Diminishing capital

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  • #39819
    jnapier
    Participant

    Hello,
    I have a case where a pensioner has been found to have over £16k in the bank, going back to January 10. The capital increases to over £24k over 18 months, due to his state benefits accruing in the account. His income is state pension, war disability pension and attendance allowance. The claimant is in sheltered accommodation which costs about £200 per week.

    Our appeals officer has advised to use the diminishing capital rule, taking into account the overpayment we are creating, as this is equal to what he would have been paying in rent without housing benefit.

    Should we reassess monthly, taking into account the rent he would have paid? And should we be including the state benefits as capital, when they are already counted as income (althoguh war pension & AA are disregarded)?

    Any assistance would be greatly appreciated, as I have no idea where to start!
    Thanks,
    Joanne

    #113528
    Anonymous
    Guest

    First, you are right to regard saved money as capital, even if it would originally have been a disregarded form of income. Once the period for which it was income has passed, and if there is any of it left, it becomes caoital in the form of savings.

    Presumably the capital has been increasing steadily since it passed the £16k mark in January 2010. I think the easiest approach would be to deal with it in 13-week chunks to match the diminution cycle.

    I would start from the point at which the capital first passed £16k (this will probably be four weeks after the date of the payment that tipped the balance). That will give you a starting balance and the claimant is entitled to no HB for the next 13 weeks.

    From week 14 onwards, take the actual capital that the claimant had in the bank in week 14 and deduct from that the o/p for weeks 1 to 13. Then calculate the o/p for weeks 14 to 26.

    From week 27 onwards, take the actual caopital that was in the bank in week 27 and deduct the cumulative total o/p for weeks 1 to 26 from that sum, then calculate the o/p for weeks 27 to 39.

    Repeat until you reach the date when HB was stopped.

    In some cases, it might be appropriate to make more frequent adjustments to actual capital between the diminution points, but in this case my bet would be the capital has increased steadily so snapshots thirteen weeks apart will suffice.

    #113531
    Anonymous
    Guest

    Agree with the 13-week installment approach, although any significant changes to the balance within those periods should also be taken into account (I’m thinking expenditure but this would apply to one-off increases as well).

    However – I thought state benefits were all paid in arrears nowadays? If that’s the case, they would become capital from around the date of the payment rather than four weeks later…

    #113599
    jnapier
    Participant

    Thanks for the replies, I’ve taken your advice and reassessed every 13 weeks, which has led to a large overpayment but claimant still has ongoing entitlement, so that’s a reasonably happy outcome!

    Thanks again
    Joanne

    #113605
    Amanda JB
    Participant

    Joanne, not sure what you mean that she has ongoing entitlement, why? has she now spent the capital?

    The calcs you are doing is only to calculate the O/P, if she still has actual cpaital of over £16K she would have no ongoing entitlement

    #113613
    Kevin D
    Participant

    I agree with Amanda. Assuming this is about “diminution” under HBR 103, only the overpayment period matters. Thereafter, ACTUAL capital still held must be taken into account.

    #113879
    jnapier
    Participant

    Maybe I didn’t explain that very well- the rent was exceptionally high (over £200 per week) so the overpayment was over £10500, which brought his capital below £16k. He also spent a bit of money on decorating his home (I do believe this was genuine & not an attempt to dispose of the capital!)

    He is back on full benefit again as the bulk of his income is disregarded ( AA & war pension), so even with the capital he is still well below applicable amount.

    Thanks again for the assistance with this one, all replies are much appreciated 🙂

    #113881
    Anonymous
    Guest

    The concern here is that the reduced capital figure is ONLY used to calculate the overpayment – once you’ve done with the overpayment, you revert to the actual capital to calculate ongoing entitlement. So regardless of his income, the claimant will only be entitled to HB on an ongoing basis if his actual capital has dropped below £16K. You said in your first post that the capital had increased to over £24K so I don’t see how it could have dropped down again so quickly… £8K+ for decorating is a lot of paint and wallpaper.

    #113882
    jnapier
    Participant

    Yes, but his actual capital has reduced by the £10500 overpayment, plus the £1500 or so used to redecorate.

    #113883
    Anonymous
    Guest

    Oh right, he’s paid it back then?

    #113884
    jnapier
    Participant

    Yes- well its currently suspended while we wait for the updated bank statements showing this but his daughter, who has POA, was keen to get the invoice asap so it could be paid back. Needless to say the recovery team are delighted!

    #113885
    Anonymous
    Guest

    Wait a minute, how did he manage to repay the overpayment before you had calculated it? I don’t see how the claimant could still have ongoing entitlement following the O/P as per your post of 24/11. There must be a period between the O/P period and the date the invoice was paid where there is nil entitlement due to capital, and a new claim will most likely be required. Sorry, I can see you were pleased with the outcome, but this doesn’t quite make sense to me…

    #113888
    jnapier
    Participant

    Sorry, I’m obviously not explaining this very well – the claim is still suspended (from the date it was originally paid up to) pending an up to date bank statement. And would we really need a new claim form when this is a predictable change within 13 weeks?

    #113890
    Anonymous
    Guest

    As the award is still extant at the moment, you might get away with a closed period supersession between the date when the savings went past £16,000 and the date when the o/p was repaid. Otherwise, a new claim is required within three months of the date when the overpayment was repaid.

    #113893
    Anonymous
    Guest

    OK I think I get it now; you have calculated the overpayment up to the paid-to-date, but you have not yet superseded the following award to nil based on actual capital. So there is an existing award, which has been suspended, and you are waiting for proof that capital has now dropped below £16K before applying our old friend the closed period supersession for the period where capital did exceed £16K. Its not how I would have done it, but doing it this way would remove the requirement for a new claim.

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