large amont of money

quintwins

sorry this might be the wrong place but i do have a benefit question aswell, i'll explain....

my hubbys granny is very very ill it's going to be barely days, however the subject of her inhertance has came up(not by us) and we were told that everything has been left to my mother in law and her sister, but my mother in law insteads on dividing heres out and we will be getting a large amount(mother in law has control on her mothers finances as she has alzheimer's so knows whats coming)

now my question is if she pays inheritance tax then gives it to us will we
have to pay any tax?

secondly we are on some tax credits and i havent renewed yet but as most of it's tied up in property (which they've had an offer on) when i get the money will i have to pay back what we have got so far?

and thirdly we intend to us this money to buy a plot of land and make a start on building our house, but i once read that spending large amounts of money can look bad benefit wise, ofcourse we wouldn't expect any benefits after we recieve this money but may reclaim once our house is built as the money will quickly go when building and we will be living in a mobile home so if we're entitled to it and it will get us moved in quicker i don't see why not (i'm sorry if that upsets anyone)

thanks for reading i know that was long

AnxiousMum

What benefits are you claiming? That might help people give you a more accurate answer.

If you are about to come into money - would it not be beneifcial though to look at using some of it for retraining, doing a course to get a qualification etc. so that you can first get a job, get off of benefits and THEN build your home?

Depending on how much your inheritance is - some training to get employment, or setting up your own business etc. would be a great opportunity for you.

quintwins

we only get tax credits and childbenefit altho not alot, however i am currently doing an ou course and will be going back to college next year when my kids all start school and my husband is fully trained and on a good wage already, i just want to know where i stand so we don't get any nasty shocks, however i do know that that amount we will recieve will be over the £16,000 cut off for tax credits

LizzieS_2

Tax credits do not take capital into account, only any interest earned on all household capital over £300pa.

Your husband will be receiving a gift from his mother, not his grandmother. It will be a potentially exempt gift for inheritance tax purposes until 7 years have passed with mother still alive.

May be worth finding the forum which covers inheritance and deaths - you will get more information there for the inheritance part.

EDIT: try this one for the inheritance question http://forums.moneysavingexpert.com/forumdisplay.php?f=26

quintwins

i didn't know if there was an inheritance forum, and it will be all gone in 7 years, if we've spent it will we still get taxed in 7years? his mums only 40 and healthy so hopefully has more than 7years left

AnxiousMum

Sorry for the misunderstanding Quintwins The cutoff for child tax credits is more in the region of 50-60K, and as said, the only 'income' you would have to declare from this is any interest earned over £300 in the year. If you're not on any of the means tested benefits - IS, council tax, housing benefits etc., then you don't need to worry about that £16000 mark.

You might want to make sure of your mum's place in this though - if she is working, shouldn't be any problems with her giving you the money, but again, if she is on benefits and she is the beneficiary of the money, she could be seen to be depriving herself of funds if collecting benefits at all. Don't want any nasty shocks for your mum either. Good luck with your plans

dzug1

quintwins wrote: »

i didn't know if there was an inheritance forum, and it will be all gone in 7 years, if we've spent it will we still get taxed in 7years? his mums only 40 and healthy so hopefully has more than 7years left

Yes the tax is still due if you've spent the money

quintwins

ok thanks i does anyone know roughtly how much tax you pay then i assume it's a percentage

his parents own a very profitable business where he works, the only benefit they get is child benefit for his sister which they would still get anyway, i think they undertsand the whole inhertinace thing better than us as she inherted quite a largre amount when her father died but given the situation (even tho they brought it up) we didn't want to ask

p.s it will be over £60k(well acually they think it will be £60k) how does that change things?

zzzLazyDaisy

I wouldn't worry about it. If MIL dies within seven years yhe tax is still due if you have spent the money BUT it is due against the estate as part of the IHT - if the estate is large enough to pay IHT.

Also re tax credits - only taxable interest is taken into account so any interest earned on non-taxable savings (ISAs, non-taxable NS&I savings, and premium bonds) is not taken into account for tax credits, nor is any money in a current account which attracts no interest.

If you are going to be spending money quickly and fairly soon it might make sense to look at non-taxable ways to save the money rather than complicating the tax credit side of things? You may need to seek financial advice to work out what is the best approach for you.

Another way might be to leave the money with MIL earning interest and for her to give you it in tranches as you need it?

quintwins

we would be sepnding it pretty much straight away as we would be moving into a mobile home on our plot with 3 small children so would be doing it all as quickly as possible until the money runs out, also theres no point in us paying rent whne we don't have to as that money can go towards our house

quintwins

oh so if she's still here in 7 years we don't pay any tax? but if she dies it comes out of his inheritance as part of that inheritance tax, sorry if i sound dim i'm just struggling to understand what happens