Inheritance help

dollydo

Hi, I wonder if someone could advise me please on another inheritance question.

A family member died recently and it looks like I've been left a small monthly pension amount. I will have a few months backdated and then a monthly income of about £100 from it. Once I get the paperwork I will advise the council as I receive housing benefit help. Can someone confirm if this is counted as income or as inheritance?


Also I will get another payment as a one off from another pension company (split with my cousin) of about £1500. As part of the deceased estate. Will this be classed as income or as capital ?


I will also let tax credits know. I don't think I need to advise them of the small lump sum, but do of pension. Is this correct?


It's all a bit confusing tbh. Don't want any overpayments, so as soon as I get paperwork I will advise everyone.


Any advice greatly welcome.


Thanks

benefitbaby

Hi,

Lump sums that you receive are capital (under £6k total savings/assets need not be disclosed), regular payments from a pension etc are income and do need to be declared for means-tested benefits, HB, CTS, tax credits etc.

dollydo

Thanks for clarifying that. Would the back payment of the pension be classed as a lump sum or would that be classed as income too ? Sorry to sound stupid x

benefitbaby

No need to apologise it is not a daft question at all.

Payments of income are normally made in respect of a specified period (or periods) and form, or are intended to form part of a regular series of payments.

Given that you will be receiving the arrears of the pension I would expect it to be treated as income for the relevant past period (e.g. April and May - or whatever period it covered) especially as monthly payments will be continuing.

If the DWP/council treat it as income for a past period then you may have an overpayment (so keep some cash safe). If they determine it to be capital then this only becomes an issue if it means your total capital exceeds £6k - this would need to be disclosed to enable them to calculate tariff income.

dollydo

More questions... Sorry. If I advise them on the day I get the back payment and it is for April and may, will they just take it as extra income for the month I declare it and reduce my payments for that month or will they apply to April and may? I hope that makes sense.

And the same applies about the tax credits as if the apply it to April it would fall under last financial year and I've just renewed my claim prior to finding out about pension.


Thanks

dollydo

Do they class it as income from the day I receive or from the dates when it should have been paid but wasn't because of probate. I understand I might get an overpayment whilst they recalculate but don't want it to effect last tax year for hub or tax credits if possible.

benefitbaby

They should take it as income for the period for which it is allocated, so if the pension was supposed to be for April (but you didn't get it until May) it should still apply as income for April etc.

Tax credits is a little more complicated as your award is based on income for the past year 6 April 2012 to 5 April 2013. As a pension is a taxable income you would have to notify HMRC of this and give them the start date of the pension payments and the amount. When HMRC send out a revised award notice please ensure you check it carefully and notify them if they have anything wrong (and follow op if they do not send out a corrected award notice).

dollydo

Have a feeling this is going to get complicated! :-(

I'm self employed, so have declared income to tax credits already for 2012-2013. So was hoping I could just tell them 14 months money for this coming year. As I haven't received the money in the last tax year.


Also with hb I have also given them last years figures. Also last year I got a little ct help, which I don't get now. Will this mean I'll get an overpayment from this too?


I assumed they would take the income change from the date I received it and adjust my payments accordingly. Is it really not likely to do this?

benefitbaby

You may get lucky but if they follow the rules then you may have an overpayment - try not to worry too much as you will have the lump sum of pension to enable you to repay it if/when it happens.

dollydo

Thanks benefit baby. I'm not so much stressing about the overpayment more stressing about if they apply it to last tax year as it means all other stuff is wrong. Happy for them to apply it to this month, and I'll advise tax credits 13 months worth of payment amounts this year. Does that make sense ?

dollydo

More stressing about tax return and tax credits. I can't see how they can apply it to last years income as I haven't had it yet. I think I need to declare it as this tax year. Is that right ?