can I use my inheritance to buy the house I live in?

Podge52

benniebert wrote: »

Absolutely correct. The only niggle they may have is if they/he/she were to ever claim a means tested benefit in the future. Questions could well be asked as to why the money was used in that way. Deprivation of Capital regulations might rear their ugly head.

If we take the scenario that somebody in work spends say £10,000 on a family holiday and and then two years later they are made redundant and need to claim means tested benefit are you saying that their holiday spend could be classed as deprivation of capital?

benniebert

Podge52 wrote: »

If we take the scenario that somebody in work spends say £10,000 on a family holiday and and then two years later they are made redundant and need to claim means tested benefit are you saying that their holiday spend could be classed as deprivation of capital?

Yes that is quite possible. As you know UC as it written into the rules and regulations that they will look at past earnings to calculate if you would be entitled to means tested benefits. The government have set it that if you had earnings (and spent it unwisely) that were, I think, £300 a month more than what you would have got under UC, then you will be penalised for spending that excess income instead of saving it for a rainy day. You will be deemed to have these notional savings and won't be entitled to any means tested benefits.


So yes in your example, earn enough to spend unwisely (which the government will have the final say on) whilst working could result in getting no help if you fall on hard times.


You will be required, before you spend your income, to ask the question - what if and would this spending be unwise.

rogerblack

benniebert wrote: »

Yes that is quite possible. As you know UC as it written into the rules and regulations that they will look at past earnings to calculate if you would be entitled to means tested benefits.

Though it's worth noting that the surplus earnings provisions only apply for employment lasting under 6 months.

benniebert

rogerblack wrote: »

Though it's worth noting that the surplus earnings provisions only apply for employment lasting under 6 months.

Yes that is correct. I forgot to add that bit into my post.
But the principle is there and people that have a newish job, should be very wary of spending these excess earnings.


Personally I can see that this may well be extended in the future for all employment situations and not just 6 months. It is the ideal tool to force people to save for 'the rainy day' as they should anyhow. If people know that they may well not get any help if they fall on hard times if they abuse their earnings.

Mojisola

benniebert wrote: »

Absolutely correct. The only niggle they may have is if they/he/she were to ever claim a means tested benefit in the future. Questions could well be asked as to why the money was used in that way. Deprivation of Capital regulations might rear their ugly head.

Not if the inheritance is used to buy somewhere to live.

Dr._Shoe

How can owning your own home be classed as "deprivation of capital"?

duchy

Dr._Shoe wrote: »

How can owning your own home be classed as "deprivation of capital"?

It isn't.......

Podge52

benniebert wrote: »

Yes that is correct. I forgot to add that bit into my post.
But the principle is there and people that have a newish job, should be very wary of spending these excess earnings.


Personally I can see that this may well be extended in the future for all employment situations and not just 6 months. It is the ideal tool to force people to save for 'the rainy day' as they should anyhow. If people know that they may well not get any help if they fall on hard times if they abuse their earnings.

So in my scenario "absolutely correct" isn't necessarily so?

GirlFromMars_2

jocrow wrote: »

I m on tax credits and housing benefit. Can I use inherited money to buy the house I live in?

The answer is most likely Yes, Absolutely.

But Deprivation of Capital is always a little bit of a worry if you may need means tested benefits in the future. Buying a reasonable house to live in shouldn't be classed as DoC but it is worth checking with a local authority decision maker.

If you talk to the Decision Maker in advance and explain to them what you are doing they may even be able to disregard the capital during the period from which you receive the inheritence to the point at which you purchase your home, and so continue to pay housing benefit for this period. This is because there is a 26 week (or longer if appropriate) disregard for money intended solely to purchase a property in which you will live. You have to be in the process of purchasing a property for this to apply, and in my case the Decision Maker (DWP) asked that the money for purchasing the home was kept separate from my own income/capital.

Purchasing a home is a very sensible thing to spend your money on! Please remember you will need to budget for future maintenance & repair though!

Good luck!

benniebert

GirlFromMars wrote: »

The answer is most likely Yes, Absolutely.

But Deprivation of Capital is always a little bit of a worry if you may need means tested benefits in the future. Buying a reasonable house to live in shouldn't be classed as DoC but it is worth checking with a local authority decision maker.

If you talk to the Decision Maker in advance and explain to them what you are doing they may even be able to disregard the capital during the period from which you receive the inheritence to the point at which you purchase your home, and so continue to pay housing benefit for this period. This is because there is a 26 week (or longer if appropriate) disregard for money intended solely to purchase a property in which you will live. You have to be in the process of purchasing a property for this to apply, and in my case the Decision Maker (DWP) asked that the money for purchasing the home was kept separate from my own income/capital.

Purchasing a home is a very sensible thing to spend your money on! Please remember you will need to budget for future maintenance & repair though!

Good luck!

All very interesting and informative. The whole thing sounds a bit woolly to me with no clear regulations to follow only the mood of the Decision Maker on a particular day.
If you can buy (assuming that it is allowed) a home with an inheritance, why can't you pay off the mortgage on the one you are living in? As an example someone I know has an interest only mortgage of about £50,000 and a year or two back had some insurance policies mature which produced about £55,000. The intention was to repay the mortgage and do a bit of decorating with what was left. He attempted to claim Income Based ESA and he was told by the DWP that this money meant that he can't claim anything - he has to use it to live off. This is what he has been doing and obviously now doesn't have enough to repay the mortgage debt in three years time. He tells me that they are going to have to sell up and rent.


So why is there a difference?