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Housing Benefit Guidance Manual: Amendment 16 June 2008

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Chapter BW1 Assessment of capital

Effect of capital on HB/CTB

Capital over £16,000

W1.330 A claimant who has capital over £16,000 after any disregards have been applied is not entitled to HB or CTB.

HB Reg 43 & 44; CTB Regs 33 & 34

Capital of £6,000 or less

W1.331 If a working age claimant has capital of £6,000 or less, the

W1.332-W1.349

Capital between £6,000 and £16,000

Tariff income

W1.350 If a working age claimant aged less than 60 has capital of over £6,000 but not more than £16,000 after any disregards have been applied, treat them as having an income from their capital equivalent to £1 a week for each multiple of £250 (rounded up to the next £250), between £6,000 and £16,000. This income is known as tariff income.

W1.351 A table showing tariff income from capital is shown at Annex B at the end of this chapter.

HB Reg 52; CTB Reg 42

Example 1

A claimant with capital totalling £6,290 is treated as having a tariff income of £2 a week.
Example 2

A claimant with capital totalling £6,006 is treated as having a tariff income of £1 a week.
Example 3

A claimant with capital totalling £5,995 is treated as having no tariff income.
Increased disregard for certain HB claimants in residential care

W1.352 Since April 1996, capital of £10,000 or less is disregarded for some HB claimants in residential care. The claimants who may benefit from this increased disregard are those

HB Reg 52

W1.353 It is not intended for claimants living temporarily in such accommodation to benefit from the increased disregard. However, the provisions will apply to claimants permanently resident in such accommodation if they are only temporarily absent, for up to 13 or 52 weeks as appropriate, see B2 Assessment of income later in this manual.

W1.354 Those claimants benefiting from the increased disregard are treated as having weekly tariff income of £1 for each multiple of £250, (rounded to the next £250), of capital over £10,000 but not more than £16,000. Capital of £10,000 or less is ignored. The right-hand column of Annex B at the end of this chapter shows the calculation of tariff income for these claimants.

Notes:

A Claimants with preserved rights include those people in registered homes or LA homes who obtained access to HB before April 1993, irrespective of whether they also fall within one of the above provisions, for example

– those in remunerative work
– people paying a commercial rent in homes run by close relatives, and
– people in registered homes who were or became entitled to HB in respect of such accommodation on 29 October 1990, see A4 Eligible rent earlier in this manual

Certain residents of small homes that had to be registered from 1 April 1993 may also have preserved rights, see A4 Eligible rent earlier in this manual.

B Personal care means the personal care needed because of, for example, old age, disablement, past or present dependence on alcohol or drugs, or past or present mental disorder. It means all that the proprietors must do to preserve and promote the health, safety and emotional well-being of the residents. It is broadly equivalent to the care which might be provided by a competent carer, and includes assistance with bodily functions when such assistance is required.

W1.355-W1.379

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Jointly owned capital

W1.380 When a claimant jointly owns a capital asset with others, obtain the claimant’s share by dividing the total value of the asset by the number of joint owners. The resulting figure is treated as the claimant’s capital resource.

HB Reg 51; CTB Reg 41

Example 1

If two people have a joint building society account totalling £10,000 to which one has contributed £8,000 and the other £2,000, treat each as possessing £5,000.
Example 2

If three people own a house in the proportions X = 50%, Y = 25%, Z = 25%, treat each as possessing one third of the value of the house.

W1.381-W1.399

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Capital assets held abroad

W1.400 When capital assets are held in a country outside the United Kingdom, the amount to be taken into account in the calculation of benefit will depend on the conditions for its transfer to the UK.

HB Reg 48; CTB Reg 38

W1.401 If capital held abroad can all be transferred to the UK without restriction, obtain its value in the country where it is held. The amount to take into account is the total value less

W1.402 If you need to determine the value of capital in a country outside the UK, ask the claimant for evidence

W1.403 In some circumstances the LA may require other evidence, for example the

W1.404 If the claimant says that any capital held in a country outside the UK cannot be wholly transferred to the UK because of some prohibition in that country, for example currency restrictions, ask for evidence. Acceptable evidence of the prohibition on transfer of capital to the UK would include documents or letters from a

W1.405 This evidence should show

W1.406 After the LA has examined the evidence on the value of the asset, deal with the claim as follows

In these circumstances review the case at reasonable intervals, such as quarterly, in order to check that the prohibition still exists and/or there is still no willing buyer

W1.407 If, after examining the evidence, you decide that no restrictions exist, then value the capital as normal.

W1.408-W1.429

 

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Valuation of capital

W1.430 Capital should be valued at its current market or surrender value less 10% if there are costs involved in disposing of it. The 10% is the standard allowance that is applied whatever the actual costs of disposal. Any charge or debt secured against it should also be deducted.

HB Reg 47 & 48; CTB Reg 38 & 37

W1.431-W1.439

National Savings Certificates

W1.440 When valuing National Savings Certificates (NSC) you need the current market value or surrender value of the certificates. Ask the claimant to provide a valuation or you can use the online calculator available on the NS&I website www.nsandi.com.

W1.441 Up to 2005 NSCs were uprated annually in July. As an aid at Annex C, at the end of this chapter, there are three tables for the valuation of National Savings Certificates (NSC) up to July 2005 that apply to all income-related benefits

You must establish which types of certificates the claimant holds.

Note: The tables end at July 2005 as the NS Department can no longer supply annual uprating details.

W1.442 The following points should be noted:

W1.443 Current values are valued at the first date of sale, and the following issues are currently on sale

Rounding up units of NSCs

W1.444 When a claimant holds an NSC for an odd amount, ie not for a whole unit, this is because

W1.445 To establish the number of units held, divide the total value shown on the NSC by the purchase price for that particular issue. This is because if the claimant were to cash in the NSC, National Savings would pay the precise value of the NSC, including fractions of units. Therefore you must calculate the precise value of units held and not round up to whole units.

Example

42nd Reinvestment Certificate shows a total value of £2,926.70. The purchase price for each unit was £100.

Divide by purchase price per unit, ie £2,926.70 £100

Total = 29.26 units

Multiply the number of units (29.26) by the value of unit as at 1 July 2003 (£138.65) to get total value of Certificate 29.26 x £138.65 = £4,056.89

Therefore value of NSC to take into account is £4,056.89

W1.446 Once certificates have been cashed in, the actual amount realised should be taken into account as capital if not yet spent. If any large amounts have been spent, consider deprivation of capital, see Deprivation of capital later in this chapter.

W1.447-W1.449

Precise valuation required

W1.450 For precise valuations ask the claimant to provide the information as the NS Department can no longer do so.

Ulster Savings Certificates

W1.451 Send requests for the valuation of Ulster Savings Certificates to

The Department of Health and Social Services
Income Support Division
Fermanagh House
Ormeau Avenue
Belfast BT2 8HY

W1.452-W1.469

Land, building or house property

W1.470 If any member of the family owns land, building or house property which is not disregarded, that is land or property other than the claimant’s home, you should obtain a current market valuation unless one is already available. A valuation can be obtained from the District Valuers Services.

W1.471-W1.474

Valuing the property
Action before requesting a valuation

W1.475 Before requesting a valuation

HB Sch 6; CTB Sch 5

W1.476 Send form LA1(rev) to the claimant to get

A copy of form LA1(rev) is shown at Annex D at the end of this chapter.

W1.477 When preparing the LA1(rev) before sending it to the claimant, you must write the case reference number on the form. The case reference number

W1.478 When you receive the completed LA1(rev) from the claimant

  1. ensure the claimant has
    1. fully completed the form and it is legible
    2. agreed to the property being valued, and
    3. signed the form
      The District Valuers Services will return incomplete or incorrectly completed forms to the LA
  2. prepare and send form LA2(rev) to the District Valuers Services to request a valuation

W1.479 If the claimant does not agree to a valuation of their property, assess capital using a notional valuation. This notional valuation could result in a higher amount being taken into account.

Obtaining a valuation from the District Valuers Services - form LA2(rev)

W1.480 When you have the claimant’s permission, send form LA2(rev) to the District Valuers Services, with the completed LA1(rev).

W1.481 Prepare the LA2(rev) before sending it to District Valuers Services

Note: Make sure the completed forms are sent to the District Valuers Services shown on form LA2(rev) is shown at Annex E at the end of this chapter.

Multiple valuations for same property

W1.482 You may ask for the value of a property at different dates, both forms LA1(rev) and LA2(rev) allow for this.

Action by the District Valuers Services

W1.483 When the District Valuers Services have valued the property, the valuer will

W1.484 If you receive an invoice from the District Valuers Services, send it to

Benefit Delivery Specialist Operations Team
Room 3S25
Quarry House
Quarry Hill
Leeds LS2 7UA

W1.485-W1.489

Claimant disputes the valuation

W1.490 If the claimant disputes the valuation

The follow-up report for wholly owned properties, or the original report for jointly owned properties, can be referred to at appeal hearings

In very exceptional circumstances the valuer may have to attend an appeal hearing.

Jointly owned property

W1.491 If the claimant beneficially owns property with one or more people

W1.492 When you receive the District Valuers Services’ valuation of a jointly owned property

W1.493-W1.509

Stocks and shares

W1.510 The term stocks and shares refers to marketable holdings, for example in

W1.511 Treat the

W1.512 The value of stocks and shares may bear little resemblance to their face value. For the purposes of calculating benefit entitlement, you must establish the market value. Before deciding whether a precise valuation is necessary, it is useful to obtain an approximate market value.

Example 1

A claimant owns 200 shares with a nominal (or par) value of 25p each, but they have market value of £35 each. Total capital value £7,000.
Example 2

A claimant owns 10,000 shares of a nominal (or par) value of £1 each but their market value is 12 pence each. Total capital value £1,200.

W1.513 Your valuation should relate to the value on the date the claim for benefit is made, or treated as made, and be based on relevant information, such as the Stock Market pages in a national newspaper. Use the ‘bid’ column price, if quoted, or the daily price figure, for example for Treasury bonds. The flat rate allowance of 10% should be deducted for selling costs. Annex F at the end of this chapter gives examples for ‘valuing’ government stocks.

W1.514-W1.529

Unit trust holdings

W1.530 Unit trust holdings are valued on the basis of the bid price which is quoted in the newspapers. There are no additional expenses of sale in selling a holding in a unit trust because the bid price quoted takes account of all selling expenses, commissions etc. Do not deduct the standard 10% for selling costs.

W1.531 It is possible to incur additional expenses of sale if a unit trust is sold through a bank or stockbroker. But since it is not necessary to sell them this way to get the full price, ignore any additional expenses of this kind. A claimant need only send the unit trust certificate to the managers of the fund who will forward a remittance for the value of the holding.

W1.532-W1.549

Particular forms of capital

Advance of earnings or loan from employer

W1.550 Treat any advance of earnings or loan made to an employed earner by their employer as capital. The payment does not form part of the employee’s regular income and has to be repaid.

Example 1

A claimant received £294 in one week but their pay slip showed that £200 of this was a loan made by the employer. Treat £94 as earnings and £200 as capital.
Example 2

A claimant started work as an employee of an insurance company, with a basic salary of £600 per calendar month. The bulk of their earnings is expected to be made up by commission.

At the end of the first month, the claimant received £980 which represented salary of £600 and an advance of anticipated commission from the employer of £380. The advance of £380 should be treated as capital, and the £600 as normal earnings.

Backdated pay awards

W1.551 Treat backdated pay awards as earnings, see B2 Employed earners, Definition of earnings and A6. Claimant entitled to arrears or increase in income.

HB Reg 35 & 79; CTB Reg 25 & 67

Bounty payments

W1.552 Treat as capital any bounty which is

HB Reg 46; CTB Reg 36

Capital paid by instalments

W1.553 When payments of capital are made by instalments, the value of the right to receive the outstanding instalments is always disregarded. The actual instalments, when received, should be treated as shown below, depending on the particular circumstances.

HB Sch 6 Para 18; CTB Sch 5 Para 15

Claimant or partner’s capital paid by instalments

W1.554 If the claimant or partner’s capital is paid by instalments

HB Reg 41; CTB Reg 31

  1. total the value of the instalments outstanding on the date the HB or CTB claim is made or treated as made, or at the date of any subsequent review, and
  2. add to that total all other capital of £16,000 or less held or treated as held by the claimant and partner

W1.555 If the total capital calculated

Child or young person’s capital

W1.556 Disregard a child or young person’s capital in the HB/CTB assessment.

HB Reg 25; CTB reg 15

Charitable or voluntary payments

W1.557 Treat as capital any charitable or voluntary payment which is not made or due to be made at regular intervals. This does not apply to payments from any of the Macfarlane Trusts or the Fund, the Eileen Trust, the LBRCF, or payments from the Independent Living Funds, which are already fully disregarded. See Capital assets disregarded in full, xvii earlier in this chapter.

HB Reg 46; CTB 36

W1.558-W1.559

Chose in action

W1.560 Chose in action means ‘a thing that can be sued for’ and is an actual capital resource. It exists when there is an entitlement to receive a sum of capital at a future date, for example a debt, an outstanding claim for compensation or an interest in an unadministered estate.

W1.561 If the payment, or repayment, of that capital sum is not made in the agreed manner or at the proper time, there is a right to sue in a court of law. That right to receive the resource, and with it the right to sue, can be sold to another party. It therefore has a market value which should be taken into account.

W1.562 In Scotland Chose in action is called ‘Action of Accounting’ or ‘Action for Payment’.

W1.563-W1.579

Court of Protection

W1.580 The Court of Protection is an office of the High Court, rather than a court in its accepted sense. It is responsible for the management and protection of property belonging to people, including children, who lack the mental capacity to manage their own affairs.

W1.581 A judge of the Court may appoint a ‘deputy’ to manage the property and affairs of a person for whom the Court is responsible. The MoJ selects a regulated banker to hold the money in the name of the beneficiary. The banker needs a court order before being able to release the money to the beneficiary. Any funds held for a member of the family by the Court of Protection, or by a deputy appointed by the Court, should be treated as capital belonging to that member of the family.

W1.582 Funds held in a trust set up by the Court of Protection are an actual capital asset of the beneficiary.

Note: From 2 October 2006 treat these payments as disregarded income, see B2 Assessment of income later in this part.

W1.583-W1.599

Fixed term investments

W1.600 These are investments, for example in building societies, local authorities, which are for a fixed period and for that reason produce a higher rate of interest.

W1.601 Building societies will usually arrange to release money before the end of the fixed term if a person claims hardship. Take such investments into account at their face value unless there is evidence that the current surrender value is different.

W1.602 When a claimant provides evidence that a fixed term investment cannot be realised until the completion of the fixed term, the value of that investment will depend on whether the agreement under which the investment was made allows it to be assigned to a third party.

W1.603 If an investment can be assigned to a third party, which it usually can, it has a market value which should be taken into account. If restrictions prevent its assignment its market value is NIL.

W1.604-W1.619

Friendly Societies – personal deposit accounts

W1.620 Contributors to Friendly Societies may make deposits to build up personal accounts from which payments may be made to them, in addition to the Society’s usual sick pay, during illness.

W1.621 Treat savings in a Friendly Society deposit account as capital. Any payments received from that account are withdrawals of capital and do not constitute income, even if paid regularly. However, the payments will reduce the value of the account.

Holiday pay

W1.622 Holiday pay which is payable more than four weeks after the end of the contract of employment should be treated as capital. In these circumstances, establish the

HB Reg 46; CTB Reg 36

W1.623 Outstanding earnings and holiday pay are normally paid on the final working day or payday, but note

Example

The claimant’s employment terminated on 1 August. The claimant collected holiday pay on 12 September. The holiday pay could have been collected by the claimant at any time from 22 August onwards.

In this case the holiday pay is not treated as capital because it is payable on 22 August which is less than four weeks after the claimant’s employment ended.
Example 1

The claimant gave and worked due notice before their employment terminated on 22 April. The contract of employment provides for part of the claimant’s holiday pay (for a closedown period between 4 July and 17 July) to be paid on 1 July.

The employer has agreed to pay the outstanding holiday pay on 27 May. The payable date of the holiday pay would have been 1 July, but that date had been varied by mutual agreement between the parties to 27 May. Because 27 May is more than four weeks after the claimant’s employment ended, treat the holiday pay as capital.
Example 2

A claimant’s partner’s employment terminated when the partner walked out, without giving notice on 2 August. The partner’s contract of employment provided for payments to be made on the last working day of the month and for one month’s notice to be given by either party.

The employer relied on the contract to make a final payment of earnings and holiday pay on 31 August.

The holiday pay is treated as capital because it is payable more than four weeks after the date of termination of employment, that is 2 August.

Income from a capital asset

W1.624 The Regulations specify certain income from disregarded capital assets is to be taken into account as income.

W1.625 In all other cases, income from capital is ignored as income in the assessment but treated as capital from the date it is normally due to be paid to the claimant or credited to their account. For example, in the case of a rented property that falls to be taken into account, any rent from that property should be taken into account as accruing capital and not as income.

HB Reg 46 & Sch 6 Para 16; CTB Reg 36 & Sch 5 Para 16

W1.626 If capital is held in an account which attracts interest, you should ensure the account is up to date at the time of the claim. Interest is usually added to an account at six-monthly or yearly intervals. Only request further information about the account if

W1.627-W1.629

Income treated as capital

Tax refunds

W1.630 Any refund of income tax charged under Schedule D or E should be treated as capital. Schedules D and E cover tax on

HB Reg 46; CTB Reg 36

Example

A claimant’s partner’s take-home pay of £104 includes a PAYE tax refund of £21. Treat the claimant as having

  • earnings in that week of £83, and
  • capital of £21

W1.631-W1.639

Interest in an unadministered estate

W1.640 When a member of the family has an interest in an unadministered estate, that interest is a chose in action and should be valued as such, see Chose in action earlier in this chapter.

Lump sum compensation payments

W1.641 Treat lump sum compensation payments as capital. Examples are lump sum payments

Remember, the value of any compensation payment for personal injury which is held in trust, or the value of the right to receive any payment under that trust, is disregarded. See Disregarded capital earlier in this chapter.

Matrimonial assets on breakdown of marriage

W1.642 A separated or divorced person may have a beneficial interest in any property of the marriage, such as the former matrimonial home or a joint building society account, see Ownership of capital earlier in this chapter.

W1.643 If the property in question is jointly owned and does not fall to be disregarded, the value of that interest should be calculated in the normal way, see Disregarded capital and Jointly owned capital earlier in this chapter.

W1.644 If all of the person’s beneficial interest in the property is legally contested, assume a nil value until the question of ownership is settled.

Example 1

The claimant’s former partner occupies the former matrimonial home. The home was jointly owned by the former partner and the claimant, who now lives in rented accommodation with their two children. Both parties are taking legal action to obtain sole ownership of the property.

The claimant could eventually own the whole, part or none of the property. Until the question of beneficial ownership is resolved treat the claimant’s interest as nil.
Example 2

The claimant’s former partner occupies the former matrimonial home, having evicted the claimant and their three children. The home was jointly owned by the claimant and former partner.

The former partner has taken legal action to obtain ownership of the whole property, and acknowledges that the claimant has a half interest in the property but is legally contesting the claim to the other half.

At the time of the claim, the claimant has an uncontested joint beneficial interest in the property, the extent of that interest, whether 5%, 50% or 95%, is not relevant, and therefore the claimant’s share should be calculated by dividing the total value of the property by two, that is the number of joint owners, see Jointly owned property earlier in this chapter.

Disregard the value of the claimant’s share in the property for 26 weeks from the date the claimant left the property, see Capital assets disregarded for 26 weeks earlier in this chapter.

At the end of this period you may need to consider whether other disregards may be appropriate.

W1.645-W1.659

Payments under an annuity

W1.660 Any payment received by the claimant under an annuity should be treated as income.

HB Reg 41; CTB Reg 31

Redundancy payments including severance pay

W1.661 Treat lump sum redundancy payments as capital. If a severance payment has been negotiated with the employer in addition to, or instead of statutory redundancy payments, treat the severance pay as capital, but only to the extent it exceeds the amount treated as loss of income.

HB Reg 35; CTB Reg 25

W1.662-W1.679

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Notional capital

W1.680 A person may be treated as possessing a capital asset even though they do not actually have that capital asset. Such assets are called notional capital. Examples of these are

HB Reg 49; CTB Reg 39

W1.681-W1.699

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Deprivation of capital

W1.700 Treat a claimant as possessing notional capital if they have deprived themselves of the capital for the purpose of receiving or getting an increase in HB and/or CTB.

HB Reg 49 & 50; CTB Reg 39 & 40

W1.701 The intention to deprive applies to each benefit, see General issues on deprivation later in this chapter.

Example

Two weeks before claiming benefit, a claimant who was aware of the capital rules gave her brother £10,000 of her capital of £21,000.

The remaining £11,000 affects entitlement in that a tariff income will arise from this amount, while the original amount of £21,000 would have automatically disentitled the claimant.

In these circumstances the claimant could be treated as possessing the £10,000 in addition to the £11,000 she actually holds.

Identifying deprivation

W1.702 You will most likely identify potential deprivation of capital when examining a change of circumstances or a repeat claim. For example, when entitlement has been refused because the claimant’s capital exceeded £16,000 and a repeat claim is made soon afterwards when capital of less than £16,000 is declared.

W1.703-W1.709

Deciding if claimant formerly owned the capital

W1.710 You must decide on the basis of whatever evidence is available whether the claimant formerly owned the capital. If the facts are in dispute, examples of evidence of former ownership might be shown by

Burden of proof

W1.711 The burden of proving that a claimant no longer has a resource rests with the claimant, because it is for them to establish title to benefit. Evidence of the disposal of capital would include

W1.712 If a claimant is unable to produce satisfactory evidence that they have disposed of a capital asset, you may conclude that they still possess the actual capital asset. The amount disposed of must be treated as notional capital, and added to any other capital that the claimant has.

W1.713 If the total of the notional capital plus actual capital is between £6,000 and £16,000, calculate tariff income. If the total of notional and actual capital exceeds £16,000, the claimant is not entitled to HB.

W1.714 The following are further examples of when a person may have deprived themselves of capital

W1.715-W1.729

Reason for disposing of capital asset

W1.730 There may be reasons for disposing of a capital asset other than to receive or get an increase in the amount of HB. Securing entitlement to benefit need not be a person’s main motive but it must be a significant one if you are to treat them as having notional capital. For example, if a claimant gave their son or daughter money to prevent their home being repossessed, the main reason would be to help the child, not secure or increase entitlement to HB/CTB.

W1.731 To decide whether securing entitlement to benefit was a significant purpose, you must establish whether the claimant has exercised choice when disposing of the resource. If claimants do no more than satisfy their need for one of the necessities of life, they have not exercised a real choice in the transaction.

W1.732 When capital has been used to repay a debt give careful consideration as to whether the debt needed to be repaid at that time. If there was no legal obligation to do so then it may be that part of the claimant’s purpose was to obtain or increase the amount of benefit.

W1.733-W1.739

Knowledge of the capital limit

W1.740 Claimants cannot be held to have deprived themselves for the purposes of securing benefit or an increase in benefit if they did not know the resource would affect entitlement to benefit.

W1.741 The LA must show that on the balance of probabilities, the claimant knew, at least in broad terms, that

W1.742 It may be considered common knowledge that such a limit exists, but the LA must consider the claimant’s educational standing, history of claiming and information sent by way of official forms and leaflets before making a finding of fact on the matter.

W1.743 Claimants are unlikely to admit that securing benefit was a significant reason behind their actions. Therefore conclusions must be drawn about the claimant’s purpose from the reasons given and from all the other circumstances of the case.

W1.744 It is not sufficient to conclude that a significant purpose must have been to secure benefit solely because entitlement was a foreseeable or natural outcome of the deprivation. It is necessary to look at all the circumstances and decide what motivated a claimant to exercise choice in that way.

W1.745 Extravagance or imprudence do not of themselves establish that the deprivation was for the purpose of securing or increasing the amount of benefit. It is evidence pointing in that direction, but all the circumstances of the case must be considered.

W1.746 The timing of the deprivation in relation to the benefit claim may give an indication of whether or not securing benefit was a significant purpose behind the deprivation.

W1.747 Similarly claimants’ explanations of how they intended to pay their rent and council tax following the deprivation may help in making a finding of fact.

W1.748-W1.759

Diminishing notional capital

W1.760 When an LA has decided that a claimant has deliberately disposed of capital to receive, or get an increase in the amount of, HB and/or CTB, the amount disposed of must be treated as notional capital, and added to any other capital the claimant has.

HB Reg 49 & 50; CTB Reg 40 & 39

W1.761 Calculate the amount of HB and/or CTB payable using

W1.762 The calculation is always based on full weekly HB/CTB entitlement. Convert a part-week payment made if rent liability starts within a benefit week to a full weekly payment, see A5 Monthly rents, Method 2 earlier in this manual for more information.

W1.763 The week in which the claimant is held to have notional capital which affects the amount of HB payable, or results in entitlement to HB/CTB, is called the relevant week. Note: In CTB the relevant week can be a part week.

HB Reg 50; CTB Reg 40

W1.764 The next step in the procedure depends on whether the claimant has any benefit entitlement when notional capital is taken into account.

Claimant still entitled to HB

W1.765 If the claimant is still entitled to HB after all notional capital has been taken into account, the decision notice should tell the claimant

W1.766 Using the HB amounts payable based on actual capital held and notional capital held, calculate the difference between the two. This is the HB lost because of deprivation.

W1.767 Confirm with CTB colleagues whether any CTB has also been lost because of deprivation and if it has, add that sum to the HB lost. Similarly if a claimant can show they have lost some other benefit, that is IS, JSA(IB) or Pension Credit, because of deprivation, these amounts should be added to the amount of HB lost. The onus is on the claimant to provide this information, by means of the decision notices issued showing the amount of IS, JSA(IB), or Pension Credit that has been lost. Note: The reference to JSA(IB) applies to pensioner cases because there could be cases where a claim for JSA(IB) would have been unsuccessful due to a deprivation of capital decision. In such cases, as the claimant would not be in receipt of JSA(IB), the HB/CTB claim would have to be dealt with under SI 2003/325.

W1.768 Deduct this total amount, on a weekly basis, from the notional capital.

W1.769 Whenever these weekly deductions have accumulated sufficiently to take the total of actual and notional capital through a tariff income band, that is a block of £250/£500, a new calculation of HB is required.

W1.770 There will then be a reduction in weekly tariff income of £1 and an increase in the amount of HB payable to the claimant. Compare this new amount of HB actually paid with the amount the claimant would have got on the basis of their actual capital. The difference between these two amounts forms the new amount of HB lost, and is added to any new amount of DPTC, IS, Pension Credit, CTB or JSA(IB) lost, if applicable. This total amount of lost benefit forms the new sum to be deducted from the notional capital.

HB Reg 49; CTB Reg 40

W1.771 This process is repeated until

Claimant still entitled to CTB

W1.772 If the claimant is still entitled to CTB after all notional capital has been taken into account, the decision notice should tell the claimant

CTB Reg 40

W1.773 Using the CTB amounts payable based on actual capital held and notional capital held, calculate the difference between the two. This is the CTB lost because of deprivation.

W1.774 Confirm with HB colleagues whether any HB has also been lost because of deprivation and if it has, add that sum to the CTB lost. Similarly if a claimant can show they have lost some other benefit, that is IS, JSA(IB) or Pension Credit because of deprivation, these amounts should be added to the amount of CTB lost. The onus is on the claimant to provide this information, by means of the decision notices issued showing the amount of IS, JSA(IB) or Pension Credit that has been lost.

W1.775 Deduct this total amount, on a weekly basis, from the notional capital.

HB Reg 50

W1.776 When enough of these weekly deductions have accumulated to take the total of actual and notional capital through a tariff income band, that is a block of £250/£500, a new calculation of CTB is required.

W1.777 There will then be a reduction in weekly tariff income of £1 and an increase in the amount of CTB payable to the claimant. Compare this new amount of CTB actually paid with the amount the claimant would have got on the basis of their actual capital. The difference between these two amounts forms the new amount of CTB lost, and is added to any new amount IS, JSA(IB) or Pension Credit lost, if applicable. This total amount of lost benefit forms the new sum to be deducted from the notional capital.

W1.778 This process is repeated until

Claimant is not entitled to HB/CTB when notional capital is applied

W1.779 If the claimant is not entitled to HB and/or CTB following a notional capital calculation, the disallowance notification to the claimant should state the

HB Reg 50; CTB Reg 40

W1.780 HB assessors should check with CTB colleagues about the CTB position. If the claimant has also lost some CTB because of the application of the deprivation rule, the weekly amount of CTB lost should be added to the weekly amount of HB lost. Similarly, CTB assessors should check with HB colleagues and add weekly HB lost to the weekly CTB lost.

W1.781 Add to this figure any IS, JSA(IB) or Pension Credit lost because of deprivation.

W1.782 The total of these lost benefits becomes the weekly amount by which notional capital is reduced for HB and/or CTB and remains at this level for 26 weeks. A new calculation is done after 26 weeks (from week 27).

W1.783 Include the amount of the weekly reduction being applied to the notional capital with the information the claimant is given with their disallowance notice.

HB Reg 49 & 50; CTB Reg 40

W1.784 When there is no entitlement to HB/CTB, there is no need to enter into continuing assessments. However, a record should be kept of these cases in case the claimant reapplies for HB/CTB.

Claimant reapplies for HB and/or CTB

HB Reg 49 & 50; CTB Reg 39 & 40

W1.785 If the claimant reapplies for HB and/or CTB, check the amount of declared capital. It may well be different from the amount declared on the original claim on which the deprivation question was decided.

W1.786 It is acceptable that the claimant may have drawn on their capital to cover at least the HB and CTB they have not received. However, if the new amount of capital declared is substantially lower, authorities should investigate the reasons, and decide whether the claimant has deprived themselves of more capital.

W1.787 If you accept the new capital figure, the action taken depends on whether the claimant reapplies

Claimant reapplies 26 weeks or more after date of deprivation decision

W1.788 The notional capital on the earlier assessment must be reduced. To get this figure

W1.789 Add the new notional capital to the actual capital, if any, declared on the reapplication.

W1.790 Calculate the amount of HB and/or CTB payable using

W1.791-W1.794

Claimant reapplies less than 26 weeks after date of deprivation decision
Change in claimant’s circumstances

W1.795 If a claimant reapplies less than 26 weeks after the date of the deprivation decision and circumstances other than capital have changed, such as the claimant as married, or a baby has been born, reassess HB and/or CTB on the basis of the new circumstances.

W1.796 Calculate the amount of benefit payable using

W1.797 The notional capital on the earlier assessment must be redetermined. To get this figure

This will give the new notional capital figure to be used.

W1.798 The next step in the procedure depends on whether the claimant has any benefit entitlement when the new notional capital is taken into account, see Claimant becomes entitled to HB and/or CTB or Claimant still not entitled to HB and/or CTB later in this chapter.

No change in claimant’s circumstances

W1.799 If the claimant reapplies less than 26 weeks after the date of the deprivation decision and there are no changes in their circumstances, keep the rate of weekly deductions at the original level.

W1.800 The notional capital of the earlier assessment is reduced by multiplying the original weekly reduction of HB/CTB by the number of weeks since the earlier decision.

W1.801 The next step in the procedure depends on whether the claimant has any benefit entitlement when the new notional capital is taken into account, see Claimant becomes entitled to HB and/or CTB or Claimant still not entitled to HB and/or CTB later in this chapter.

Claimant becomes entitled to HB and/or CTB

W1.802 If the claimant is now entitled to HB and/or CTB,

  1. put the relevant benefit into payment, see A6 Deciding and paying benefit
  2. reduce notional capital by the weekly total of HB and/or CTB lost.
Claimant still not entitled to HB and/or CTB

W1.803 If the claimant is still not entitled to HB and/or CTB the latest amount calculated is the new amount of the assessed benefit lost. Add to this the amount, if any, of the other LA administered benefit also lost, plus any IS or JSA lost. These amounts may also have been revised as a result of a recalculation of notional capital in that other benefit assessment.

W1.804 Compare this new total benefit lost figure with that already being used. If the new benefit lost figure is

W1.805 The effect is to make sure that the weekly reduction in notional capital for benefit lost can be increased as a result of reassessment but it is never to be decreased.

W1.806 The claimant should be informed of the new nil decision and of any increase in the weekly amount by which their notional capital is reduced. Separate notifications should be made for HB and CTB.

W1.807 The process of considering entitlement to HB and/or CTB is repeated, see Claimant still not entitled to HB and/or CTB earlier in this chapter.

W1.808-W1.829

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IS/JSA claimants affected by deprivation

W1.830 IS and JSA Regulations state that if a decision has been made that an IS or JSA claimant has disposed of capital to receive IS or JSA, or get an increase in either benefit, the notional capital should be reduced by the sum of the lost amounts, if any, of

W1.831 If, despite deprivation, a claimant is entitled to IS or JSA(IB), the claimant should receive maximum HB and CTB. Any existing HB or CTB deprivation assessments are put into abeyance by entitlement to IS or JSA(IB).

W1.832 When an IS/JSA deprivation decision takes a claimant off IS/JSA, the DWP office reduces the calculated notional capital by the amount of the lost benefits.

W1.833 The DWP office will know the amount of IS/JSA lost, but it also needs to know how much HB and CTB, if any, has been lost because of deprivation.

W1.834 For this group of claimants, the loss is the difference between the

W1.835 The onus is on the claimant to show the DWP office how much HB and/or CTB they are actually receiving. There should be sufficient information in the HB and CTB decision notices sent to the claimant.

W1.836 If the claimant has not kept the notices of determination covering the relevant weeks, it is possible that they may ask you to confirm the relevant decision. It is expected that this will be the limit of the involvement required of local authorities in such cases.

W1.837-W1.869

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General issues on deprivation

W1.870 It is possible that IS, JSA(IB) Pension Credit, HB and CTB may reach a different decision about whether a claimant has disposed of capital to receive benefit or a higher rate of benefit. It is also possible that the capital amount the claimant is deemed to have disposed of may be different in each benefit.

W1.871 These potentially different decisions and/or amounts arise from the fact that the deprivation regulations for each benefit have to focus on the fact that the deprivation has to have as a motive, not necessarily the only motive, the intention to get that particular benefit or more of it.

W1.872 The regulations aim to help authorities and social security offices reach a reasonable figure by which the notional deprived capital can be reduced over time.

W1.873 When treating a claimant as having a notional capital resource, you must ensure the resource is not counted twice, for example by counting the value of personal possessions and the amount the claimant is treated as having deprived themself of by purchasing the items. Do not treat a notional resource as possessed for all time. For information about taking the value of personal possessions into account, see Disposing of capital to buy personal possessions below.

W1.874-W1.889

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Disposing of capital to buy personal possessions

W1.890 If, for the purpose of obtaining benefit or more benefit, capital that would not have been disregarded has been used to acquire personal possessions, the current market value of those possessions should be taken into account as an actual resource. Their market value should not be disregarded under paragraph 12 of HB Schedule 6 or paragraph 8 of HB(SPC) schedule 6 (Paragraph 12 of CTB Schedule 5).

W1.891-W1.929

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Deprivation of jointly owned capital

W1.930 If, for the purposes of securing benefit or an increase in benefit, a claimant has disposed of capital which was jointly owned, special rules apply. Treat the claimant as having disposed of any part of which they were the beneficial owner.

W1.931 If, as a joint owner, the claimant was treated as possessing more capital than they owned beneficially, disregard any excess over the actual capital they possessed when deciding whether deprivation had occurred.

Example 1

A claimant owned £10,000 of a joint bank account totalling £40,000 with one other person. A claim for benefit was refused because she was treated as having capital of £20,000. The claimant arranged for the joint account to be closed and invested her £10,000 in a building society.

She made a further claim which was accepted because her capital of £10,000 did not exceed the prescribed limit and she was not treated as depriving herself of a resource.
Example 2

Mr L owned a 75% share in a piece of land worth £40,000. There were two other owners. Believing that his £30,000 investment would preclude entitlement to benefit he gave his share of the land to his son. He then claimed benefit.

He was treated as having notional capital of £27,000, that is three quarters of £40,000 less 10% for selling costs.
Example 3

Mrs Y owned a 25% share in a piece of land worth £40,000. There were two other owners. Believing that her £10,000 investment would reduce the amount of benefit she would get, she gave her share of the land to her daughter. She then claimed benefit.

A notional capital calculation would show a figure of £12,000, that is one third of £40,000 less 10% for selling costs. However, as this is more than she beneficially owns, she is deemed to have notional capital of £9,000 that is one quarter of £40,000 less 10% for selling costs.

W1.932-W1.949

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Payments to third parties

W1.950 A payment of capital made to a third party but intended for someone else, is subject to special rules. The treatment of such a payment depends on whether it is made to or for a member of the family, and how the payment is used. The term third party can include a public body, such as an LA.

HB Reg 49; CTB Reg 39

Payment to a third party for a member of the family

HB Reg 49; CTB Reg 39

W1.951 Any payment made in respect of a member of the family, but paid to a third party outside the family, should continue to be treated as part of the family’s capital if it is used to provide

For the definition of ordinary clothing or footwear and rent, see B2 Assessment of income.

W1.952 If the payment is an occupational pension or Pension Protection Fund lump sum payment it is treated as possessed by the claimant regardless of how it is used. This does not apply to a bankrupt person who has no other income and their occupational pension is paid direct to creditors/trustees.

Payment to member of the family for a third party

W1.953 A payment of capital may be made to a member of the claimant’s family for a person who is not a member of the family, for example a daughter who is a long-term hospital patient. Treat such a payment as belonging to the member of the family to whom it is paid (for example the claimant) to the extent that it is kept by that person or used on behalf of any member of the family. Ignore the remainder of the payment.

W1.954 The LA must decide on the available evidence whether and how much capital should be treated as kept by the claimant. All the capital should be treated as kept by the claimant if

W1.955-W1.999

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