Declaring entitlement to inheritance to DWP

KittemC

I'm named as a beneficiary in my mum's will which, if we went through probate with her will as it stands, would mean I would stand to inherit in excess of £400,000. I currently claim Child and Working Tax Credits as a single parent.

However, we are preparing to apply for a Deed of Variation, as mum was in the process of changing her will when she died, and the variation would mean I will inherit far less than this. The solicitor handling all this has asked me to check the implications of being named as a beneficiary on the original will, as she thinks I may have to declare my entitlement to the amount of inheritance in the original will (£400,000+).

I have been trying to get through to the Tax Credits department to no avail, so I'm hoping someone here will be able to answer my question in the meantime. Does an entitlement to inheritance have to be declared to the DWP, or is it just the amount you actually inherit that must be declared? I need a firm answer before we proceed with the Deed of Variation so that I know exactly what position I am in.

Thanks in advance.

tacpot12

Is the reason that you are signing the Deed of Variation to ensure that you can still claim Tax Credits? 

It may help to know what reason you are signing the Deed for if it is not to ensure you can still claim Tax Credits. 

Mojisola

KittemC said:

I'm named as a beneficiary in my mum's will which, if we went through probate with her will as it stands, would mean I would stand to inherit in excess of £400,000. I currently claim Child and Working Tax Credits as a single parent.

However, we are preparing to apply for a Deed of Variation, as mum was in the process of changing her will when she died, and the variation would mean I will inherit far less than this.

Does capital affect the amount of Tax Credits you can claim?

If so, this is deliberate deprivation - you can't give away money so that you can continue to claim benefits.

KittemC

No, sorry, I should have been clearer in my OP. The Deed of Variation is to split mum's estate between me, my sister and our dad, according to mum's wishes. It will affect my tax credits claim, there's no way around that and I'm not gifting anything. 

I will declare whatever I do inherit to HMRC (and, I believe, DWP also.) But my question is whether my entitlement to inherit according to the original will needs to be declared, even though I will not actually be inheriting those assets.

HHarry

The general consensus on the forums is that it is the entitlement that is important, and that a deed of variation is a deliberate deprivation of assets, and so the entitlement wiil be counted.

Backed up on many websites - https://allanjanes.com/-Gifts-to-Beneficiaries-on-Means-Tested-Benefits-a-Rock-and-a-Hard-Place

But there have been specific cases where it hasn’t been seen as such - https://www.weightmans.com/insights/deeds-of-variation-and-deprivation-of-assets/

So in short it’s complicated, but I imagine if you DoV you’ll have an argument on your hands at some point.

KittemC

HHarry said:

The general consensus on the forums is that it is the entitlement that is important, and that a deed of variation is a deliberate deprivation of assets, and so the entitlement wiil be counted.

Backed up on many websites - https://allanjanes.com/-Gifts-to-Beneficiaries-on-Means-Tested-Benefits-a-Rock-and-a-Hard-Place

But there have been specific cases where it hasn’t been seen as such - https://www.weightmans.com/insights/deeds-of-variation-and-deprivation-of-assets/

So in short it’s complicated, but I imagine if you DoV you’ll have an argument on your hands at some point.

That's great, thank you. It's very complicated, and I'm struggling to work out what the implications will actually be for me.

The amount I stand to inherit under the DoV will be around £35,000, of which £20,000 will be going to my ex husband to buy him out of my house, with the remainder being used for home improvements and savings for my children. 

Presumably at some point, once the inheritance money has been used up, I will be able to reclaim tax credits (or UC)? But what will my entitlement mean for this?

The DoV is being prepared as per my mum's wishes in her new will, which was drawn up but never signed. There wasn't any link between her new will and her death, just incredibly bad timing.

Spoonie_Turtle

I'm confused, has this been moved here from a different part of the forum?  Capital doesn't affect Tax Credits, only interest of more than £300 earned on any capital is taken into account.

Edit: also TC are administered by HMRC, not DWP.

calcotti

Capital does not affect Tax Credits anyway so the question of whether or not this is deprivation is currently immaterial. 

It will be material if you are claiming any other means tested benefits.

MalMonroe

I'm sorry for your loss.

The best thing you can do is contact DWP and ask them. If you can't progress without knowing the answer to that particular question then they seem to be the best people to advise you. You might have to wait to speak to someone but it'll be worth it in the end.

Also, if you register to use HMRC online you can also leave a message there which will be attended to within a specific time limit. 

OR - you could even contact HMRC on Twitter - [@HMRCgovuk] - and without using any personal details, you could just ask your question. 

As in the song 'You can't hurry love', you can't hurry government departments unfortunately. 

Alice_Holt

Completely immaterial for TC's as calcotti and spoonie have stated.

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


Why do you refer to the DWP rather than HMRC ?
DWP have nothing to do with TC's.
Are you in receipt of other benefits?

poppy12345

MalMonroe said:

I'm sorry for your loss.

The best thing you can do is contact DWP and ask them.

Nope. The OP claims tax credits which have nothing to do with DWP. HMRC deal with tax credits and savings do not affect it, only interest of more than £300 affect it, as previously advised.