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Thread: Income based ESA Max Saving allowed help?

  1. #1

    Question Income based ESA Max Saving allowed help?

    Hi,

    What's the max capital cash your allowed to hold under Income based ESA for a single person?

    Lets say for example a claimant has a £1million current market value freehold house, a house that is broken, rat infested, damp, leaks the whole lot gone wrong with it but the location made the value of it to be a million. Of course current market value today might crash 99% in a housing price market crash next week so this property asset does not have a constant stable value you know what I mean.

    Or lets say you have depreciating assets like cars that the value of price goes down over time. For example a Mercedes car that cost £90k new 9 years ago is only worth around £2k today.

    Does the DWP only consider cash asset your holding not your other volatile price assets mentioned above? Or is it the timing of purchasing these assets relevant to the timing of opening your benefit claim? What if the claimant purchase assets using finance like a nil deposit down but monthly debt payments to pay?

    Lets say again the claimant saved the cash flow from the ESA benefit that the claimant been getting for years because the claimant has the right to save not spend the whole benefit per week right? If that's the case and because of this the claimant cash asset savings go over the allowed threshold then will the claimant be punished for saving his/her benefit money?

    The government chancellor saying inflation target rate is 2-3% per year. So are claimants allowed to compound & save and go over the allowed threshold yearly at 2-3% rate to compensate the weaker pound sterling currency?

  2. #2
    Senior Member
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    The house you live in and any assets you own like cars etc are not counted. The max savings you can have and still get any ESA is £15,999, but anything between £6,000 and £15,999 causes ESA to be reduced - the more you have the bigger the reduction. There's no going over to compensate for inflation.
    Last edited by noisynoodle; 23-11-20 at 19:00.

  3. #3
    Senior Member nukecad's Avatar
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    If you save up your benefits and don't spend them then they count just the same as any other savings.

    We've seen that happen on this forum where a mother didn't let her her adult child touch his PIP, saving it up 'for a rainy day', and it built up to over £16,000 so his IR ESA got stopped - and he had to pay some ESA back from when the savings had gone over £6K.

    Property you own, apart from your main residence, is treated as capitial and valued by the DWP, same £6k/£16K rules.
    You can argue about the valuation they put on the property - good luck with that one in most cases.

    Personal possessions - that you have before you claim IR benefits - are disregarded, that includes cars you may own.
    But anything more than you need that you buy after you have claimed IR benefits, or very shortly before claiming IR benefits, will be treated as 'Notional Capital' and treated as if you still had the money that you have spent.

    So for example, say that you own two cars before claiming IR benefit and one gets written off later, you couldn't justify buying a replacement and reducing your savings to increase your IR benefits because you still have a working car so don't need another.
    If you did buy another using savings then the DWP can treat it as if you still have those savings.

    Do you have a particular situation in mind?
    (or is this just a general question).
    Last edited by nukecad; 23-11-20 at 21:49.
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  4. #4
    Quote Originally Posted by noisynoodle View Post
    The house you live in and any assets you own like cars etc are not counted. The max savings you can have and still get any ESA is £15,999, but anything between £6,000 and £15,999 causes ESA to be reduced - the more you have the bigger the reduction. There's no going over to compensate for inflation.

    Okay so £15, 999 cash asset capital savings is max allowed for a single person and lets say the claimant has this max amount then how much the income based ESA support Group benefit is reduced by?

  5. #5
    Quote Originally Posted by nukecad View Post
    If you save up your benefits and don't spend them then they count just the same as any other savings.

    We've seen that happen on this forum where a mother didn't let her her adult child touch his PIP, saving it up 'for a rainy day', and it built up to over £16,000 so his IR ESA got stopped - and he had to pay some ESA back from when the savings had gone over £6K.

    Property you own, apart from your main residence, is treated as capitial and valued by the DWP, same £6k/£16K rules.
    You can argue about the valuation they put on the property - good luck with that one in most cases.

    Personal possessions - that you have before you claim IR benefits - are disregarded, that includes cars you may own.
    But anything more than you need that you buy after you have claimed IR benefits, or very shortly before claiming IR benefits, will be treated as 'Notional Capital' and treated as if you still had the money that you have spent.

    So for example, say that you own two cars before claiming IR benefit and one gets written off later, you couldn't justify buying a replacement and reducing your savings to increase your IR benefits because you still have a working car so don't need another.
    If you did buy another using savings then the DWP can treat it as if you still have those savings.

    Do you have a particular situation in mind?
    (or is this just a general question).
    Okay so basically as a claimant you don't have the right to save your benefits income if you already have between 6-16k or over that amount if the claimant wants to claim max ESA payable per week?

    Okay I have another couple of examples:

    Lets say I have £0 nil in my bank account and one day I received a surprised inheritance letter from a uncle I haven't met stating I am entitled to inherit £1million cash. Okay I take my deceased uncle's cash and bought a £million pound house with it straight away but I still have £0 in my bank account. This is done while I am claiming ESA. This £million pound house is my main residence now as I moved out of my mates shed.
    Will DWP see this as over 16k capital that I still have even though I now have £0 in my bank? What if I did this transaction before claiming? Does it have to be declared on the ESA application form?

    Okay 2nd example:

    Lets say I have £15,999 cash savings max in bank but my debts/liabilities mount up to £15,999 from credit cards/loans etc. So my debt to cash equity ratio is 100% meaning my net worth is £0. Will DWP still see this as me having £15,999 cash I have after I show them my debts?

    Lastly your saying I'm only allowed assets that I need, so that £million pound house example I gave above, the DWP wont allow because it has 5 bathrooms, 10 bedrooms which is way more than I need correct? If that's the case am I allowed to buy a 1 bedroom apartment then that cost £100k for example?

    Lastly can the DWP force you to sell/liquidate your assets at whatever market price you get for them if you owe them any money back but have £0 in the bank?

  6. #6
    Senior Member nukecad's Avatar
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    1: Yes that would be OK in that specific case.
    The question would be why didn't you buy a cheaper house and live off the rest, but legally there is not a problem.
    You have to tell the DWP about changes of circumstances, in this hypothetical case at least because you would have a change of address.

    2:No it's only your assets that count, not your debts.
    And you couldn't pay off all your debts at once to clear your savings, you are only allowed to pay off what you have to. eg. The minimum monthly repayment.
    If you pay them off when you don't need to then the DWP can count you as still having the money.

    3: Number of bedrooms has nothing to do with ESA.
    ESA is about if you can work or not.
    If you buy another property only one can be your main residence for benefit purpose, (except in certain special circumstances).

    4:The DWP cannot make you liquidate your assets to live on.
    If you owe them money and are not claiming benefits to recover it from then they could go to court to get a repayment order, just like anyone else owed money can, the court could order you to sell the the large property and get something smaller.

    Again, why are you asking these hypothetical questions?

    If you have a problem then tell us what it is and we can give specific answers rather than beating about the bush with if's and maybes.
    Last edited by nukecad; 23-11-20 at 22:53.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  7. #7
    Okay my understanding is getting better many thanks.

    So whatever asset you buy is classed as a circumstance that must be reported to DWP hence assets are not private? Cheapest average 1 bedroom apartment in UK is around 100k give or take what location. Okay if the claimant moved out of his/her parents house or relatives house into that 1 bed apartment example (new main residence) then that's okay for ESA claim even though the apartment was bought in full cash no debt mortgage?

    Yeah just giving extreme examples/circumstances to see what is right and allowed and what is wrong disallowed understanding the terms and conditions of the ESA claim to know basically what is legally right or wrong instead of remaining ignorant you know what I mean. Hopefully this thread can give value to viewers that can help them with their decisions.

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