Money from Estate ?

montycat_2

Hello,
My Husbands estate has just been settled and after paying off his debts ,there is £32,000 left .This come to me as he died without a will and I have 3 young children .
Would I need to declare this as Income or ,is it tax free .I have it in savings at the mo.
Thankyou

Bossyboots

No it is not classed as income for income tax purposes.

montycat_2

That is good as I was worried it would reduce my tax credit payments .

Bossyboots

Its a while since I claimed credits but I think you have to declare it for that purpose.

montycat_2

aha so,it could be classed as income for tax credit purposes.Umm maybe need to post this on the Benefits board .
The money has never been in any account except savings .

Chrismaths

AFAIK, It wouldn't be classed as income, but would be included as capital, and you can only have so much capital before they take the credits off you. My condolences for what they're worth.

montycat_2

Hi ,How much capital is allowed before it affects the tax credits please ?

Chrismaths

http://www.thepensionservice.gov.uk/pensioncredit/entitled.asp gives you all the info. I've assumed you're talking about pension credit, apologies if this is not the case. Basically they assume you have £1 per week income for every £500 you have over £6k. If anyone knows of an investment that guarantees a 10.4% net yield do let me know
Good incentive for saving isn't it?

PS
The standard thing people do in these circumstances is sod off round the world/fix the roof/buy a new car/furniture/go on long bender. The other thing to do is to try an buy an asset that isn't classed as an investment, but won't lose it's value (like antique furniture, jewellery etc). That's not a recommendation BTW.

montycat_2

Chrismaths,Sorry ,I should clarify it is Child Tax Credit -I am 41 with 3 children under 10 .I have had to invest most of the "inheritance" as,it is the income for me and the kids .
I used the majority of it to buy the house .
Does this affect the dvice you gave ?

isasmurf

Capital is not normally taken account when calculating your tax credits. However, as it is over £300 you should declare it as you will be getting income from those savings, which will be taken into account when calculating your award.

Chrismaths

Yes. There is no savings limit for CTC, so put those holiday brochures down!