Inheriting and tax credits

sunnybobbi

I inherited 33,000 last year when my dad died. I am self employed and only made 1,900 profit in the last year. Do I have to put the 33,000 on my working families tax credit form and my tax self assessment form as other income or not?

Tallymanjohn

Don't know about the tax credit but on your Self assessment form there's a section on interest paid from investments and wherever you have it invested should send you a statement 'for tax purposes' around now.

sunnybobbi

I used it to clear debts, and to live on last year when work was slow.

roger_c

Depends whether the £33,000 was

1) income from his estate (say interest/dividends/earnings that the estate earned since his death) that you received, you should have got a form called an R185 from the solicitors/accounts handling his estate if it was income; or

2) if it was capital you received (say the money from a home/shares the executors of his estate sold or even just cash in his bank account).

I don't have much experience with the working tax credits forms but if it is a capital payment then I very much doubt it will have to be shown on your form.

sunnybobbi

Hi
My step mum left him it a couple of years before when she died, so it was his bank account. Some was isa's. I didn't get a form from the solicitors. I have looked but I can't find any and don't remember receiving it.

John_Pierpoint

If the solicitors had kept you waiting two years before paying you anything they should have paid you interest. (Interest is the rental price of money) unless the will says otherwise.

If you have been paid interest you should have got an R185 certificate explaining how much it was and how much tax had already been paid.

sunnybobbi

Sorry if I explained that badly. It was an inheritance he had received that had been settled and then he died and I was the beneficiery.

sunnybobbi

I have caled the solicitors to get an R185 as I never received one.

sunnybobbi

I did get an R185 now so is it the amount on there I would put on? or the inherited amount of capital or nothing? I really am lost with this.

sleepless_saver

The £33000 does not count as income, it counts as capital. So you shouldn't enter it as income on either your WTC or your tax self assessment. It's only the income you have received from it i.e. interest that you need to put.

Personally I would take the capital sum as the total amount that came to you including any interest accrued while the solicitors were hanging on to it. Interested to know what others think about this. I would only put on the form any interest that you have received since you actually got the money.

Do you still have the ISAs? Income from ISAs is normally disregarded for working tax credit BUT the tax free status of ISAs held by someone who dies is lost on their death. So in this case the interest from any ISAs you still have would need to be included (even though you don't usually have to put them on a tax self assessment form). Some other sorts of interest are disregarded e.g first £70 of National Savings Investments but you would need to include all interest received on the tax and WTC forms, included any disregarded interest.

It's the gross interest rather than the after tax interest that should go on the forms.

sunnybobbi

Thanks for that, it is a real help. I don't have the ISA's they were cashed in by the solicitors.