Terms & Conditions

[John Boxall]

I have a claim from a lady, over 60, who pays rent 6 monthly. Not a PCGC or PCAIF case.

Her capital is close to the £16,000 limit & following a recent intervention she was found to have capital exceeding the £16k limit and entitlement was ended.

Her arguement is that as she pays a rent of just over £5000/year, her ‘excess’ capital is the money she has to put aside to pay her rent.

I have read the regs, & CH/1656/2005 however cant find any way of disregarding either her Housing Benefit or the money that she has to put aside to pay the rent. Is there any way that I can?

John 😕

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

Wilkins Micawber, Ch12 David Copperfield

[Anonymous]

I can’t think of any way round this, John.
The problem is, as many have said before, she is arguing from the point of view of “what is fair and just” – whereas we have to follow the Regs – whether they are fair and just or otherwise. 8)

[Anonymous]

Why can’t she pay her rent in advance thereby reducing her capital?

Or pay 1 years in and do the same?

[petedavies]

Like Jon, I cannot really think of a way around it

Couple of thoughts which may help in the future but will not be of any use regarding the current situation:

1) Can you not pay HB 6-monthly? Different I know, but it will prevent HB sitting around in her bank account and should prevent the same thing happening again as long as the payments in & out are synchronized.

2) Would her LL accept payments on anything other than a six-month basis?

[Kevin D]

[quote:5f22c3d652]Why can’t she pay her rent in advance thereby reducing her capital?

Or pay 1 years in and do the same?[/quote:5f22c3d652]

Er, if the purpose of this is to obtain HB/CTB, isn’t there a slight problem of notional capital?

Regards

[Anonymous]

Yes Kevin, and there’s also the distinct possibility of derivation of capital.

As I’m sure you are aware the only reason this lady has capital exceeding £16k is that she’s having to let her HB payments mount up before she pays her rent twice yearly.

Another idea? Persuade her LL to accept monthly rent payments

[Darren Broughton]

If your LA pays HB in arrears then couldn’t you argue that HB (Pension Age) Sch 6 para 21(a) comes into play – i.e. disregard the capital as it is arrears of benefit? I know it’s a bit tenuous but….

[gerryg]

I am sure that one of m’learned friends will be able to think of the case but isn’t there a CD that says you should not count as capital any income for the period to which it relates. You should only count anything that they haven’t spent at the end of the period to which it relates.

If the income payments (i.e. the HB) are in respect of rent for the next six months then you should ignore it until she uses it to pay the rent.

[Anonymous]

Gerry, are you think of https://hbinfo.org/comdecs/ch_1561_2005.doc ?

[Stalbansbenefits]

[quote:5c4f826f45]If the income payments (i.e. the HB) are in respect of rent for the next six months then you should ignore it until she uses it to pay the rent.
[/quote:5c4f826f45]

Surely that would only work if you paid HB six months in advance? If, like everyone else, you pay it 4 weekly / monthly in arrears, then if she hasn’t spent it at the end of the period it covers, it becomes capital.

[gerryg]

No Martin, it was this one…

http://www.osscsc.gov.uk/aspx/view.aspx?id=505

Para 23 explains it better than I managed

[Bobkirkpatrick]

On the other hand, you could look at CIS/515/2006, and in particular paras 34 – 39:

“34 I must also consider if the approach of the schedule, or that of the submission, is good law. The secretary of state’s representative recited regulations 29 and 32 of the Income Support (General) Regulations 1987 and paragraph 7(1) of Schedule 10 to those Regulations as authority for the approach to be taken to the payments in of benefit. The relevance of Regulation 29 is limited to the signposting in regulation 29(5). Regulation 31 states, so far as relevant, when benefits are treated as paid. Regulation 32 adds to the rules about the weekly amount of income. There is nothing in those regulations dealing with the time at which past income becomes capital. Schedule 10 lists exclusions from the general rule in regulation 46 that all capital is to be included. Neither define capital. Nor would I expect them to. Paragraph 7(1) provides that arrears or concessionary payments of benefit are excluded from capital for 52 weeks from receipt. In other words, lump sum payments of benefit fall to be treated as capital if the claimant still has them 52 weeks later. There is no other express guidance in the Regulations relevant to the approach taken by the secretary of state’s representative to the conversion of unspent benefit from income to capital. The regulations cited do not support the proposition in the submission to the tribunal.

35 How is saved benefit to be identified as capital? The standard way of approaching a similar question in a business or tax context is by looking, as all proper commercial accounts do, at the “balance sheet” at the end of each year or other period. It is the difference between one year and the next that is to be treated as capital. (That is, indirectly, the approach of paragraph 7(1)). In this case, it could be approached by asking what the actual capital held is at the end, say, of each calendar year or tax year. If this discloses totals that are clearly above the capital limits, then that would be clear evidence of excess capital. If not, then a closer look may be needed.

36 Test it this way. A claimant has her pension or benefit paid into a building society account monthly, as the government now encourages. She is in credit in her account by a small amount, but one rather larger than her monthly benefit income. She withdraws or transfers out various sums for her living expenditure over the course of the month. She is good at keeping her expenditure broadly within her income. So at the end of the average month she has about the same sum in credit at the end of the month as at the beginning of the month. How much capital does she have: the day to day floating balance, the sums left over at the end of each month, or the amount in her account when it is checked, say, at the end of each tax year?

37 The answer is clearly not the day to day floating balance. Her benefit cannot become capital on the day it is paid into the account, unless it is clear that the account is one for long term savings (such as an ISA account). That is not true of most of the accounts relevant to this case. In the ordinary way, the money she receives and then spends within the month cannot be regarded as capital.

38 I also reject the proposition that if she holds over some benefit from one month to another (perhaps saving for a holiday two months ahead) that those short term savings left over at the end of each month become capital. A longer view must be taken than that. A good practical rule may be the 52 weeks allowed in paragraph 7(1). Or the matter may be looked at by identifying total capital from time to time as suggested above, with a view to identifying increases in sums held from one date to another for which there is no clear explanation. So if the sums are paid into accounts such that they cannot be withdrawn without a penalty in the short term (such as fixed term or tax privileged savings) then they may become capital on payment in. If the sums accumulate in an account over a period, but for a specific reason (such as saving over a longer period to afford an overseas trip to see relatives) and the expenditure is made for that purpose, then that would not be capital. But if sums accumulate from one year to the next, and the claimant has no specific plans to spend them in the short term, then they will at some point become capital. When precisely that point occurs is a question of fact.”

While this was an Income Support case, the principles are the same for HB. As you are looking for a way to help this claimant, then applying the above arguments is your answer.

[Author]

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