a client of mine who receives DLA, ICB and IS has the opportunity of receiving a lump sum of approx £11000 from a pension with weekly payments of £30pw (less than the amount of IS he receives of £40pw)

he has a car on finance that costs him £130 monthly (which he uses his DLA money to pay) and he owes just over £4500 on it.

if he accepted the pension lump sum and cleared the outstanding finace on the car, he'd be left with £6.5k in the bank and he'd be £130 monthly better offf as he'd no longer have to pay to the car. which is an attractive proposition to him

this would allow to remain on IS, increase his weekly money as he'd get to keep his DLA and have a useful amount of savings in the bank

he contacted his DWP office to ask how they would treat him clearing his car finance and was informed they would ignore it and only treat what remained as savings

can anyone give an opinion on this? i'd hate for him to clear his debt and then be treated as having deliberately spent it to carry on claiming benefit and be treated as still possesssing the money as this would mess up his IS claim and HB/CTB entitlements as well

many thanks

"he contacted his DWP office to ask how they would treat him clearing his car finance and was informed they would ignore it and only treat what remained as savings"

Who did he speak to? Do you have details of the date, time, name of the person, etc? Is there a phone record or written record of this? If this is verifiable then paragraphs 29843 and 29844 of the Decision Makers Guide will be important because this specifies for the Decision Maker that there is no deprivation of capital in these circumstances.

Another aspect of deprivation is that it is done either to obtain Income Support or increase the amount of IS already being paid. I don't think either of these apply in the circumstances you describe, because he is already receiving IS, and the amount payable will not increase.

Wed 18-Mar-09 12:44 PM by Tony Bowman

Evidence of the phone call, as John suggests, would indeed be very, very useful in challenging a deprivation decision. However, don't forget that a claimants word must be accepted unless he is obviously trying it on (my phrase - see R(SB)33/85).

However, I take a different view on the deprivation. It is correct to say that the a main reason for the deprivation must be to become entitled to, or to more, income support. However, even though the end result will be the same as it is now, it is not the now situation that is important - it is what the situation will be when he has the capital. The money will obviously pass through the client's bank and at that point there will be, in theory if not in actuality, a tariff income which will serve to reduce the IS currently payable. Then spending the money means that he will get an increase in benefit so it would be appropriate to apply the deprivation tests. In some cases, usually where no money is involved (e.g. client gives house away) I would argue along the lines John suggests, but these are very few and far between and still depend on the reason for the deprivation.

From the description you've given I would consider arguing that the reason for the deprivation was to better the client's qualify of life by disposing of a debt and increasing his overall weekly income - the effect on IS, as a means-tested benefit, is incidental.

thanks for your thoughts, much appreciated. unfortunately he doesnt have a record of the time/date of contacting the DWP.

i think my client is going to take the pension lump sum, pay the car finance off and see what happens. i'll tell him to keep his fingers crossed