Benefits + Selling house ?

maisythompson

Hi Everyone this is my first post, I am in a very confusing situation as to what I need to do following the sale of my house?

I have recently sold a larger house and moved into a smaller house that has left me with around £85,000 left over. The house that we have moved is a 2 bedroom house with 4 people living in. What we had planned was to build an extension with the remaining money which would create enough space for us to live in as there will be 5 of us when my son returns from uni.

At the moment I am in receipt of working tax credits and child tax credits / family credits i think they are called sometimes. As my situation has changed since the house sale last monday my situation will remain the same once the essential building work has taken place. What I would like to ask is will I still be entitled to the benefits I receive whilst the money is sitting as a credit in my bank account. I am aware I have to tell them.

My next question is regarding a son who is at university. He is currently in receipt of maintainace loan + grant + tuition fee loan starting his second year in september. When it comes to him reapplying in his third year will the amount he receives from the student finance service drop beacause of money I have held in the bank if the building work has not been completed by this stage.

I am confused as to what will happen whilst I have this as it will not be forever and will be used for this work by next summer. Any advice will be greatly appreciated.

maisythompson

if anyone can shed some light on this it would be great

[Deleted User]

why on earth didnt you just spend the money and buy a bigger house thus avoiding any complications,some people make life too complicated for themselves

Mojisola

If you sell a house and have a gap before you buy a new one, the capital can be disregarded as far as benefits are concerned. You could argue that the capital you have should be ring-fenced for the same reason. You need to contact the Benefits Agency and talk it through with them.

Too late now but it would have been better to have discussed the possibilities before selling the other house.

bumble1

My understanding is that tax credits are based upon income and not the amount of capital you have in the bank. You will have to declare the interest earned ( unless in a tax free account eg ISAs, NS&I tax free accounts etc ) for the year it is paid. Eg if you put the money into an account that pays the interest in the 2012/13 tax year you would declare it then and it would be added to your income for tax credits purposes in the year 2013/14. Tax credits are based upon the previous year's income.
So, basically, tax credits are income not capital based and it is quite legal to invest the money tax free in ways that will not affect tax credits.