Business Arrangement and ESA

Client has a 4 bed house and owns it outright without mortgage, all rooms en-suite.  Mum running a business in the house – guest house – although Mum is not living there. CL takes no share of the profits of the business

Client shares kitchen and dining facilities with guests but not bathroom. They will use the kitchen but have separate bathrooms as the rooms are – self-contained in the house.  He has he been living in the property for 2 years. Out of the 2 years he has been living there all alone for 12 months and his Mum has been running the business in the property for another 12 months

CL is on IB-ESA SG, Severe Disability Premium, Council Tax Support and PIP.

The guests don’t stay in the house for more than a night or a few days at a time and sometimes no days at all for weeks. This arrangement has been going on for a year now.

CL wanted to know if this will affect his IB-ESA SG.

CL also wanted to know if he has to inform the DWP even though he is not making any money from the arrangement with his mother.

Current circumstances/change of circumstances what impact will this have on his benefit

I will be grateful for any input

I noticed that I have not received any reply to my post. I realise that this is a somewhat unusual enquiry, but I will be most grateful for any input/contribution.  At this point, I will take any comment, no matter how insignificant.  Thanks everyone.

Okay I’ll have a go (but make no promises as to whether I’m right or not)!

So I’d say the SDP is secure as the people that are going through are not normally resident with him and therefore he still counts as living alone. PIP should also be fine as all of this is irrelevant to PIP I’d have said.

With the ESA my gut feeling is that none of the people could be classed as partners (and anyway aren’t there long enough for a sane application of living together as a couple) so the only remaining issue would be the business. Presumably mum has all the relevant paperwork to show that it’s her business and her business only (i.e. HMRC registrations, companies house entry, the details for whatever system she uses to handle bookings are in her name, etc etc) so I can’t see why it would impact on his ESA. My only slight worry would be what is the basis of the award of SG? If it’s for mental health along the lines of not being able to cope with change, social engagement, etc then at review it might become a bit sticky. If it’s physical health (or a different mental health ground) then obviously there’s no worry there either.

I’m going to slightly cop out on the CTR and say that as I think the ESA is unaffected then that CTR won’t be to due to passporting rules around income related benefits and CTR!

Whether or not he should the tell the DWP? I usually go down the road with my clients of saying that it’s normally better to disclose something even if you think it won’t have an impact and/or doesn’t need to be disclosed but that it’s up to them as to whether they do so or not (obviously in some situations they have to disclose things but I don’t think this is one of them?).

Also not promising this is useful, but just in case there’s a concern re ownership of an asset used in someone else’s business, then ESA reg 2 defines as follows:

“dwelling” means any residential accommodation, whether or not consisting of the whole or part of a building and whether or not comprising separate and self-contained premises;

“dwelling occupied as the home” means the dwelling together with any garage, garden and outbuildings,  normally occupied by the claimant as the claimant’s home including any premises not so occupied which it is impracticable or unreasonable to sell separately, in particular, in Scotland, any croft land on which the dwelling is situated;

I don’t suppose it could be very practicable to sell off the ‘guest house’ part of the premises?

Might want to take a step ahead and be open and honest about the business accounts. DWP/HMRC might find it a touch surprising that his property is being used for business without any gain for himself.

I’m not sure about the CTR regs when (part of) the property is being used for business. I would expect he would not be entitled to full CTR anymore (that’s just my speculation from a policy perspective)

Jon (CHDCA) - 05 December 2019 03:24 PM

I don’t suppose it could be very practicable to sell off the ‘guest house’ part of the premises?

It would be entirely plausible for him to sell to his mother.

Thank you so much, that was very helpful indeed – CHAC and Jon, for both replies.  I will advise my client accordingly and he can decide what his next step will be.