tax credits benefits and windfalls - hypothetical question

all_hours · 12 May 2006 at 12:00AM

does anyone know how a small sudden windfall would affect your rights to receive tax credits or any means tested benefits. obviously if I won £millions on the lottery it wouldn't be an issue. but if you won £10k-£20k would you have to declare it as a sudden increase in savings and be expected to live of this until your savings dipped below the allowed amount or would you be able to pay off debt.

I remember a news article a few years ago - a man had spent his £30k redundancy payout in 2 months then claimed benefits and he was charged with fraud.

I haven't won anything yet should I only be praying for a big win.

computerwoman · 12 May 2006 at 12:09AM

:j From what I know personally, your allowed upto £6,000 savings or at least I am, it all depends in what group you fall into, but it also depends on the amount I guess, if it's a small amount I'd say enjoy it and keep schumb, but if its a very large amount, then tell all who need to know, as the benefit people have ways of finding out, so it's best to be honest about it really, hope this helps T

all_hours · 12 May 2006 at 12:57AM

I'd be honest if it happened.

I spend a couple of £ each week on the lottery if I win a tenner occasionally I get a £1 scratch card with £10k - £30k top prize. daydreaming about what I'd do with the money if I won I doubt I'd be able to pay off a chunk of debt as it doesn't sound right being able to keep it and still get tax credits and HB. but I wondered if anyone knew what the rules were.

£10k would be whittled down to below the limit with a few months. 30k would take longer and I'd be back in FT salaried work by then anyway. you can tell how much time I've spent thinking about it. :rotfl:

CIS · 12 May 2006 at 8:02AM

On tax credits, savings dont matter - only the income earned from the savings matters and is counted as income.

For other other benefits, the aounts are reduced for savings over around #6K or so and die off completely around #10-15K.
If someone spends money too fast and then claims benefits, they often fall foul of the deprivayion of capital rules for using their money up too fast and then expecting state benefits to make up the rest, your expected to live affordably until your savings drops to the point where you can claim benefits,

all_hours · 13 May 2006 at 3:43PM

CIS wrote:

On tax credits, savings dont matter - only the income earned from the savings matters and is counted as income.

For other other benefits, the aounts are reduced for savings over around #6K or so and die off completely around #10-15K.
If someone spends money too fast and then claims benefits, they often fall foul of the deprivayion of capital rules for using their money up too fast and then expecting state benefits to make up the rest, your expected to live affordably until your savings drops to the point where you can claim benefits,

Thanks for clarifying this. I didn't realise TC didn't take savings into account. I've also read the other thread about capital deprivation.

oldMcDonald · 13 May 2006 at 3:48PM

CIS wrote:

On tax credits, savings dont matter - only the income earned from the savings matters and is counted as income.

This is correct. We received some (inheretance) money a few months ago and we have checked with Tax credits. Your savings do not matter, but any interest over £300 is viewed as income.

Lisa

tax credits benefits and windfalls - hypothetical question

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