If you are held to have deprived yourself of some capital in order to get or increase housing benefit, you will be treated as if you still had it. This is called ‘notional’ capital. This can include money that you spend, transfer or give away from your pension pot. In some cases, the amount of notional capital along with your actual capital will exclude you from housing benefit. Or, you may be entitled to housing benefit, but because of your notional capital the assessment is related to a higher tariff income than your actual capital warrants (see 24 above ).

If there were good reasons for spending your capital, and getting housing benefit (or more of it) wasn’t a significant motive for spending the capital, you should not be affected.

If you are held to have notional capital on this basis, the local authority will apply the ‘diminishing notional capital rule’, which reduces the amount of notional capital over time.
HB Regs, reg 49

Y