I may owe thousands in council tax arrears and I feel sick

[Littlespiderseverywhere]

So. I recently switched to UC from tax credits, and I declared my savings to them- about £7700. I knew that the limit for savings on tax credits was £16000, and on UC it's tapered from £6000.

I was also on housing benefit, and council tax benefit. I had made my initial claim for these about 15 years ago when I first moved into a house with baby DS1, and was very poor with no savings at all. Since then the only change of circumstances I had had to report to the council was moving house once.

The council have just emailed me and told me that DWP have informed them that my savings are over £6000, which is their cut off for council tax benefit. I had no bloody idea of this. I must have been told- or asked to declare any savings- 15 years ago when I first applied, but at the time I had nothing, and have no recollection of this.

My savings have been close to or over £6000 for 5-6 years!! I have always lived very frugally through fear of ending up without money again- for me, having an emergency nest egg has been top priority.

I'm so anxious and upset (hence posting at this time of night!). I'm autistic too, and I can feel the worry pushing me towards the edge of not being able to cope.

The council want to see all my bank statements for years back, and I intend to fully comply ASAP. But- as far as I can calculate- I think I will owe them about £6-7000.

Do you think I will be able to offer them a lump sum from my savings- say £3000- and set up a payment plan for the rest? I'm self employed and am not quite even hitting the minimum income floor for the hours I'm working (20 hours p/w- I have a fit note which doesn't really seem to be needed yet because I'm still on transitional protection).

I feel sick with anxiety that I could lose all the savings I've carefully scrimped and saved to build up. What if the car breaks down tomorrow?? I realise that I have only been functioning well all these years because I have been able to live within parameters of my own creation regarding hours worked and having enough money for mine and the kids' modest needs, and I'm terrified of the effect on the DC if I'm unable to remain stable and functioning for them.

Ah. I see you tried CAB.

I work in Revenue and Benefits for our Council, obviously others may be different but we'd calculate what you owe then send a letter which may say payment due in x days for each year you owed money. If the person then called up and explained the situation we would happily put a hold on the account and let you do a repayment plan.

Does it depend on council?! I specifically rang up and asked them and they said the cut off was £16k savings.

I honestly think anyone who thinks they may need state help in the future who has some meagre savings is better off buying a lovely diamond ring or something when times are good to cash in if their circumstances change.

Meanwhile a high earning relative of mine was paid £200k as a settlement to leave his city job after a row with his boss, and was able to sign on at the job center the next week as jsa isn't means tested, so the system is broken.

Realistically, one year of full council tax would take you below the £6,000 threshold, so you should not be given a bill that wipes out your savings.

Would your anxiety not be better with full time wages instead of20 hours of self employment ? Then you would just pay the full council tax with no fear of recalculation

That was exactly my thinking - any payment due should not be more than £1,700 as that will reduce your savings to the £6k level.

Just so you’re aware, JSA is funded from NI contributions you personally make. It works similar to the state pension. If you haven’t paid in, you’re not eligible. It’s designed to support working people to return to work following unemployment events. It’s only about £90 per week, and only up to 6 months. You have to be available to work throughout (it’s stopped if you onboard) and you have to demonstrate you’re working to find a job. You can work up to 16hrs whilst you’re on JSA and they deduct what you receive by what you earn.
If your relative earned £200k Pa it’s a drop in the ocean compared to the taxes & NI they paid in. And it’s in the governments best interest for that high earner to be back as a high earner asap.

To add an alternative perspective OP -

• I also owe council tax arrears

• I have no savings, no buffer, much as I’d like to have this, there’s not been any money ‘spare’ to save for a rainy day

• being hard up has left me on the edge of coping many, many times

• I work full time and have done for many years, live alone and been hit by the COL crisis, living very frugally

Pay your arrears using the savings you’ve only managed to hang on to because you received ‘benefits’.

People don’t NEED benefits when they’ve got a £6 grand buffer tucked away. You can’t have it both ways.

I know exactly how it's funded 'just so you know'

Doesn't mean I agree with it.

And he didn't earn 200k pa, this was a settlement to get him to leave the company without taking legal action for unfair dismissal. He earned around 450k pa

Be careful spending just to go below a limit. It may be reasonable to spend a large amount of money such as repairs if you own your or property or rent deposit. However the DWP or council may look at whether you deliberately spent capital to get benefits or more benefits. They treat you as having the money - you can challenge such a decision.

OP one thing to look at is whether all the capital was personal and how the scheme works if any is/was capital of the business eg aside for tax payments.

Talk to the council about whether you can pay in instalments.
Debt advice is regulated by the Financial Conduct Authority hence advisors being very careful on things like when there is a business (for serious matters personal criminal offences)

They will have a mechanism for setting up a debt payment plan rather than expecting it all at once. If you pay a chunk off initially you would be brought below the threshold.

I did work in this area and have had a quick look online. As far as I can see, you are allowed up to £16k. From £6k every £250 is counted as £1 weekly income, so £7k =£4 weekly income, £8k=£8 weekly income.
Every £1 you go over your allowance based on you circumstances, eg 1 adult, single parent, child x age, your entitlement is reduced by I think 25p per £.
Income that you have in current account that needs to be used for regular bills is not counted.
Try Welfare Rights in your area. You will need an appointment. They were good at fighting ppl corner.
I don't think it is as bad as you are projecting.
This is for Council Tax help. I do not know about UC.
Good luck. Pay all your outstanding bills to date.
They can't take off you what you don't have. Appeal if you think they are wrong or want too much at once.

So you don’t think you should be entitled to 6 months contributions based unemployment benefit if you’ve been paying your national insurance credits and lose your job? That’s a bit harsh, it’s a fairly low benefit available to us as it is.

Not if you have hundreds of thousands in the bank, no.

The threshold should be high, but there should be one.

These are rules for universal credit. Councils in England have power to set different rules (don’t know about Scotland wales or NI). Some follow similar rules some just say nothing if capital above £6000.

These rules do change and some councils have tightened so OP may not have to pay everything back if the limit was higher in previous years

That’s great!
It’s just that your comment allowed readers who might not know, to form a misinformed opinion on JSA.

It’s always great to add clarity so people can see that the relative you’re using in your example paid approx £200k each year in Tax & NI, and would receive a maximum of £2,400 back (assuming they claimed the full 6 months).
You’ll also know that it’s necessary in order to receive their NI stamps which they’re entitled to following unemployment, so they are not penalised when it comes to state pension.

It’s ok knowing that, to still be outraged at them getting a small amount back. I wonder if you feel the same about the state pension, or when they access the NHS.

Agree with this. You have been receiving benefits and have been able to save. Use the savings to pay what you owe.

I'd try the CAB again. Often they have a local office where you can pop in and chat f2f.

National debt line is good. Also Stepchange ❤️

Try not to worry too much. If you DO owe money you might well be able to make an arrangement to pay the arrears monthly. Martin Lewis has made a breakthrough with council tax debt very recently.....so the vibes are on your side 🥰

Its really helped with mine. I thought I had arthritis in my knees but since taking the HRT the pain has completely gone. The anxiety is still there though sadly, so I think I need to increase it.

He doesn't need to access the nhs as he's back in work now so bupa pay for everything. Oh and he got a golden hello of 50k before starting his 500k job, so yeah that 2.4k really was a drop in the ocean which I'd rather have gone to someone like the OP.

BUPA is entirely useless in a medical emergency situation. It only covers new, non-emergency conditions. It also doesn’t treat anything considered chronic.

You’re entitled to your opinion, and I respectfully disagree.

When it comes to finances people shouldn't rely on information from a forum, if they are old enough to have a relationship & children they should be old enough to check out finances and other legalities themselves?

Should, being the operative word.