× Search rightsnet
Search options

Where

Benefit

Jurisdiction

Jurisdiction

From

to

Forum Home  →  Discussion  →  Universal credit administration  →  Thread

Savings and monthly payments of Universal Credit

Ruth Knox
forum member

Vauxhall Law Centre

Send message

Total Posts: 551

Joined: 27 January 2014

We have a client who has savings of just around £6000.  He is worried that when he receives monthly payments of benefit (he also has disability payments going in) they will take him over the savings limit.  If this is the case, he would be constantly having tariff income taken off and going back on again.  Looking at CPAG it says that benefits payments are credited to the period they cover - but if they are paid in arrears, does this mean that the day they go in, they count as savings?  We can suggest standing orders going out the day before I suppose, but I wonder if my interpretation that a payment would count as savings from Day 1 is correct?  Ruth

SocSec
forum member

welfare benefits/citizens advice//ashfield

Send message

Total Posts: 277

Joined: 11 July 2013

Income support regs sch 10 para 7 covers this re arrears of benefit paid so maybe its fair to assume UC has a simalar provision !?

Paul_Treloar_CPAG
forum member

Advice and Rights Team, Child Poverty Action Group

Send message

Total Posts: 550

Joined: 30 June 2014

Very good question without an easy answer - when does benefit paid as income become capital?

If you have access to volume II of Sweet and Maxwell, you need to see the commentary first to reg.40 IS regs at p.442 under heading “Benefit income”. In short, various judgements have concluded that at some point accumulated income becomes capital - the sensible approach would be that if any amount of income is still possessed at the end of the period to which it is properly attributed to then it becomes capital subject to any deductions for relevant liabilities. So a month’s payment of DLA that is spent within a month could never become capital - it remains to be treated as income (and of course disregarded as income for IS for example).

However, the commentary also signposts you to the commentary at p.389 following reg.23 IS regs, and the case CIS/515/2006 where the Commissioner takes a rather different approach - he concluded that a longer view had to be taken, possibly by looking over a year in line with the position of benefit arrears payments being disregarded as capital for 52 weeks. There’s lots more to this decision as well about various issues related to this approach.

However, in a nutshell, it would appear to remain the case under Universal Credit that payments of benefit are treated as income, and at the very least, provided your client spends the respective sums paid within the same period within which they are intended to cover, then they should not be treated as capital and thus he shouldn’t be affected by tariff income.

Indeed, reg 46(3) of the UC regs specifies that any sums paid regularly and by reference to a period are to be treated as income and the commentary in S&M Vol.5 notes this appears to be an attempt to draw more of a line between capital and income.

SocSec
forum member

welfare benefits/citizens advice//ashfield

Send message

Total Posts: 277

Joined: 11 July 2013

I note that IS regs sch 10 7 [1] [e] specifically refers to Universal Credit arrears being disregarded for 52 weeks,

And thinking more broadly nothing has changed from the current situation, if IS JSA or ESA payments would take your cliebnt over the capital limit you would have the same problem now as when UC comes in, though the amount of arrears will of course be higher with UC as it is paid monthly.

Gareth Morgan
forum member

CEO, Ferret, Cardiff

Send message

Total Posts: 1995

Joined: 16 June 2010

Paul_Treloar_CPAG - 26 March 2015 02:21 PM

Indeed, reg 46(3) of the UC regs specifies that any sums paid regularly and by reference to a period are to be treated as income and the commentary in S&M Vol.5 notes this appears to be an attempt to draw more of a line between capital and income.

I’m familiar with some issues that can arise in this particular area.  It’s a common problem where people arrange for a regular payment of capital to be made to them.  It can happen with equity release schemes and some kinds of savings products and pension schemes.  The way to avoid this being treated as income is to drawdown irregular amounts at irregular periods.  The best decision on this was Commissioner Hywel’s famous ‘Draco’ case that I still quote from frequently.