Tax Credit/Financial Settlement query

Numberlock

I can't find the answer to my query on the HMRC website so I would be grateful if someone might be able to help me with the following:

I've been receiving Tax Credit of approximately £200 per month since my husband and I separated last August. I'm hoping that we can agree on the financial settlement soon and that I should receive around £150,000 to £200,000 (mostly from the sale of our house) in the next few weeks.

I want to use my share of the settlement to buy my own property (hopefully!) so it might only be in my bank account for a couple of months or so. At this stage, I just don't know. My query is: am I obliged to report this to HMRC as soon as I take receipt of the money?

Thank you.

System

No. With regard to Tax credits that is not classed as earned income. You only have to report any interest you receive on that capital (if it makes any) whilst it is in the bank account and then only if it and any other income besides employment/self-employment/taxable social security benefits are morte than £300.

See here - http://www.hmrc.gov.uk/taxcredits/start/claiming/income-hours/other-income.htm

As far as taxes are concerned you only need to declare the interest made if you are a taxpayer and it is not taxed at source or if you are a 40% taxpayer whether is taxed at source or not.

one_hot_minute

Slightly off topic, but whilst you have the cash in your account, be aware of the £50k limit for the Financial Services Compensation Scheme in the event of a bank meltdown.

It may be worthwhile opening some other accounts to split between different financial institutions just to protect yourself.

karenx

If you are claiming housing benefit or council tax benefit just now you will need to notify them and your entitlement to these will stop

enabledebra

Yes you should tell HB if you are claiming. Make sure they know that most of it is from the sale of your property and that you intend to use it to buy another as if they agree that's where it's come from they should disregard it for up to 26 weeks.