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Capital Disregards
I have a client who has just come into an inheritance of some £132,000.00. He receives IS & HB/CTS. He lives in a Council flat and is a secure tenant. He is exercising his Right to Buy the flat and will use the capital sum he has inherited to purchase the property. However, from my reading of the Regulations, Schedule 10, IS Regs, it does not appear that there is any way that he can argue that the capital sum can be disregarded if he uses it to purchase the home he currently occupies as a secure council tenant.
In other words the capital sum will result in his not being entitled to IS & HB/CTS.
Is this correct?
If he uses the capital to purchase his home under the right to buy I have assumed that he would not be caught by the notional capital rules. Any thought on this?
I have a client who has just come into an inheritance of some £132,000.00. He receives IS & HB/CTS. He lives in a Council flat and is a secure tenant. He is exercising his Right to Buy the flat and will use the capital sum he has inherited to purchase the property. However, from my reading of the Regulations, Schedule 10, IS Regs, it does not appear that there is any way that he can argue that the capital sum can be disregarded if he uses it to purchase the home he currently occupies as a secure council tenant.
In other words the capital sum will result in his not being entitled to IS & HB/CTS.
Is this correct?
If he uses the capital to purchase his home under the right to buy I have assumed that he would not be caught by the notional capital rules. Any thought on this?
clearly if he doesn’t buy the flat, he loses all entitlement to all means tested benefits.
if he buys the flat, he would have no more need for HB in any event (certainly in terms of no more rent being paid).
my feeling would be that buying the flat would reduce his entitlement to means tested benefits (the housing benefit)
i seem to recall also that a person is entitled to buy somewhere to live, but can’t currently find the reference to that.
if that is right, the Income support and council tax should not be affected, save for whatever capital he has left after buying the flat.
the other point, of course, is that if buying a flat there will surely be service charges to be taken into account?
Leaseholders also needs to think about LAs policy on charging for repairs and replacements eg roof and windows etc as blocks are updated. You can be hit for massive sums….
http://www.theguardian.com/money/2005/may/14/housingpolicy.society
Yes, I would tend to agree that whilst your client has the cash and is going through the process of the right to buy, they will have nil entitlement on the grounds of excess capital but once they have paid for this, provided they are back under the relevant capital limits, I would be very surprised to see a decision about notional capital being made against them.
Their operative reason for spending the money is clearly to obtain the interest in the property, and correspondingly, also stop any future HB claims from happening, which adds weight to the argument that the operative purpose of making this move wasn’t to secure entitlement to benefit, albeit it’s a different benefit (IS) they would be claiming.
See R(SB) 40/85 -
8. At paragraph 21 of the last mentioned decision the Commissioner expressed the view that the word “deprive” is an ordinary English word
whose meaning is not a question of law. In my judgment it does not change
its meaning by reference to the consequences of deprivation. It is in my
judgment perfectly proper for an adjudication officer or tribunal to conclude
that a person has deprived himself of a resource if as the result of his
own act he ceases to possess that resource whether or not he becomes
possessed of some other resource in its place. He may thus be held to have
deprived himself of a, resource if he gives it away, if he uses it up in living
frugally or prodigally, or to pay for a holiday or in any other manner that
leaves no resource at the end of the day; or if he uses it to purchase a
resource of equal value which will retain its value; or which will rapidly
depreciate or which will fall to be disregarded for purposes of supplementary
benefit.
I would think that the DWP would have to show that the claimant knew that, as a consequence of his action, the value of the new resource (his home) would be disregarded, in order to arrive at a conclusion that he had deprived himself of £x for the purpose of ......
here’s a link to R(SB)40/85 -
Dear All,
Thanks for your responses to my query.