Inheritance, house buying and benefits.

OKAPI

Hello.
Little bit of background.

I'm a housewife and my husband is self employed. We currently rent our home so claim housing benefit, also council tax benefit. We also get child tax credits and working tax credits.

My husband dad died and he inherited their house. We're in the process of selling the house (there are debts that have to paid paid). We are buying our currently rented home with the money from the sale of the house.

After we have paid off the debts owed by his dad, and we have bought our house, there will be around 15k we think left.

We are wanting to improve our living (buy a caravan, upgrade to a less knackered car, take a holiday, buy new beds for the kids, buy a sofa for eg)

We'll no longer need to claim housing benefit so the only means tested benefit we will be eligible for would be some council tax benefit. I am worried though that they'll see the purchases as described above as depreciation of capital. Are we better just not claiming council tax benefit at all (even if we are still eligible for it) in case it's felt it is depreciation? I believe that the house purchase will not been seen as DoC because buying it will reduce our 'drain on society' so to speak as we'll not be claiming HB anymore.

Any advice would be really helpful. Especially if I've missed anything with the above too.

Many thanks.

WhenIam64

You can do calculations yourself using https://www.entitledto.co.uk/benefits-calculator/

Some of the benefits will be reduced because of capital. How much they will be reduced by will depend on what you spend the money on as some of the spending will be seen as necessary - and some not.

A Decision Maker will advise after the event. They will follow the rules shown in the DM guide.

Have a read of this

https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/capital-rules

Tariff income rules

Capital or joint capital over £6,000 is treated as providing income, known as “tariff income”, of £4.35 per month for each additional £250 (or part thereof). For example capital of £6,250 gives monthly tariff income of £4.35. Capital of £6,250.01 gives a monthly tariff income of £8.70.

The lower limit is £6000, so any capital below £6000 is disregarded.

The upper limit is £16000, so anyone with savings (capital) over £16,000 cannot get Universal Credit.

calcotti

OKAPI wrote: »

We'll no longer need to claim housing benefit so the only means tested benefit we will be eligible for would be some council tax benefit..

Your Tax Credits award, which is a means tested benefit, will continue. There are no capital limits for Tax Credits. You do have to tell HMRC about any interest you receive less a £300 disregard but in the circumstances you have described this is unlikely to make much difference.

You will need to tell your local authority about your change in circumstances and they will recalculate your Council Tax Reduction. Unfortunately you will not know how they will regard your expenditure in advance. The purpose of the deprivation of capital rules is not to prevent people spending money. Most of the items you list seem fine to me - the only one that would concern me is the purchase of a caravan.

The rules quoted by WhenIam64 are for UC which you are not and will not be claiming - however the rules for Council Tax Reduction are similar.

OKAPI

calcotti wrote: »

Your Tax Credits award, which is a means tested benefit, will continue. There are no capital limits for Tax Credits. You do have to tell HMRC about any interest you receive less a £300 disregard but in the circumstances you have described this is unlikely to make much difference.

You will need to tell your local authority about your change in circumstances and they will recalculate your Council Tax Reduction. Unfortunately you will not know how they will regard your expenditure in advance. The purpose of the deprivation of capital rules is not to prevent people spending money. Most of the items you list seem fine to me - the only one that would concern me is the purchase of a caravan.

The rules quoted by WhenIam64 are for UC which you are not and will not be claiming - however the rules for Council Tax Reduction are similar.

Thank you. Yes, we won't be moving over to UC. The caravan is 2.5k. So only a 'small' purchase really. I anticipate most of the money will be spent on the house within the first year. I'm not sure how I would calculate any income from interest, I don't think my bank account even gives interest?) but I can work that out with help later down the line.

Thanks for your help.

calcotti

OKAPI wrote: »

I'm not sure how I would calculate any income from interest

You don't need to calculate it - if you get interest it will appear on your statements.

TELLIT01

The only item on the list which might be questioned is the caravan, but at a cost of £2.5k I think even that unlikely.