissioner in CPC/370/2006. It avoids uncertainty of scope and difficulties of application. It is consistent with the legislative history of the disregard and the more humane approach to resource-related benefits that has increasingly been shown over the period of the welfare state. It recognises the increased emphasis that has been given over recent decades to ways of assisting claimants off welfare by not requiring particular categories of possession to be disposed of for what may be a relatively short period on benefit.
54. This interpretation does not render the word “personal” redundant. It still has a function in distinguishing between things held by the claimant for personal and business use.
55. There is, of course, the risk of abuse in my conclusion. However, the legislation contains the safeguard of notional capital. If personal possessions are disposed of in order to secure or increase entitlement to housing benefit, their value will be taken into account as notional capital. And if something is converted into a personal possession for that purpose, it will be caught by the qualification to the disregard in paragraph 11”.

I, therefore, think that this avoids the can of worms that Claire fears whereby cases can get caught up in elaborate, over complex debates about just what is a personal possession. You know the ones the “how many angels can dance on the head of a pin” type

Fri 13-Nov-09 12:23 PM by John Birks

The regs are quite clear I thought on personal possessions.

someone may wish to open the can by saying that your table is too expensive to be a table and therefore its an asset. If thats the DM then caselaw is against them.

Jewellery is specifically referred to (I think, cba reading it up) as I remember. Whether wearing it or not its jewellery.

What if you had the star of India in your top drawer?

Aside from that making you the Queen its still jewellery and it's still your possession. The value is disregarded and that's where consideration ends I'd have thought?

Cars are ignored, the regs don't say reasoanble cars are ignored or state that there is a prescribed limit on them. say any car under £20k is ignored.

I once had a customer who had a nice new SL55 and was on IS.

His circumstances had rapidly declined but the lovely SL was his personal possession to sell whenever times got 'too' hard.

When he came to sell it the capital raised was just that, capital. Which wasn't ignored.

The state has powers to seize assets when required. The Social Security system doesn't have that power as parliament would have given them the power if it so wished.

So Chippendale or chip board, Bugatti or banger if it's yours it's ignored.

I think...........

Very interesting discussion! It probably won't alter anything, but I can't help thinking the comparison between the way different "possessions" are treated is - or so it seems to me - a little unfair.

If I put money into shares or ISAs over several years and then need to claim benefits, they are taken into account as capital. But if I spend the money on buying stamps (or jewellery or whatever) they are treated as a personal possession and ignored. Why should there be such a difference?

Because many people would get pleasure from a stamp collection or jewellery which they would not get from money in a ISA.

Also if they started going down this road of treating personal possessions as capital it would be very hard to enforce and it would be invasive to people's privacy.

For those who may not realise it, this is what use to happen in the early days of National Assistance, ......or was it supplementary Benefit ?

If you made a claim for financial assistance, they would send an officer around to discuss it with you - he would cast his eye around making suggestions as to what personal possessions you could sell before you asked the State for help...

The ones I have spoken to said it made their parents feel like beggers asking for charity, and as a consequence it was instilled into them never to ask for anything. This is why, particularly in rural areas, we still encounter this strong reluctance to apply for benefits such as Pension credits and AA

Well who would have thought one little musing would have provoked so much debate!
If they do decide to take the value into a/c it will be worth challenging the decision.
If anything comes of it I will post you an update.
Thanks for all your considered responses.

One point that hasn't been mentioned, and is not relevant to this case because of the 'many years' point, is deprivation.

I'll reference HB regs but there are similar provisions in IS / JSA / TC etc.

There is a broad definition of personal possessions in RH 7/08

"Having regard to the context of the words and the history of the legislation, "personal possessions" mean any physical assets other than land and assets used for business purposes (broadly the same conclusion as was reached in CPC/370/2006) (paragraphs 53 to 55)."

There's a useful paragraph in the same decision which says

"26. Later the claimant's representative drew a distinction between a capital asset and a personal possession. That may have been a convenient shorthand way of referring to the disregard provisions, but it is inaccurate and creates a false dichotomy. A personal possession is one of the disregards under Schedule 5. That Schedule only applies to capital. A personal possession must be capital in order to be subject to the disregard. If it were not, the disregard would not apply. Personal possessions are a subcategory of capital, not a separate category from capital."


In Sch. 5 of the HB regs the disregard is laid down as

"11. Any personal possessions except those which have been acquired by the claimant with the intention of reducing his capital in order to secure entitlement to housing benefit or to increase the amount of that benefit."

Even where the item itself would normally be disrgarded, if the claimant buys a Picasso with an SOP to get HB (or a car, or a Biro) then it's deprivation and the value still counts (less of course 10%).