Will inheritance affect our tax credits?

cosmomo

We are due to receive an inheritance of around £100k. We had intended to clear our mortgage and debts with this and would be left with nothing (probably around £3k left on mortgage).
We have now heard that there will be a capital gains on about 30k of the money (property to be sold has gained value since iht) and they want to transfer the property to the beneficiaries names before selling to minimise the cgt.
How is this going to affect our child tax credit? Will we lose it? Any words of wisdom gratefully received.

densol_2

No it will not affect it. The only time it could is if you earned more than £300 interest on the money. That would then be counted as " income ". Tax credits ( as oppposed to universal credit ) do not take into account capital ( thankfully )

cosmomo

Thanks. I wasn't worried until the capital gains bit came up - i thought that ight make a difference and that we would have to come off CTC, pay off the debts and re-apply for UC!. What a relief.

konark

Are you on UC or any means-tested benefits?

cosmomo

On WTC and CTC.

My problem is (I think) that the inheritance is a property to be distributed among 10 beneficiaries. Property was valued at £700k 2 years ago and inheritance tax was paid. It is now being sold for just over a million so capital gains tax will be liable on about £350k. They want to put the property into the beneficiaries names before they sell (so each can benefit from the 11k exemption from cgt). Thus for a short time we will have a tenth share of a million pound property. Then we will have an inheritance of 70k and a capital gain of 30k.

I am thinking we will have to declare this as a change in circumstances, and lose our CTC and WTC for 2016/17. We will then pay off our debts and a large part of the mortgage and be skint for the rest of the year before reapplying for UC in 2017/18.

I had thought that as a straight inheritance it wouldn't have affected the tax credits, but the capital gains part is going to stuff it up.

attphotos

I am inheriting 32000, half of which will pay off debts. Will having that money in the bank affect our tax credits? Most people seem to say no but its there a specific paragraph on Tax Credit website which explains the situation clearly? It would seem quite a common/obvious issue!

nannytone_2

tax credits are only affected by the interest above £350 paid on capital.
the capital itself isn't counted.

if you receive housing benefit/council tax support, they will be affected