Hi

I have a tenant in his 70s who has a large overpayment of Housing Benefit due to excess capital. He is not in receipt of PC. 18 months or so ago his sister passed away and left him some money. He purchased an equity bond of £30,000. This is tied up for 5 years. This was not declared to the LA by the tenant as “he could not touch the money” Housing Benefit have now found out about the income and cancelled his claim making an overpayment of £2614.50 recoverable. My tenant has gone to a firm of solicitors who have made an arrangement to pay back the HBO at £10.00 a week. He only has his State and an occupational pension which I believe to be in the region of about £130.00 a week. His solicitor tells me the bond cannot be cashed except in extreme circumstances. Should this have been brought into his benefit calculations since he is unable to access it. Any views would be very welcome

Thanks

Carrie

The decision should be appealed. Any capital available to the claimant on application is only treated as his capital from the date he could acquire it if he applied for it (reg 49 HB Regs 2006).

Regards
Paul

"........His solicitor tells me the bond cannot be cashed except in extreme circumstances".
Did he specify the exact nature of the extreme circumstances.? Probably serious loss of interest. I think your problem may lay in the fact that your client inherited cash, at which point he had the choice of where to invest it etc - the fact that he then put it into a bond which will probably penalise him heavily should he cash it within the 5 year period was of his choosing....

When you say he he only has state pension plus P.Pension which amounts to £130 per week, do you mean added together, or PP of £130 pw on it's own....?

I broadly agree with Mike.

There are two issues:

1) can it be disregarded under Sch 6? If yes, then the next question makes no difference.

2) can the capital be obtained?

If the capital cannot be disregarded and can be obtained, now, then it counts - even if penalties will be incurred. However, if the capital CANNOT be obtained for 5 years, then I agree with Nevip.

As an aside, your post is a little contradictory. It indicates that the bond CAN in fact be cashed, but then it indicates the clmt is unable to access the bond. Both statements cannot be correct.

Regards

Hi Kevin

Hmmm I did not make it clear did I . My tenant thinks the bond cannot be cashed, but he is a little confused. Housing Benefit say it can be cashed. The solicitor claims it can only be cashed in extreme circumstances.

Mike, His total income is in the region og £130.00 weekly.

Another concern I have is that he was on benefit before he inherited the money from his sister.

Carrie

On the basis of what you have said so far, it sounds to me that if he cannot realise the fund then he will have deprived himself of capital. So the question really is whether he has notional or real capital, either way he will be on to an OP although the amount of the OP may be effected by the calculation of his capital e.g. whether the diminishing capital rule will apply to the notional capital or whther the costs (i.e. penalties) in withdrawing the money early would also serve to reduce the amount taken into account.

This then leaves the question of recoverability. It may be worth an appeal just to test the water and find out if the LA can prove that he failed to notify the COC.

Notional capital is only at issue if:

1) the bond cannot be cashed, AND

2) there was a "significant operative purpose" in making the bond "unobtainable" in order to obtain, or increase, HB/CTB.


Regards

True, and that what was I was getting at in terms of 1).

If this does turn out to be an issue because the bond cannot be cashed then the LA will have to provide some evidence of intention. Another reason why an appeal to test the water would be in the client's interests.

I would be very surprised if the bond cannot be 'cashed' by the claimant. It is likely he will simply lose interest or incur a charge.

However, if there is an element of Life Assurance in the bond (even if it is ancillary to main purpose), it would be disregarded in full - see R(IS)7/98.

If it is disregarded for this reason, although converting capital from a non-disregarded form into something that is disregarded can be considered deprivation, I imagine it would be extremely difficult to prove in this case - the LA would have to prove the claimant knew the bond would be disregarded.

Even if the bond cannot be cashed it would presumably still have a capital value to the claimant which he could realise by selling on the right to cash the bond in the future.

My view of this case is that it is actual capital and there is no way around that.