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!

I've emailed the CAB and my local mental health benefits service, hopefully they will come back to me soon.

Similar situation to a friend of mine. They had been underpaid ESA for many years and received £32K. As it was the fault of DWP then it was deemed their error and exceptional circumstances so they were not penalised for having such a large sum sitting in their bank account and could spend it as they wished, whilst retaining their usual monthly benefits. Obviously this was DWP and your dealings are with the Council, but it was their error ultimately. Speak to the CAB as per pp, and then Council and DWP if needed. Good luck!

You mentioned you don't drive, could it be a possibility to learn in the future or can you not learn due to ill health/mobility issues?
If you can, I'd consider driving lessons & a small car.

Maybe a sunshine break for your mental health?

I really hope it does work out like your friend @swampusdonkus
I can't learn to drive unfortunately, poor eyesight and motor/coordination difficulties. A holiday might be a nice idea, I haven't had one in years.

Another person saying get proper advice, if the council has overcharged you for 10 years, then you will have been living on lower than the minimum the government level to meet your needs .

Get some proper advice from an expert. Nobody qualified to advise you will advise on mumsnet.

Understand legally what impact it will have on your benefits.

Pension contributions might be an option but don’t do anything without expert advice.

Seems odd to me as this is Money that you paid out, mistakenly, over many years, not quite sure why it should then affect benefits, they are effectively taking the money back off you again.

Get some advice.

Compensation usually gets written off for a year. Not sure if this would fall under that but worth checking?

Pip isn't means tested so you need not say anything about that. It won't change.
If you're on ESA or UC or other means tested then you'll have to tell them and stop the claim.

If your benefits have been underpaid, you could be entitled to a back payment from the DWP.

This might involve a substantial lump sum payment. This could push you over the savings limits for means-tested benefits, including:

• income-based Jobseeker’s Allowance
• income-related Employment and Support Allowance
• Income Support
• Universal Credit
• Housing Benefit
• Pension Credit.

In some cases, this payment isn’t counted as savings for one year, and won’t affect your income-related or means-tested benefits during this time.

However, where benefits have been underpaid because of an error, any payments over £5,000 can be disregarded for the length of the claim or until the award ends. This could be an official error or on a point of law

https://www.moneyhelper.org.uk/en/benefits/problems-with-benefits/how-do-savings-and-lump-sum-pay-outs-affect-benefits

That doesn’t sound right. You should have been living on it in the past but we’re surviving on less due to their mistakes.

Read this and ask DWP if they can provide a letter which you can give to the council re housing benefit.

Backdated lump sum benefits payments from DWP

You could put some of it into a private pension which then won't be counted as savings. But like others have said, get some proper advice.

It's not technically backdated benefits though - it's a repayment of care costs that OP was paying to the local council and has now been told is due to be repaid as it was charged in error.

@AllBranEater I recommend you get advice from a benefits specialist over this. I think it's likely you can have it disregarded.

I would suggest that you approach CAB or similar.
Other posters are correct in saying that a large payment of benefit arrears ( which could be due to error, or just the effect of another benefit itself being backdated) can be ignored for up to 52 weeks, or indefinitely depending upon the amount. £40k would definitely be in the latter category.
It depends on whether or not the DWP decide that the payment can be disregarded.
Even if it is deemed as capital you are allowed to spend it reasonably. It would make sense to update your furniture and white goods if necessary, probably for the first time you could buy items not from the budget range. The DWP would look at deprivation of capital, but in order to be treated as deliberately depriving yourself of capital in order to become entitled to benefits that has to be your main, or very significant motivation. Sensibly purchasing better quality, longer lasting items when you have what is likely to be your only ever large lump sum, or even something like learning to drive and purchasing a car is not expenditure just to get benefits.

I have no advice to add, but second the advice to get proper legal advice. I came on the thread to hope you get a lovely holiday!

Overpayments shouldn't be counted for the first year if I remember rightly, so in that first year use it to do house improvements etc, and you can have up to sixteen thousand saved before your benefits stop completely. I would get advice before cancelling your benefits

Please get some advice asap

This group is great. The answers are reliable.
Benefit support

But basically, this would be disregarded for 1 year and you can use that money fir things like buying a car or buying some appliances that really need to replaced etc….

Having says that PIP won’t change even if you have more than £6k.
ESA wont either if you have contribution based ESA. (Otherwise you will have been moved or in the process of been moved to UC anyway)
UC yes will change for capital higher than £6k.
Bit overall it might change much less than you think.

The payment is for the care costs overcharged by the council. It's NOT benefit therefore the DWP capital rules for benefit do not apply.
OP you also need to check the council has calculated the interest due on the money they incorrectly took from you for so many years.
If you receive the payment into your bank account your entitlement to the payment of housing benefit stops. Income related ESA stops.
You keep your PIP and any contributory ESA. When your capital falls to under £16k you can then claim Universal Credit.
It's essential you seek advice from a specialist adviser BEFORE accepting payment.

Thanks, but the facebook group leads to an error when I click on it unfortunately, it sounds useful. It's IRESA, so I will get a letter soon about moving. I've emailed my local citizen's advice, and another benefits charity. Hopefully they can help me.

Trying again @AllBranEater
Its this one here : https://www.facebook.com/groups/278260135547189

Hopefully it will work.
Otherwise search for U.K. ME &Chronic illness Benefits Advice Group.

Indeed this. Please speak with Citizens advice OP. If you just spend it they will say it's a dereliction of finance. People on benefits are not allowed naice things

Hmm, I've tried googling that, and it brings me to the same page as your link, which says: "This content isn't available at the moment
When this happens, it's usually because the owner only shared it with a small group of people or changed who can see it, or it's been deleted."

@NoEscapingMe - I know, that's something that worries me.

Find out if you are allowed to put it in a pension.

It's because it's a private FB group. Do you have a FB account? If so try searching for the group using the FB search bar.