Tax Credits and Savings from Inheritance

Karrabdan

I am just about to receive £25,000 from an inheritance straight from a Solicititor and wanted to know if I have to declare this to Tax Credits and whether this will affect my claim at all? £5,000 will be used up straightaway on debts and the remainder I was planning to just put away in a long term investment. I would appreciate anyones feedback.

zagfles

No you don't need to declare it at all.

Though if you earn taxable interest off your long term investment you would need to declare this if it (plus any other savings interest you have) is over £300 a year. But it's unlikely to affect your tax credits much.

Karrabdan

Thanks for your advice. Do you know if the Tax Credits people can track your bank accounts so they can check at all, just don't want to be caught out at all. I've never had this kind of money before so don't want to worry about having to declare it if I don't need too. I also receive a small amount of housing and council tax benefit as well. Not sure if they might work differently.

zagfles

Housing benefit and council tax benefit are completely different - they have capital rules so they will stop once you have capital over £16,000. You will need to tell them.

But don't worry about tax credits, there are no capital rules at all. You just need to declare interest over £300.

Oldernotwiser

Karrabdan wrote: »

Thanks for your advice. Do you know if the Tax Credits people can track your bank accounts so they can check at all, just don't want to be caught out at all. I've never had this kind of money before so don't want to worry about having to declare it if I don't need too. I also receive a small amount of housing and council tax benefit as well. Not sure if they might work differently.

Could you clarify what you mean by this because it sounds a bit suspect at the moment.

happy_lass

Karrabdan wrote: »

I am just about to receive £25,000 from an inheritance straight from a Solicititor and wanted to know if I have to declare this to Tax Credits and whether this will affect my claim at all? £5,000 will be used up straightaway on debts and the remainder I was planning to just put away in a long term investment. I would appreciate anyones feedback.

My gut feeling would be to phone tax credits and declare !! or am i just too honest?!
I would think that it would always be best to declare ! I dont think i could sleep at night worrying that i would be done for not declaring it.Better to be safe than sorry.
I would think that Tax Credits can pretty much check your accounts, you would be amazed at how much the DWP/Tax Credits know. better to declare now and be told that everything is ok than not declare and be told that everything is not ok. But, i am a big Wus and i am a worrier !

karenx

With regards to housing and council tax benefit they will treat you as if you have the full 25k even though you are using some of it up. It goes under deprevation of capital rules. So as you will have more than 16k your benefits for housing will stop completly.

midnight_express

Yes they can check your bank accounts.

Sixer

You DO need to declare it to the housing and council tax benefit people and you will lose these benefits as you have more than £16k.

You DO NOT need to declare it to the tax credits people and you won't lose tax credits.

You DO need to declare the interest earned on the money the next time you renew your tax credits. The interest will be added to your other income to make a total.

Karrabdan

Thanks for all your help and advice. I will do as you advise. I don't hardly get any housing and council tax benefit anyway, just a couple of quid, hardly worth claiming for so will advise them once everything is cleared out. Nothing suspect about what I was asking Oldernotwiser I just think its wrong that they get the right to check your bank accounts without prior knowledge. Some organisations have too many priviledges over people. Nothing is safe anymore. I do want to be honest, that's all I've ever been in my life, even though where its got me is just struggle from week to week. Its just nice to know I won't have to for a while.

HappyMJ

Karrabdan wrote: »

Thanks for all your help and advice. I will do as you advise. I don't hardly get any housing and council tax benefit anyway, just a couple of quid, hardly worth claiming for so will advise them once everything is cleared out. Nothing suspect about what I was asking Oldernotwiser I just think its wrong that they get the right to check your bank accounts without prior knowledge. Some organisations have too many priviledges over people. Nothing is safe anymore. I do want to be honest, that's all I've ever been in my life, even though where its got me is just struggle from week to week. Its just nice to know I won't have to for a while.

If you wish to claim housing and council tax benefit again in the future you will need to keep receipts for almost everything otherwise they will assume you will be living on almost nothing and have hidden the money just to claim. The capital will be reduced using diminishing notional capital rules. It will reduce quite quickly so you could reclaim in a year. To give you an idea it will reduce by the maximum amount of income support, housing and council tax benefit that you would have been entitled to if you did not have this money. My rent and CT plus £67.50 a week assumed personal allowance is about £9,400 per year. So after a year assuming same circumstances your £25,000 will be assumed to be £15,600 and you can claim again.