The new £151,000 capital rule for HB/CTB

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    Has anyone spotted in Hansard or any other official source any reference to the cost of abolishing the capital limit for HB/CTB for the over 60s?
    The non-alignment of the capital rules for Pension Credit and HB/CTB from October 2003 results in some strange anomalies as detailed below:

    Any leaflets, claim forms, websites and training materials, which state that
    “Savings over £16,000 usually mean you will not be able to get Council Tax Benefit”
    will be potentially misleading after October 2003, with the introduction of Pension Credit

    Q. I heard that ministers had declined to abolish the capital rule for HB/CTB when they abolished it for Pension Credit. How come you are suggesting the £16,000 capital rule no longer applies to HB/CTB?

    A. There will be numbers of people claiming the guarantee element of Pension Credit who will have >£16,000 savings with the result that they will be automatically passported to 100% HB/CTB

    Q. How can this be?

    A. A worked example is probably the best way to show how this works.

    Amy and Bert are a couple in their 80s. They each receive £80 per week retirement pension, giving them a total income of £160 per week. They sell their house and put £71,000 in the bank. They move into Sheltered Housing, with a rent of £75 a week. They have no entitlement to HB/CTB or Pension Credit.
    A benefit adviser sees them about their supporting people charge. She advises them to claim Attendance Allowance and to establish their underlying entitlement to Carers Allowance. The effect of this is that they become entitled to £1.90 Guarantee Credit as their appropriate amount rises from £155.80 to £291.90. They then automatically become entitled to 100% HB/CTB and so now have no rent or Council Tax to pay (and are exempt from the supporting people charge).

    Q So what is the maximum amount of Capital someone could hold before being ineligible for HB/CTB?

    A. If Amy and Bert had no income (for example they had left the country at the start of their working life and had now returned after a lifetime globetrotting) then they would still be eligible for the Guarantee Credit, and therefore 100% HB/CTB with £151,500 savings.

    Q. So in effect the HB/CTB capital rule will vary according to age, level of disability and caring status?

    A. Yes. Many people like Amy and Bert who move into sheltered housing who are “income poor /capital rich” will find they are eligible for HB/CTB despite having relatively large capital assets. However negligible increases in income or savings will extinguish entitlement completely. If Amy and Bert’s income in Example 1 increased by £2 a week they would lose all of their HB/CTB (typically in excess of £75 a week). The only way to remove these anomalies is to abolish the capital rule for HB/CTB for people aged 60+

    Acknowledgements to Lancashire County Council and Manchester City Council Welfare Rights Services for briefings provided on this issue


    Not sure I understand the question. The HB £16,000 maximum rule continues (for cost reasons) BUT a pensioner can get full HB if they qualify for the PC guarantee. As you say, this creates anomalies particularly where the pensioner only has the state pension based on a partners contributions and capital of about £20,000.

    This really is the poverty trap at its sharpest. Just a few pence in income or assumed income can make the difference between full rent / Council Tax / Supporting People exemption and …. nothing at all. In London, that may mean over £250 per week difference.

    Expect pensioners in this caegory to start spending; one way to get the economy going!


    My question is:
    Has anyone seen an official estimate of how much it would cost to align the PC and HB/CTB capital rules?


    No and I am sure no official figures have been issued. DWP have said “a lot”.


    Sorry, I’ll try that again….

    Would it really cost that much extra, given that there is in effect going to be no HB capital limit for pensioners getting Guarantee Credit anyway, to make the treatment of capital the same for all pensioners?


    Fortunes. With rents and (in particular)Council Tax moving up so much in the South of England, you would entitle a substantial number of pensioners. I would point out that the Government has recently admitted that it cannot afford the Pension Credit improvements on a long term basis.

    I mean, does anyone buy the position that raising the working age to 70 has ben done on equality grounds? That it has nothing to do with the virtual collape of pension schemes and the closure of vast numbers of company schemes? The collapse of Equitable Life, the “blue chip” of insurance companies will not help encourage people to save either. The State ends up picking up the tab for all of this via means-testing.

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