Money for child

calcotti

mummy45 wrote: »

She was thinking of giving £20K would that affect tax credits?

As previously advised capital is ignored for Tax Credits.

Alice_Holt

mummy45 wrote: »

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?

Since your sister has control of that bank account, I think it would immediately need to be reported as a change of circumstances and would end any means-tested benefits such as HB, CTr.
If the capital was held in a child's account which the parent could not access (JISA, or Bare trust with the aunt as trustee, or SIPP) than the HB regulation calcotti refers to would apply.
However with the situation you describe the money is controlled by the claimant, and will be (I believe) counted towards the £16k capital limit.
Failure to report this change would mean your sister will be running up overpayments that will eventually need to be repaid along with likely penalties / fraud investigation.

Re tax credits - this was covered in calcotti's post @3
"There is no capital limit for tax credits; the value of any savings/capital is ignored. However, any taxable income from savings and investments is taken into account as investment income."
Some more info for you:
https://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/investment-income/

Can you comment on the suggestion made in post 2. This would be far more sensible than your aunt depositing £20k in a bank account controlled by a relative in receipt of means-tested benefits.
Presumably your aunt could also settle the legal bills directly?

tomtom256

calcotti wrote: »

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.

But they could decide that the person with beneficial interest is the claimant and not disregard it, if they believe it has been put into there name to hide the capital, I have seen this done many times by claimants who then as they have sole control of the account spend it on what they want.

The safest thing to do, would be to create a trust fund for the child in question with some of the capital and then get your aunt to pay your legal costs seperately, as using the child's capital for legal costs would make the claimant the person with the beneficial interest/ownership of the capital.

Cross posted with Alice.

Carrieanne

Seems the OP's sis would use the money for ongoing expenses related to her daughter and some towards legal expenses. As others have pointed out, having anything above £6K sat in a bank account her sis has access to could, and likely would, negatively impact her Housing Benefit award along with any other means-tested benefit she's in receipt of such as Council Tax Reduction, for example. An easy and stress free but long-winded way of accepting the whole sum would be for aunt to gift it to her at intervals, say in £5K increments when her account balance is below £1K then when her balance is beneath £1K again make a similar transfer. With the aunt/niece familial connection no eyebrows will be raised concerning the gift aspect. To receive the whole £20K in one lump beyond the gaze of the state would involve aunt withdrawing the sum in cash and handing it to sis, but sis would be committing an offence if she didn't declare her real savings to the DWP.

poppy12345

Carrieanne wrote: »

An easy and stress free but long-winded way of accepting the whole sum would be for aunt to gift it to her at intervals, say in £5K increments when her account balance is below £1K then when her balance is beneath £1K again make a similar transfer.

I wouldn't advise doing it this way either. Even though it's a gift, transferring such large amounts of money in such a short space of time could very likely look suspicious, if bank statements are requested for any reason in the future.



The suggestion in post 2 is the better option here.

MissMollyJ

For your sisters safety and peace of mind I agree - can the aunt pay legal expenses directly and then a lower sum that would t be an issue be put into an account for the child? Having had overpayments (admittedly small) myself (due to fluctuating self employed income) I can say it’s very stressful and something to avoid.

mummy45

Thankyou all, I think my aunt settling legal costs directly and then giving a smaller sum for the child is a much safer way.