DR v Secretary of State for Work and Pensions (SSWP)

For universal credit, capital is relevant unless a specific statutory disregard applies. Whether a payment is taxable does not determine whether it is disregarded for universal credit purposes. Compensation for injury to feelings is distinct from compensation for actual physical or mental injury and does not, without more, fall within the personal-injury disregard. A decision-maker should not treat a claim as simply “closed”: that expression has no apparent legal basis in the relevant decision-making legislation and may obscure appeal rights. An error concerning an earlier claim remains immaterial where the tribunal made a clear finding that the claimant’s capital exceeded the upper limit and the outcome could not have differed.

The appellant challenged the First-tier Tribunal’s refusal of her appeal against a decision concerning her entitlement to universal credit. She had received approximately £27,000 under an ACAS settlement comprising sums for loss of employment, statutory redundancy and injury to feelings arising from alleged discrimination. By the date of her later universal credit claim, she retained capital of £10,700.

The First-tier Tribunal found that the capital could not be disregarded and that an assumed yield deduction therefore applied. Permission to appeal was granted on two issues: whether the First-tier Tribunal had wrongly failed to recognise an earlier 2019 claim, and whether the settlement payment was capital which could be disregarded. The central questions were whether either error of law was material and whether any part of the settlement fell within the statutory disregards.

1. The appeal was dismissed. The First-tier Tribunal’s decision disclosed no material error of law.
2. The First-tier Tribunal erred in finding that the appellant had not made a universal credit claim in 2019. The DWP correspondence confirmed that a claim had been made. The description of a claim as “closed” was legally problematic. As explained in PP v Secretary of State for Work and Pensions (UC) [2020] UKUT 109 (AAC), the concept of case closure is jurisprudentially suspect. It does not appear in the Social Security Act 1998 or the Universal Credit etc. (Decisions and Appeals) Regulations 2013, and the DWP’s approach may have denied the appellant an appeal right.
3. That error was immaterial. The First-tier Tribunal had made a clear and indisputable finding that the appellant held more than £16,000 in capital in 2019. Under regulation 18(1) of the Universal Credit Regulations 2013, that excluded entitlement to universal credit. Correct notification and appeal procedures could not have produced a different result.
4. The settlement proceeds constituted capital. Tax treatment was irrelevant to the universal credit capital rules. The relevant question was whether the proceeds fell within a statutory disregard, including those in Schedule 10 and regulation 75 of the Universal Credit Regulations 2013.
5. Regulation 75 applied only where the sum was agreed or awarded in consequence of personal injury. The expression “personal injury” bears its ordinary meaning and includes disease and injury resulting from disease, as stated in R(SB) 2/89. Compensation for injury to feelings, however, is distinct from compensation for actual injury to physical or mental health, such as psychiatric injury. The sums for loss of employment, redundancy and injury to feelings therefore did not qualify for the disregard. The retained £10,700 was properly taken into account and the assumed yield deduction was correctly imposed.

• First-tier Tribunal (Social Entitlement Chamber): On 7 September 2022, refused the appellant’s appeal against the Secretary of State’s decision dated 27 December 2020.
• Upper Tribunal (Administrative Appeals Chamber): Dismissed the further appeal under section 11 of the Tribunals, Courts and Enforcement Act 2007.