Gifting money then claiming pension credit.

homi

Can anyone give me some advice which I can pass onto my neighbour.

My neighbour has asked me for some advice on what would be classed as depravation of funds in the event he wanted to claim additional benefits after gifting money.

He is 70 this year and has savings which put him over the threshold where he can get pension credit or any other help  ( I think around 23k). 

He wants to use his gift allowance from 2021 + 2022 + the again in April 2023  - half for his 10 year old grandson and the other for his daughter who is struggling to pay her mortgage since the interest rate rise. 

I told him that it maybe classed as deprivation of funds as he intends to claim pension credit , free dental treatment etc once under the limit.

He owns his house outright and survives on the state pension.

Any help would be appreciated.

calcotti

homi said:
I told him that it maybe classed as deprivation of funds as he intends to claim pension credit , free dental treatment etc once under the limit.

Yo are correct. It may be classed as deprivation of capital. The rules are not fixed and DWP have to consider that increasing benefit entitlement is a motivating factor but gifting money is likely to be a red flag.

homi

calcotti said:

homi said:
I told him that it maybe classed as deprivation of funds as he intends to claim pension credit , free dental treatment etc once under the limit.

Yo are correct. It may be classed as deprivation of capital. The rules are not fixed and DWP have to consider that increasing benefit entitlement is a motivating factor but gifting money is likely to be a red flag.

I thought the same but he thinks as he is entitled to gift the money ( which he was going to do anyway) and if this brings him under the threshold he is entitled to any benefits if he has less in savings.

I am not 100% sure how it works because he would be penalised and has not broken any rules, would it not be the same if he spent the money on his house.

Quite a hard one to judge .

calcotti

If he gifts money my expectation would be that it will be treated as deprivation and he would be treated as if he still had the money he gifted.

eskbanker

homi said:
...he thinks as he is entitled to gift the money...

Anyone is entitled to gift what they want, but it sounds like he maybe believes that gifts being exempted from inheritance tax means that they couldn't be challenged on the basis of deprivation of assets, whereas these are two unrelated matters.

pmlindyloo

There is no savings limit with Pension Credit.

Any savings over £10,000 is treated as income at the rate of £1 per week for every £500 (or part of) over the £10,000.

It might be sensible for him to use a benefits calculator to see if he is entitled to Pension Credit at the moment.  e.g. www.entitledto.co.uk

calcotti

pmlindyloo said:

There is no savings limit with Pension Credit.

Any savings over £10,000 is treated as income at the rate of £1 per week for every £500 (or part of) over the £10,000.

It might be sensible for him to use a benefits calculator to see if he is entitled to Pension Credit at the moment.  e.g. www.entitledto.co.uk

I assumed that reference to a threshold of £23,000 meant this is what they have calculated would be the relevant capital amount taking into account other circumstances. 

homi

pmlindyloo said:

There is no savings limit with Pension Credit.

Any savings over £10,000 is treated as income at the rate of £1 per week for every £500 (or part of) over the £10,000.

It might be sensible for him to use a benefits calculator to see if he is entitled to Pension Credit at the moment.  e.g. www.entitledto.co.uk

thanks , if he was to gift the 3k from this year and last year allowance would he still be able to claim the pension credit on the savings on the reduced amount or would this be seen as deprivation of funds?

diystarter7

homi said:

calcotti said:

homi said:
I told him that it maybe classed as deprivation of funds as he intends to claim pension credit , free dental treatment etc once under the limit.

Yo are correct. It may be classed as deprivation of capital. The rules are not fixed and DWP have to consider that increasing benefit entitlement is a motivating factor but gifting money is likely to be a red flag.

I thought the same but he thinks as he is entitled to gift the money ( which he was going to do anyway) and if this brings him under the threshold he is entitled to any benefits if he has less in savings.

I am not 100% sure how it works because he would be penalised and has not broken any rules, would it not be the same if he spent the money on his house.

Quite a hard one to judge .

Hi OP

Gifting is easily traced and proven re benefits.

Doing up ones house is not easily proven if it was essential/necessary or done in a way to set yourself up to claim benefits.

I'm pretty certain the benefits department will want to know whay xxx pounds left the account and now claiming benefits

If next door wants to be 100% certain - call the benefits people, don't give names say you are asking on behalf of a friend, and keep it concise. If they say they can, take their details.

Personally, I can't see it working like that unless he is only giving away a few k;s but the best bed, call the benefits dept.

(It's a bit like us giving our thousands away in order to claim benefits, just does not sound right)

Good luck

calcotti

homi said:

pmlindyloo said:

There is no savings limit with Pension Credit.

Any savings over £10,000 is treated as income at the rate of £1 per week for every £500 (or part of) over the £10,000.

It might be sensible for him to use a benefits calculator to see if he is entitled to Pension Credit at the moment.  e.g. www.entitledto.co.uk

thanks , if he was to gift the 3k from this year and last year allowance would he still be able to claim the pension credit on the savings on the reduced amount or would this be seen as deprivation of funds?

See earlier reply

calcotti said:

If he gifts money my expectation would be that it will be treated as deprivation and he would be treated as if he still had the money he gifted.

poppy12345

homi said:

pmlindyloo said:

There is no savings limit with Pension Credit.

Any savings over £10,000 is treated as income at the rate of £1 per week for every £500 (or part of) over the £10,000.

It might be sensible for him to use a benefits calculator to see if he is entitled to Pension Credit at the moment.  e.g. www.entitledto.co.uk

thanks , if he was to gift the 3k from this year and last year allowance would he still be able to claim the pension credit on the savings on the reduced amount or would this be seen as deprivation of funds?

As advised, giving away any money will be seen as deprivation of capital and he will still be classed as having that money. No one is saying he can't gift it but it will affect any potential entitlement.