Downsizing - Benefits affected

LostSocks

My MIL is in her 70's and has decided to sell her house and move closer to us. She currently recieves pension credit and council tax benefit. When she downsizes, it looks like she will have a chunk of money left over, which she would like to use to do up the new house and buy new furniture etc. Can she do this without affecting her benefits? I'm not sure where to go to get advice on this, as it's worrying my MIL and is putting her off moving and we really would like her to get a smaller house near us. Thanks

sandraroffey

citizens advice can help you there. they are fantastic in anything to do with benefits and the like.xxxx

lemonjelly

It will depend on what part of pension credit she is on, & how long ago she was awarded it.

If she is in receipt of Pension credit - guarantee credit, then the pensions service treat her as having the same amount of income/savings for a period of 5-7 years. This is called the applied income period. During this time, changes are irrelevant, and not taken into account until her claim is re-assessed (ie after the 5-7 year period). Because she is getting pension credit guarantee credit, she is "passported" to council tax benefit.

It will of course affect her when they reassess her.

There is no longer an upper capital limit for pension credit, so after this time, she may still qualify...

Of course, it may also be reasonable for her to spend some of the capital (ie new bed, tv, furniture if required. This can happen a lot when downsizing, as the old furniture may not fit etc). Also, purchasing a funeral plan.

If she is only getting pension credit savings credit your MIL should seek advice on a 1 to one basis from CAB or similar.

Reasonable costs (eg moving costs, decor etc plus updating furniture which is old) is not deprivation of capital. The rules for benefits state that they would have to show that your MIL knew about the impact of getting rid of the savings, & did it to increase benefit entitlement.

If she was only recently awarded the pension credit, she has plenty of time to decide what she needs.

Gifting money to family members however would definately fall foul of the rules!

EdInvestor

http://www.rnib.org.uk/xpedio/groups/public/documents/PublicWebsite/public_pensioncredit.hcsp

See: Your income and your savings.

IIRC the first 10k of capital is now ignored following a change in the budget.

LostSocks

Thanks everyone for your advice. I'll contact Citizen's advice and see what they say. But in the meantime, lemonjellly has given me a good idea that what she is planning to do will be okay.