Money for child

mummy45

My sister is a single mum. My aunt wishes to give her a large lump sum of money to use for her child only on things like clothes, activities like swimming ballet or school trips and also to go towards legal costs as my sister is in court with her ex over the child. She receives housing benefit and tax credits. If this money is put into a bank account for her child will it effect her benefits?
Thanks

MovingForwards

If it's over £6k, yes.

Can the aunt not pay for the things rather than putting it into your sisters account?

calcotti

It will not affect Tax Credits because capital is not taken into account for Tax Credits. She will need to declare any interest received over £300/year.

Capital owned in her name will be taken into account for Housing Benefit if over £6,000. Council Tax Reduction, if relevant, will also be affected.

mummy45

If the money is put into a bank account in the child’s name though rather than my sisters?

poppy12345

mummy45 wrote: »

If the money is put into a bank account in the child’s name though rather than my sisters?

First you asked if your sister could receive a large sum of money and now your asking if her child could receive it instead... hmm :eek:

MissMollyJ

Only taxable income is counted by tax credits anyway so unless it’s a truly massive lump sum it probably won’t impact the tax credits. And if in the child’s name and money given by a relative I’m pretty sure it won’t impact - however, call HMRC tax credit helpline and ask because it is so important to get these things right.

MissMollyJ

poppy12345 wrote: »

First you asked if your sister could receive a large sum of money and now your asking if her child could receive it instead... hmm :eek:

Seems relatively straightforward unless the child is of the age of being financially responsible for her own affairs that it’s the mother that will sort out the bank account etc on behalf of her child.

MissMollyJ

MissMollyJ wrote: »

Only taxable income is counted by tax credits anyway so unless it’s a truly massive lump sum it probably won’t impact the tax credits. And if in the child’s name and money given by a relative I’m pretty sure it won’t impact - however, call HMRC tax credit helpline and ask because it is so important to get these things right.

Oh god - and check with housing benefit because that is an entirely different kettle of fish.

calcotti

The Housing Benefit Regulations 2006
http://www.legislation.gov.uk/uksi/2006/213/regulation/45/made

Disregard of capital of child and young person
45. The capital of a child or young person who is a member of the claimant’s family shall not be treated as capital of the claimant.

mummy45

Thankyou for you opinions. And I may have phrased the original question wrongly, I meant that the money would be put into a separate bank account in the child’s name but obviously my sister would be in charge of it because the child is only 5 so can’t actually spend any of the money herself. She was thinking of giving £20K would that affect tax credits?

[Deleted User]

Its a loop hole and one that should be closed.