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Prize Money - Income or capital?
Hello
If a UC claimant enters an art competition and wins a cash prize, am I correct in saying that this would be treated as capital, rather than income? I think that this is the case, and so it won’t affect UC as long as it doesn’t bring capital to £6k?
It’s just £60, but want to be sure that this shouldn’t be treated as earnings. (especially if there is no work allowance)
Thank you
Martin
If its just a one-off prize from an amateur art contest, then its not going to form part of any self-employment and it isn’t otherwise earned income (see reg 52) or unearned income (see reg 66) so it isn’t income for UC purposes. Perhaps if your client were to be running around earning a living by hustling these competitions all the time, then the answer might be different.
Thank you, Elliot - yes, it’s a one off prize for an amateur contest.
This makes sense - thank you for explaining.
It’s never been totally clear what Reg 52(a)(iii) includes.
I’ve always thought (and I think the S&M commentary may suggest this as well, but I don’t have it in front of me) that it probably is intended to include paid work which is not sufficiently organised to be considered a trade.
If so, it may well be that the prize money should be included as earned income under that heading.
It’s not really “paid work” in any sense though, is it? There is a disconnect between the payment and the work - in that you are not creating the artwork in exchange for a commission, you are creating the artwork for its own sake and there is, separately, a chance that the judges might like it and give you a (fairly nominal) prize to acknowledge the skill demonstrated.
Yes, thinking it through, I agree with you that this wouldn’t be paid work.
It’s not really “paid work” in any sense though, is it? There is a disconnect between the payment and the work - in that you are not creating the artwork in exchange for a commission, you are creating the artwork for its own sake and there is, separately, a chance that the judges might like it and give you a (fairly nominal) prize to acknowledge the skill demonstrated.
If you were really confident, it might be in ‘expectation of payment’. What about if you cheated?
Following a flight of fancy; what if an ‘employer’ set up a competition to see ‘who could carry out a task best’, with a prize equal to the pay for a job. The conditions of entry made it very difficult for another entrant. No tax, NI or deduction from benefit?