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Q: Buying a car on Social security ( No Answer,   4 Comments )
Question  
Subject: Buying a car on Social security
Category: Relationships and Society > Law
Asked by: kimba6-ga
List Price: $5.00
Posted: 30 Apr 2006 07:17 PDT
Expires: 30 May 2006 07:17 PDT
Question ID: 724107
I am recently divorced from my husband and the house and all assets
sold, I received 18,000 from the sales. I have qualified for pension
credit and the amount is dependant on how much money I have left over
6,000.
I asked from the outset if I could buy a car from my assets and was
told that it would be ok. They now say that the car price (11,000)
will be added to my notational capital and benefits reduced
accordingly. Does anyone know the rules regarding this especially for
depreciating assets like cars, surely there are guidelines as to what
you can buy with your remaining capital without being penalised on the
pension credit question.

Clarification of Question by kimba6-ga on 01 May 2006 03:33 PDT
Question relates to the United Kingdom
Answer  
There is no answer at this time.

Comments  
Subject: Re: Buying a car on Social security
From: cynthia-ga on 30 Apr 2006 15:12 PDT
 
I'm certain there is an amount you CAN spend on a car that will not
reduce your benefits, capped at "X" dollars. Find out what that cap is
and stay under it.
Subject: Re: Buying a car on Social security
From: pinkfreud-ga on 30 Apr 2006 15:17 PDT
 
It would help if we knew your nation of residence. Since you use the
pounds-sterling symbol, I assume that you are not in the USA.
Subject: Re: Buying a car on Social security
From: answerfinder-ga on 01 May 2006 03:48 PDT
 
This is not an area that I could offer advice on, but if you have not
seen this before, it may help. It has paragaraphs on assets and
capital.
http://www.thepensionservice.gov.uk/pdf/pensioncredit/pc10sapr05.pdf
Subject: Re: Buying a car on Social security
From: frde-ga on 01 May 2006 04:59 PDT
 
This certainly sounds like the UK

I've heard about this, if you sell a home and intend to buy another,
then those funds are not counted as assets for benefits assessment.

The following applies to Housing Benefit & Council Tax Benefit 
- NOT Pension Benefit - I've found other stuff on that - more later

http://www.manchester.gov.uk/benefits/claim/capital.htm#We don?t count

<quote>
We don?t count...
money which is part of your regular income - for instance, wages or a
student grant - we will count this as income instead
the value of your home where you usually live 
money from the recent sale of your home which you are going to use to
buy another one if it is reasonable to do so to enable you to complete
the purchase
</quote>

Later :-

<quote>
What happens if I spend my capital or give it away?
We will treat you as still having capital if you spend it or give it
away either solely or largely with the aim of getting benefit or
getting more benefit. If you use it to pay back a debt we will
consider whether you had to repay it at the time.
</quote>

Basically the 18,000 has been ring fenced for buying another home,
but if it is spent on a car, then they can deem that it could not be
spent on a home, so it is (or was) capital.

In some ways that sounds unfair, but in other ways it is reasonable,
'ring fencing' money from and for, a home is quite generous.

On the other hand the Pension Credit stuff is interesting:

http://www.rnib.org.uk/xpedio/groups/public/documents/publicwebsite/public_pensioncredit.hcsp

<quote>
The first 6000 of your savings and capital are ignored in the
calculation for Pension Credit. There is no savings / capital limit
above which you cannot claim Pension Credit.

The Pensions Service count 1 a week as income for every 500 or part
of 500 over 6,000 you have in savings. (For care home residents the
first 10,000 of savings ignored.)
</quote>

This confirms it :-
http://www.direct.gov.uk/Bfsl1/BenefitsAndFinancialSupport/BenefitsAndFinancialSupportArticles/fs/en?CONTENT_ID=10018692&chk=qflERR

I think that what has happened is someone told you the 'ring fence' rules
(which might apply to pension benefit, although I can't see any reference to it)

Alternatively, getting rid of assets before applying for pension
benefit is probably a bit tricky for them to prove.
Perhaps they were giving you a hint.

My inclination would be to negotiate with them, point out that the
18,000 comes from assets that need to be replaced, that you need a
car etc.

The plus side is that you can get Housing Benefit and Council Tax
relief regardless of 16,000+.

Also 12,000 should at 4% pa pull in 480 
- while you are losing 2 * 12 * 53 = 1272 in benefit
- it does seem a bit 'cheap'

I expect you can beat them down to a 6000 car and a few other odds and ends.

Good Luck

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