how will inheriting a lump sum affect tax credits?

jacquibaby

Will Inheriting from my mums estate will wipe out all of the tax credits we currently receive? Currently on self employed with low earnings and receiving DLA/carers allowance for daughter. Son would be receiving EMA for 6th form.

At the moment, have around £6000 from estate coming at some point.(how much would be disregarded?) Also, a third of a share in a house which is not yet on the market. Starting to fill out tax credit renewal form this week, a bit confused about the part other income and personal circumstances as unsure of how house sale will/may go?

Presume that all tax credits will stop? Income from business is expected to stay low.

themonkeybutler

Inheritance is NOT an income for tax credit purposes until it hits a VERY large amount (cant remember exactly what, but its 6 figures). It doesnt need to be declared.

jacquibaby

Hi
That's what someone on here told me a while back, but looking at the notes to go with the form, step c- complete your annual declaration-other income, looking at the working sheet; there is "income from trusts, settlements and estates. You will find details on certificate R185, which the trustees or administrators should have given you Enter the gross amount (before tax is taken off).
So I presume that they ask for a reason?

jacquibaby

Or is that as in trust/estates and settlements which generate an income! Confused!!

paulofessex

I would have thought as you havent actually received anything from your mums estate it is unwise to put what you think you will receive at this point in time. Surely it would be best to renew the claim as usual. This gives you time to look into what any disregards may be etc and once you have received from the estate you can phone them to advice of any change of circumstanes as and when it happens

themonkeybutler

Inheritance isnt income for TC purposes until it reaches a specific amount where it becomes taxable, honestly. If they are asking for it specifically, tell them - if its under the threshold (which it is), it wil not be added to your claim.

jennihen

jacquibaby wrote: »

Will Inheriting from my mums estate will wipe out all of the tax credits we currently receive? Currently on self employed with low earnings and receiving DLA/carers allowance for daughter. Son would be receiving EMA for 6th form.

At the moment, have around £6000 from estate coming at some point.(how much would be disregarded?) Also, a third of a share in a house which is not yet on the market. Starting to fill out tax credit renewal form this week, a bit confused about the part other income and personal circumstances as unsure of how house sale will/may go?

Presume that all tax credits will stop? Income from business is expected to stay low.

I was recently in the same position as you.
I rang the tax credit line who were very helpful. Basically the figure I inherited does not affect my tax credits this year but next year i have to show them the interest over £300 generated by the inheritance (3.5% in my case) and this figure is the one that is used in the new calculation.
As the interest rate is low and I am buying a house with the money I don't expect it to affect my tax credits in a big way.

jacquibaby

Thank you so much!

I don't expect that it will be much interest, as I expect to use an amount towards my mortgage which comes to a renewal early next year (if the house is sold by then!!) with Northern Rock- who won't be offering a great deal to me as they no longer do self-cert mortgages on fixed rates! Plus no maintenance has been done on this house in the past 10 years and we desperately need some work done!
phew.

sunnyone

Put your cash into easy access ISAs and it will never count for tax credits, you dont have a massive allowance per year (@5,000 each if your a couple or see a fA for advice on a stocks and shares ISA which has a much higher allowance) but if you keep some for everyday cash and put as much into ISAs that you can you will minimise the impact on next years tax credits.

jacquibaby

Hi!
back again...

Does this still apply? The house will finally be sold. I'm looking at the forum guide about income you have to declare and this
"income from trusts, settlements and estates" is what is making me think that I need to declare the portion of the sale of the house which I will get in due course.( I don't expect no more than £40,000).

Thanks.

Oldernotwiser

jacquibaby wrote: »

Hi!
back again...

Does this still apply? The house will finally be sold. I'm looking at the forum guide about income you have to declare and this
"income from trusts, settlements and estates" is what is making me think that I need to declare the portion of the sale of the house which I will get in due course.( I don't expect no more than £40,000).

Thanks.

As was explained earlier, receiving an amount of capital is not the same thing as income, it's only the income received if you invest it, which you don't plan to do.

However, if you receive council tax benefit you'll lose this or any other means tested benefits.