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
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
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.
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:
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.)
This confirms it :-
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
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.