BENEFITS EXPERT: Should we downsize our house?


My husband works full-time but I cannot work anymore due to poor health. We are thinking of selling our house and ‘down-sizing’.  

 That way we could have a few thousand to help us out in our retirement.

 But we would not want to do this if it meant me losing my benefits. I get Disability Living Allowance (DLA) and Employment and Support Allowance (ESA). How would these be affected?

DLA is not means-tested and therefore not affected by income.

 ESA based upon National Insurance Contributions is not affected by savings. If you do not qualify for Contributory ESA, you can only qualify for ESA based upon your income, including that of your husband.

 Someone whose partner works 24 hours a week or more will not qualify for Income-related ESA.

 Joint savings over £6,000 reduce Income-related ESA and it is not payable at all where savings are more than £16,000.

 People in the ‘work-related activity group’ for ESA can only receive Contributory ESA for a year, while those in the ‘support group’ can receive it indefinitely.

 With your husband working full-time you would not be eligible for Income-related ESA if you ceased to qualify for Contributory ESA.

 So it all boils down to whether or not you are in the support group. If you are, your savings will not affect your ESA. If you are not, you might wish to consider asking for your case to be reviewed with a view to you being placed in the support group.

I am being finished at work because I have had a stroke.

 You recently told me I could then claim Guarantee Pension Credit and full help with rent and Council Tax.

 My employers have offered me a choice between being paid my normal wages for the next 12 weeks or taking them all in a lump sum. The lump sum would bring my savings up to about £11,500. Which would be to my advantage?

If you draw wages for the next 12 weeks you would not be entitled to Pension Credit, Housing Benefit or Council Tax Benefit during that time.

 If you decide on a lump sum this amount would not be treated as income. Payments of earnings when you leave a job are ignored and a lump sum of this sort would be regarded as part of your final earnings.

 You would therefore be able to draw Pension Credit and receive maximum Housing Benefit and Council Tax Benefit right away.

 As every £500 of savings over £10,000 is treated as £1 a week income, your Pension Credit would be reduced by £3-£4 a week if the lump sum increased your savings to £11,500.