Millionaire on benefits- rare of course- but is it time for means testing disability benefits

[Flippityflops]

Close friend is a millionaire .
Has not worked since age 40 .
He now has a disability and on his account s advice , he claims non means tested benefits he says .

if this is indeed true- given that such benefits cater for additional expenses of living with a disability, and he absolutely does not need it .. isnt it time that this benefit is means tested in these different times to prioritise the financialy vulnerable.

He for example told me - unsure if its true - that he bought a beautiful 3k painting wirh the money.
it’s gorgeous ive seen it and it dows add value to daily living .

its a bit like the taxpayer is giving him a huge freebie and we cant afford it and those in his income bracket.

As the necessary data is potentially changing all the time, hence the need for means testing to be an ongoing and regular commitment, how would that mean testing costs went down every year and also became cost effective? After all, people's finances don't necessarily become less complex over time.

You also need to factor in the cost of people responding to means testing by ensuring their income falls within the threshold. There will inevitably be some of this for people close to the line and/or whose awards are particularly large.

family member is friends with him

Not a great friend if he’s gossiping about his financial affairs.

How do you know he's a millionaire? How do you know what benefits he's on? I would just ignore him on the subject of finances.

YANBU

ALL state benefits (incl state pension) needs to be means tested, including disability payments. Obviously the level needs to be set high, but we can't afford to be paying benefits for people who don't need them by some high margin.

One of our neighbours, (he's a retired GP, she's a retired dentist) who already had two "nice" newish cars, got a mobility car - what they call their "fun" car - a sporty little Mini. Yes, I know they're entitled to it and it's paid by their disability benefits, but they didn't "Need" the extra car, and don't "need" the benefit payments. Pretty sure they could have afforded a sporty little mini out of their own funds if they really wanted to!

Simple to "means test" via tax records. Those with higher incomes will already be doing annual self assessment tax returns, so there's already a "rough and ready" way to use declared taxable incomes that would work for most people.

Fair enough, it won't pick up fraudsters fiddling their taxes, or those with high tax free incomes/gains from ISAs etc., and be problematic for non doms etc., but could certainly be used for the "top end" of people who'd still have high taxable incomes even with ISAs or a bit of tax evasion.

Got to start somewhere. Just because something is "hard" doesn't mean we shouldn't do it.

No, disability benefits should not be means-tested.

If you are a millionaire and your disability needs are extensive you may actually be a lot poorer, in terms of lifestyle, than a non-disabled person of average wealth/income. Being disabled is very expensive. No one chooses to be disabled, it is not a moral failing to be punished, therefore the additional costs should be borne by the whole of society.

It's not about hard, it's about whether it actually saves anything and doesn't cause more problems than it solves. We must do something and this is something is a terrible way to make decisions.

A small majority of the population are doing self assessment tax forms, and they're all doing them as individuals. The way means testing for benefits works in the UK is that it's done by the couple's income. It would be an option to do it for individuals, but that not only means any threshold will catch fewer people, it also means different systems to the current means testing. Alternatively, we do it as households which means your 'rough and ready' way is even less useful.

I'm also wondering, do you envisage this being applied to children's disability benefits, and what would the criteria be there?

You've additionally left out people working and earning less in order to stay below any cap. That would happen, and it needs to be factored in.

PIP is a gateway benefit, you have to apply for the benefit even if you don’t need the money itself, to access other support that you do actually need such as blue badge, adapted mobility car, carer access / accessible zone in theatres and events, etc.

I guess it depends how old you are and what your living costs are! (And how long you live for- but of course no one can predict that).

I’m in my late 40s and I live in a very expensive part of the country. I wouldn’t expect a million pounds to last for the rest of my life even though I don’t have a lavish lifestyle. (Of course I might die next year, in which case a million would do nicely, but if I live to 80-odd, I would expect to need more than a million to last me till then).

Then use a similar system to child benefit then, where you can claim it, but tick a box instructing not to pay it. By doing so, the claiming parent claims "credits" for state benefits such as state pension, but doesn't actually receive the money.

They've managed to create that system for child benefit, so just "tweak" it for other benefits at a much higher threshold.

As far as I know, you don't have to be claiming PIP or disability benefits to be able to claim for a blue badge for parking.

No one has yet said whether they’d be happy to swap their health or that of their child to be able to get disability benefits?
My child will never live an independent life. We can afford to pay for everything he needs currently out of our income. His DLA is mainly put away so that when we’re dead and gone he’ll still be able to have some quality of life (which will have to be managed by one of his siblings).

Nobody is 'punishing' anyone for being disabled. What a strange thing to suggest. Nobody is looking to tax disabled people more or make them ineligible for universal benefits. it is about whether they should be eligible for disability benefits if the individual has the means to support themselves.

We all have our burdens to carry. It isn't just about disability but can be about having a crappy or traumatising childhood, being the victim of abuse, experiencing poverty... the list is endless. Very few of these things are a choice but it's likely that they will hugely disadvantage us in life. Society would buckle under the strain of all the burdens if we don't accept that where at all possible we should look to carry our burden ourselves. A millionaire can meet the costs of their disability. Why should poorer people with their own struggles be paying for this? It is insane.

Child Benefit isn't calculated as a household or couple. Child disability benefits could be means tested through the CB mechanism too with a higher or lower threshold.

The best way to stop people earning less to stay under the cap is to avoid cliff edges.

Unless I'm way off, disability benefits aren't (and wouldn't be) based on household or couples either. Presumably it's the "person" who'd disabled, so you can use personal tax records to dictate whether their income is high enough that they don't "need" disability benefits. Yes, there is freedom for married couples to transfer assets between them, as they already do for tax planning etc., but that has other risks. It's not perfect to based disability benefits on an individual's income, but it's a start, and really there's nothing "perfect" about any aspect of our tax/benefits systems.

If someone has very high income levels, then they can pay for their own car, or pay for adaptations for their car. They'll get the VAT knocked off anyway so that's a 20% saving against other non-disabled people!

Why would someone with an income of several hundred thousand per year "need" a freebie paid for effectively by lots of much lower earning workers??

No one is suggesting the means test kicks in at low levels. We're talking millionaires.

If it's got a higher or lower threshold than CB, that makes the administration more expensive because something new would have to be created and maintained. This lessens the likelihood of the means testing saving any money.

Obviously, as you say, avoiding cliff edges is sensible policy. That means using the child benefit threshold itself would be a bad idea, since some people would then end up with ridiculous marginal rates. Which is unfortunate as that would be the most straightforward way to do it. Also probably rules out either the 50k or 100k points, since those are already cliff edges.

It sounds like you're talking about means testing the disabled person only? Ie you wouldn't take into account the resources of their spouse or parents when it's a child?

I can't say I'm confident this is how it would work in practice, especially with adults. Most means tested benefits in the UK also consider the income of any cohabiting partner.

There would also be no guarantee whatsoever that any means testing would only affect millionaires. Not least because the fewer people who are affected, the less likely it is to pay for itself. I mean, how many people on PIP have millions of pounds of their own resources (presumably not including their home, most people's main asset) without even counting the income of their partner?

Hmmm I don't think it would cost that much if you used a mechanism like the High Income charge that they use for CB. Ultimately having a threshold means a lot of people won't bother to claim at all if they exceed the threshold which will be a massive saving and then you are just left with an increase in self assessment for those that want to claim have it clawed back through income tax. The cost of fraud of course needs to be considered but it's important to remember that we are currently paying these benefits to everyone irrespective of income.

CB actually isn't a cliff edge tax so it could sit at a similarish level. Also lots of people claiming disability benefits don't have children.

I'm surprised it's not means tested. It usually is

@Flippityflops close friend huh? You don’t sound like much of a friend.

No PIP shouldn’t be means tested. Your one example out of millions means fuck all but your proposed means testing would ensure that swathes of people with disabilities would be on the wrong side of any cut off point (because it wouldn’t be £1mil) and suffer hardships because their disabilities mean they can’t meaningfully increase their earnings.

I'm not sure if someone would manage to stay rich on disability benefits. Id imagine his millions will go down pretty fast if he keeps spending like he is!

@Bumpitybumper

CB actually isn't a cliff edge tax

I agree. There are worse "cliff edges" where you can actually be significantly worse off by earning a pound more. CB wasn't like that as it tapers away. A lot of the problem was that it was at the same threshold as higher rate tax, so there was a "double whammy" of losing some CB at the same time as paying higher level of tax on the extra income over the £50k. To some extent that double whammy isn't as bad anymore now that the CB threshold has been raised to £60k. So, no, the CB wasn't and isn't a "cliff edge" as such.

If their spending due to disability is that high, then they'd pretty soon come back into scope of earning below the threshold so would get benefits. No one is talking about a low threshold akin to the WFA or the £16/£17k savings threshold for universal credit/pension credit etc. I think we're all talking about much higher sums around either a million of savings or £100k of income.

I think realistically the threshold would have to be closer to £60k to make any real savings.

Interestingly the estimates in terms of the amount of money a child costs each year and the amount of money a disability costs each year are roughly the same (around £12k). If £60k is deemed an acceptable threshold for which families no longer are eligible for additional payments from the government then why wouldn't the same be true for disability? The government obviously think that someone earning this amount can meet the costs of raising a child themselves so why couldn't someone on this income meet the costs of their disability?