Inheritance and working tax credit

Daisychain30

Hi, I’m wondering if anyone can help.

My Aunt recently passed away and left half of her estate to my Mum (my mum and dad are married -and have been for 30 years but only my mums name is mentioned in the will). It is in the process of going through probate but the amount isn’t large enough to be charged inheritance tax.

My Mum and Dad have never been financially stable due to circumstances and don’t have any savings. My Mum is a serial worrier and asked the solicitor if she needs to ‘tell anyone’ about her inheritance and the solicitor explained that she doesn’t as in the eyes of the law it is a gift.

My Mum is retired and my dad is self employed (sadly business is not thriving). They currently claim working tax credit. Both mum and dad are in their 60s

My understanding is this: for tax credit purposes, such as a claim for working tax credit, the amount inherited isn’t included and isn’t taxed, but any interest over £300 a year must be declared and this will be taxed - is this correct?

I just thought some of you lovely people may be able to help. TIA

Newly_retired

I hope they are not paying for this advice! Better to go to Citizens Advice.

calcotti

Daisychain30 said: My understanding is this: for tax credit purposes, such as a claim for working tax credit, the amount inherited isn’t included and isn’t taxed, but any interest over £300 a year must be declared and this will be taxed - is this correct?

Almost. Instead of “will be taxed” you should have said “needs to declared to Tax Credits and will be taken into account”.

https://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/investment-income/

The benefits system, including Tax Credits, isn’t something a financial adviser will necessarily know much about.

Daisychain30

Newly_retired said:

I hope they are not paying for this advice! Better to go to Citizens Advice.

Ahh the CAB up here is useless! The person they’re going to they’ve seen before about other issues, they find him really useful and reasonable 

Daisychain30

calcotti said:

Daisychain30 said: My understanding is this: for tax credit purposes, such as a claim for working tax credit, the amount inherited isn’t included and isn’t taxed, but any interest over £300 a year must be declared and this will be taxed - is this correct?

Almost. Instead of “will be taxed” you should have said “needs to declared to Tax Credits and will be taken into account. 

The benefits system, including Tax Credits, isn’t something a financial adviser will necessarily know much about.

Ah thank you - I’ll forward this on to them, I think my mums worry was that all of her inheritance would be taken off them because my dad doesn’t want to close his business down yet (something I’m still trying to get him to do). Thanks again, that websites a big help