DLA / Incapacity & Incoming Inheritance

Benefitz

Hi guys

I was diagnosed in 2000 with a physical medical condition which effects my bones and movement. I was awarded DLA and incapacity benefit and have been on it ever since. However, I am soon to receive a rather large Inheritance and am now very worried as to what I am supposed to do. Do I have to declare this? I mean, I could have a billion pounds but that would not change the physical condition of my joints and the pain I suffer. I of course want to do the right thing but not sure what to do? Can anyone advise me? Is DLA and incapacity means tested or not? I can't see how it can be but just don't know?

Secondly, due to the financial climate right now, I'm not too happy about having sums of money in the bank anyway, a very close friend said I should put some of the money in property and let an estate agent manage them for me. But...doesn't this type of investment technically mean I will be a landlord and therefore working when I shouldn't be even though I won't be doing anything.

Very concerned and worried about what I am supposed to do?

Any advice would be very much appreciated.

Thanks

Oldernotwiser

Neither DLA or IB is means tested so you can have as much savings as you like.

In the present climate I can't see why you think that property is a safer investment than in a bank; prices are forecast to fall by many percent in the next few years!

Benefitz

I'm not a greedy person Oldernotwiser and certainly not bothered about making lots of money. Just somewhere to put some money and leave it for the long haul. Property will always recover, always has, always will, just may take longer this time. But I certainly don't want to rent out property if it makes me a Landord and therefore legally means I am commiting fraud as a worker when this would not be the case.

I really appreciate your answer though. Thanks for letting me know about my benefits not being means tested. Really helps so thanks.

cw18

I'm about to get a redundancy payment, and although it's well below the "protected" £50k level I need to know I can get to it (or some of it) at all times to pay the bills -- so I'm currently planning on splitting it between 2 (or even 3) different banks..... having first made sure they're not using the same FSA registration number (which is shown on a table on MSE I found through this article)

Oldernotwiser

Benefitz wrote: »

I'm not a greedy person Oldernotwiser and certainly not bothered about making lots of money. Just somewhere to put some money and leave it for the long haul. Property will always recover, always has, always will, just may take longer this time. But I certainly don't want to rent out property if it makes me a Landord and therefore legally means I am commiting fraud as a worker when this would not be the case.

I really appreciate your answer though. Thanks for letting me know about my benefits not being means tested. Really helps so thanks.

There are different opinions on this but I do suggest that you have a look at the House Buying/Rental board before you go ahead. Many analysts are forecasting drops of 50% and you don't have to be greedy to want to avoid that! Good luck.

healy

Benefitz wrote: »

I'm not a greedy person Oldernotwiser and certainly not bothered about making lots of money. Just somewhere to put some money and leave it for the long haul. Property will always recover, always has, always will, just may take longer this time. But I certainly don't want to rent out property if it makes me a Landord and therefore legally means I am commiting fraud as a worker when this would not be the case.

I really appreciate your answer though. Thanks for letting me know about my benefits not being means tested. Really helps so thanks.

If the agents are dealing with the properties and you are not doing any work realating to the properties you can still claim IB. You will have to fill out a tax return though.

[Deleted User]

healy wrote: »

If the agents are dealing with the properties and you are not doing any work realating to the properties you can still claim IB. You will have to fill out a tax return though.

and as I/B is a taxable benefit depending on the rental earnt it could mean losing upto 40% of your I/B in tax,dla is in no way affected by income or savings and isnt taxable

Benefitz

OK thanks for these replies, I really appreciate it.

Woodbine, from what you say, am I right in thinking that DLA is not taxable but IB is if I earn above what I get for DLA and IB?

If so, I obviously I get an annual tax allowance like anyone else but you are saying that if I earn from any rents anything above what I get from DLA and IB then this would be taxable which I understand, but why would it mean that I lose 40% of my IB?

Wouldn't I just be taxed on anything I earn above my tax allowance?

Sorry if I'm confused about this simple issue.

Would it help if I formed a LTD company to run any property rentals through this to make any tax issues easier and seperate?, or again, does this make me a company director and therefore a worker even though I wouldn't actually be working?

To be honest I might just shelve the whole idea, things are tough enough without lots of extra hassle and putting myself in a risky position when there is no need.

What do you think?

Thanks again for all and any replies.



Thanks

cw18

DLA will never count as income when it comes to working out taxable money

What you would need to declare on a Tax Return is your IB, and dividends/interest paid on money you have invested, and any income from a job or (in your case) rental.

Your personal allowance would be offset against these, which is why with only DLA and IB you (probably) won't be paying tax now -- highest rate IB is £84.50/wk = £4394/year, but a standard personal allowance is £6035 (meaning you have an available buffer of £1641 for other taxable income).

Glyndwr_2

Oldernotwiser wrote: »

Neither DLA or HB is means tested so you can have as much savings as you like.

In the present climate I can't see why you think that property is a safer investment than in a bank; prices are forecast to fall by many percent in the next few years!

Think you mean IB is not mean tested. HB certainly is means tested!

Oldernotwiser

Glyndwr wrote: »

Think you mean IB is not mean tested. HB certainly is means tested!

Absolutely right, it's a typo and I'll change it. Thanks for spotting it.