On benefits, due a sudden lump sum of 40K, what do I do?

[AllBranEater]

The council have just sent me a letter saying that they've been overcharging me for a contribution to my care costs for 10 years, so they need to give me just over 40K back. Obviously I will have to cancel my employment and support allowance, housing benefit and council tax reduction, but I think I get to keep my PIP?
I've done a budget, and with only PIP as income I will have an annual deficit of £10,448.26.

I am also aware I might think of something(s) to buy with some of it, whilst thinking about deprivation of capital in a few years time.

So I'm wondering what to do in terms of saving it. I think that I need to keep £10K-15K in instant access, but I'm not sure? The rest I might be able to put in an account where you lock it away for a year for higher interest, or with limited numbers of withdrawals?

Any thoughts appreciated!

Personally I would decorate and buy new appliances if yours are old and buy a newer car.

Why can't you live on the money and save a small amount of it? Not sure if I'm missing something here ...

Are you likely to use that much care going forward? If so, they could keep some of it on account for you against the costs you will continue to incur?

Basically spending to future proof, make your house as file efficient as possible.

In reality the capital will get spent and you will become eligible for various benefits again.

You’ll probably need it to live on

Will it actually class as savings? I've heard anecdotally where the amount comes from an underpayment of benefits previously it's not classed as savings....it's not something I've ever looked into but I thought I'd throw it in as a consideration

Thanks, appliances are a good idea - I don't drive.

I am going to live on it, it's just working out how much to say and how

I wont incur any costs in future apparently - I was sectioned under section 3 of the Mental Health Act, so aftercare is free.

Get proper advice. You are allowed to buy things needed. Have you any expensive house repairs like roofing, heating or windows - do things that you haven’t needed but that make life better. Fixing a roof is ok …

I would talk to a benefits advisor. The lump sum isn’t an inheritance or lottery win. It is backpayment of benefits you were supposed to get. You shouldn’t have to cancel your ESA, UC, and so on.

I would talk to DWP as sometimes if there’s been an error then there’s a period where the lump sum is disregarded.

First of all OP ask the council to hold onto the money until you've had a chance to get some proper independent financial advice. Could you explore shared ownership or are you already in the right home for you? Any debts that could be settled, any essential equipment needed that you've not been able to access due to cost? Until the money is physically in your account you don't technically have it so please get advice before having to give up means tested benefits until you absolutely have to 💐

@RandomMess @RubyRedBow I will live on it and then go back to benefits.

You are entitled to spend your money as you wish. Does your house need adaptations? New furniture? Redecorating?
This was the advice my DM's social worker gave her when her savings tipped over into her making contributions to her care. You don't have to deny yourself.

I would speak to a benefits advisor, Citizens Advice or maybe Mind should be able to help

You won't lose PIP as it's not means tested, it's an in work benefit to help with costs of a disability/health issues. You can be working and still get PIP.

It's the council rather than DWP, but I will check. I am delaying the council as much as I can, but they keep reminding me.

I'd speak to the DWP. If you need to use it to live on, they'll calculate for how long it needs to last.

You might not though as it's an overpayment. You'll need to find out.

Thanks all.

You need to check how this money would be counted as it is the return of an overpayment due to an error. It is going to throw up problems if your ESA is closed as you may then need to undergo another work capability assessment when you reclaim and if it is income related ESA you are going to have to claim Universal credit instead when the money drops to 16k. You may lose out on transitional protection etc. This has huge implications so make sure , as others have said that you get proper advice form CAB etc.

I second speaking to citizens advice, I wouldn't speak to DWP as there's a chance they'll just see that conversation as you informing them of the money being there and then you losing your benefits before you have the money.

I'm not 100% sure but I think if the money you have is to be spent on your home, it may be disregarded as capital

Please get some proper advice about this OP. It would be very unfair if this was classed as savings. It isn't savings, it's income you should have been receiving over the last 10 years. Maybe speak to CAB.

@AllBranEater shocked that you are going to be financially penalised due to their massive error! I think your benefits should remain untouched in this instance!

You should get proper advice on this as it’s an underpayment that has accumulated. If you hadn’t been underpaid at the time presumably it would have been part of your normal budget and wouldn’t have become savings.