Pension Credit and moving home.

2016Convert

Hi there

My parents are in receipt of a guaranteed pension credit and they don't pay council tax.

They own their home but are at age where they want to downsize to a bungalow. I happen to live directly next to bungalow that has gone on the market and am in the fortunate position to be able to buy the bungalow. My parents want to put their current house in my name. I buy the bungalow in my name and move my parents into there. They wouldn't be paying any rent as I would then rent the house they have put in my name out.

Just wondering how it would affect their benefits? I'm aware that I will have to pay capital gains tax on the house I would receive in my name.

Thanks

Mojisola

Why should your parents receive means tested benefits when they have given away the capital they have in their house?

2016Convert

I'm asking how it would affect their benefits. Not why.

Mojisola

Read up on deprivation of assets.

2016Convert

Any links?

It was a question. I thought this board was supposed to be a source of help for questions. Any help appreciated.

Alice_Holt

Try googling "deprivation of assets and benefits".

You may find this - "If you deprive yourself of capital in order to increase the amount of benefit you get you can be treated as if you still had that capital, this is called ‘notional capital’. This might occur if you give assets away to members of your family..."

Then try googling "benefit fraud"

w06

They'd lose all benefits because they've deprived themselves of the value of a house in order to keep benefits

xylophone

By giving away their home, your parents would be deemed to have deprived themselves of capital/assets.

https://www.gardencourtchambers.co.uk/socialwelfare/the-deprivation-of-capital-rule-in-welfare-benefits/



Under the 'deprivation of capital rule', a claimant who deprives him or herself of capital for the purpose of retaining or obtaining entitlement to means-tested benefits (i.e. Income Support, Housing and Council Benefit, income-based Jobseeker's Allowance, income-based Employment and Support Allowance and State Pension Credit) will be treated as depriving themselves of capital. Under the regulations the claimant will then be treated as still possessing the value of the actual capital given away as "notional capital" for benefit purposes, (subject to its value diminishing over time by means of a calculation under the 'diminishing notional capital rule'). See for example Housing Benefit Regulations 2006 (SI 2006/213) reg 49 (similar provisions apply to each of the means-tested benefits listed above).

As they are in receipt of means tested benefits, they must be fully aware that there is a means test in operation so could hardly claim ignorance of the rules.

They own their home but are at age where they want to downsize to a bungalow.

Then they can sell their home and buy the bungalow?

If there were a shortfall, I am sure that you would be generous enough to lend your parents the required amount against a charge on the property....

2016Convert

I only asked what would happen. Not attempting to commit benefit fraud or my parents to be ignorant of the rules.

teddysmum

I can't understand why they would give you their house , unless to keep it from the care providers or to have no capital from a sale without buying on. Both scenarios fit the comments above, as they seek to deprive the benefit system.


If you want their house to rent out, then you can buy it and they can buy the bungalow with that income. They can then keep their benefits, if there is no surplus to become savings (giving this surplus to you would be deprivation of assets as mentioned .