Backdated pip payment

Hi mikmikmik.
Arrears of PIP etc are always disregarded for means tested benefits such as ESA or UC, Housing benefit etc. However when the payment was made due to an error of law (Leap payments would clearly fall into this category!) and the payment is over £5000, (again your payment would comprise this) then the payment can be disregarded until the end of the award of the means tested benefit. (This basically means until you stop claiming ESA etc, if there is a review and benefit continues this won't matter, it will be treated as the same award for these purposes.)

The rules appear to be very similar for UC. Additionally if you were previously in receipt of eg ESA and that ceased because you were migrated or for some other reason, as long as UC entitlement (which may not coincide with actual payment date if there is some delay) starts within 1 month of the previous benefit ending then the arrears are disregarded. Again for under £5000 it's 12 mths, for over £5000 the disregard is for 12 mths or the termination of the current award, whichever is later.
Here are some examples that are provided in ADM Chapter H: capital disregards (this is the Decision maker's guide for UC)
Example 1
Glyn is entitled to UC. His award began on 17.5.18 when he moved to a different LA area and was unable to claim HB. On 23.10.18 he receives a payment of £6,802.03 arrears of ESA(IR) after the decision converting an award of IB to ESA is revised for official error. Glyn’s award of UC ends on 3.2.20 when he claims SPC (State pension Credit) . The payment is disregarded as capital for the whole of Glyn’s award of UC.
Example 2
Chantelle is entitled to IS as a lone parent, as well as PIP standard daily living component. In April 2019 she receives a payment of £7,099.65 arrears of PIP after her PIP award is superseded for error of law to include the mobility component from 28.11.16. The payment is disregarded as capital for the purposes of IS. On 10.7.19 Chantelle’s award of IS ends when her youngest child reaches the age of 5. Chantelle claims and is awarded UC from 11.7.19. The remaining amount of arrears of PIP continues to be disregarded as capital for the purposes of UC.

As to whether you NEED to notify, theoretically not, because it's disregarded, but I would always err on the side of caution, because although UC/ESA/PIP are all from DWP they are separate departments, and if something goes wrong they will swear blind that they have no knowledge of what each other has done, and legally the onus is on you as the claimant!
What I would suggest is to notify ESA and Local Council in writing saying that you have received £7k as arrears from PIP. You can enclose a copy of the Decision/Payment notice to accompany these letters. You may wish to state that you now have £2.5k + 7k in the bank. You can state that you understand that the £7k arrears is disregarded for the lifetime of the means tested award. Send recorded delivery!
Keep a copy of each of these letters, and make sure NI Number and or Housing Reference Number is clearly marked on all pages. The ESA letter would need to be sent to wherever your decisions derive from.
I personally don't know what the UC application form entails in respect of capital, but presumably given that there is a disregard there will be a space for this, or maybe there is additional info box. If not you could send in a copy of the arrears notice, and the letter you are about to send to ESA, and explain your savings. That said, unless you feel a migration to UC is imminent I wouldn't worry!
Depending on what exactly the Leap arrears comprised (ie whether this was just for daily living, or mobility or both) this may qualify you for additional premiums/benefit. It may be worthwhile asking a local advice centre to do a full benefit check. It is possible that other benefits might have arrears too! It is likely that these would also be disregarded in the same way - no doubt an advisor would be able to clarify this.
The PIP arrears are disregarded and can be used for anything, basically this is money that you should have had previously to help you with expenses because the idea of PIP is that disabled people often have more costs eg taxis etc, you are not restricted in what you spend, or alternatively you can keep the money in the bank for a rainy day!
I hope this helps.
LL26

Hi mikmikmik

I did email the DWP in regards to benefit backdate and claimants going over to UC and received the following reply:

As per UC eligibility criteria arrears of benefit, Tax Credits or compensation for non-payment of £5,000 or more paid due to official error or error of law can be disregarded for the length of the Universal Credit award. The disregard applies to claimants who receive a payment of arrears or compensation:

` whilst in receipt of Universal credit

~ whilst in receipt of a Legacy benefit and migrate to Universal Credit with a gap of less than a month between awards of benefit.

This longer disregard will only be available on a transitional basis and will only apply to payments of arrears or compensation which relate to a period before Legacy benefits are abolished. Once migration to Universal Credit is complete and Legacy benefits are abolished, a standard 12-month disregard will apply to all new benefit arrears and compensation payments whether or not they are due to official error or errors of law.

Gary