Inheriting whole holiday home on Universal Credit

Adviceplease1

Advice please: I'm a single Mum to a 2 and 4 year old. One will go to school Sep 23, one in Sep 24.  I own my home with a big mortgage, work P/T, (can't afford to work F/T due to nursery costs).  Get 85% of childcare back and £180 of u/c pm.  Struggle with money due to cost of living/mortgage payments.

My elderly Dad wants to transfer his holiday cottage to me now, to avoid inheritance tax (it's worth £250K but he owns another house worth £400k). It's in a remote area people don't visit in winter, so it mostly breaks even, no big profits. He's a pensioner with not much money either.

My questions are:
1. If he transfers it to me, will my universal credit payments stop?
2. Will I stop getting 85% of my childcare back?  Can I claim this money back another way?
3. Will I still be eligible for the 3 year old child funding? (I think as my income would be under £100Kpa I'd still get it?)

I've tried asking in my u/c journal and they said they couldn't tell me until the transfer was actually made, then it'd be referred to a Decision Maker.  Obvs I need to know BEFOREHAND! 

Any help would be hugely appreciated. Thank you.

Adviceplease1

PS: My dad is thinking about leaving 30% of his cottage to my children, so I wouldn't own all of it, just 70%.  I'm unsure if there's a way to make this transfer to us whilst still giving me permission to sell it if I need to later on (though we'll try to do this via a solicitor).  Does it still count as an asset if I don't own all of it? Thanks.

HillStreetBlues

With UC it would be classed as savings, so once in your name any UC would stop with that kind of amount.

WelshPaul

Property that you own, other than where you live, counts as savings when means-tested benefits are calculated. This means that such property needs to be valued and an amount entered into the calculator.

Spoonie_Turtle

Adviceplease1 said:

PS: My dad is thinking about leaving 30% of his cottage to my children, so I wouldn't own all of it, just 70%.  I'm unsure if there's a way to make this transfer to us whilst still giving me permission to sell it if I need to later on (though we'll try to do this via a solicitor).  Does it still count as an asset if I don't own all of it? Thanks.

Yes, because you'd own 70% of the value.

If this went ahead your only option if your income is not enough to live on would be to sell one of the houses and live in the other, then use the money from selling to live on until you had £16,000 left to be able to reclaim UC.

I don't know what other help for childcare there is but I doubt it covers anywhere near the 85% UC does.

calcotti

WelshPaul said:

Property that you own, other than where you live, counts as savings when means-tested benefits are calculated. This means that such property needs to be valued and an amount entered into the calculator.

You really don’t need to work it out. The share of the cottage is going to be worth more than £16,000. That therefore ends entitlement to any means tested benefits.

Adviceplease1 said:

Does it still count as an asset if I don't own all of it?

The value of the share of the property is your capital.
1) UC will stop. 

2) The childcare help you currently get is part of UC so that will stop. (You could look at tax free childcare which would give some support if you meet the qualifying conditions.)
3) A capital asset doesn’t affect 30 hour free childcare (if that’s what you are referring to).

If you part own a property it might have no value if you would be unable to sell it because of an unwilling co owner but I can’t see that could apply in this situation.

Possibly if the property was put in trust for your children it wouldn’t affect your benefits that’s way outside my knowledge.

Grumpelstiltskin

Get him to check Inheritance Tax in detail, even with the 2 properties he maybe under the limit.

In your situation I think you will have more hassle and less income so not worth it.

Keep_pedalling

If your father is serious about IHT planning he should take advice from a professional rather than going ahead with this idiotic plan. For starters he is highly likely to pick up a significant CGT liability on any transfer to you, and presumable he would still want to receive the rent (otherwise you would hardly need to the benefit anymore) which would mean it would be a gift with reservation so the seven year rule would not apply.

calcotti

Keep_pedalling said:

If your father is serious about IHT planning he should take advice from a professional rather than going ahead with this idiotic plan. For starters he is highly likely to pick up a significant CGT liability on any transfer to you, and presumable he would still want to receive the rent (otherwise you would hardly need to the benefit anymore) which would mean it would be a gift with reservation so the seven year rule would not apply.

OP says the rental income just covers the cost of owning it so there is no suggestion that he wants to receive the income. However I agree that IHT planning probably needs advice (he may have taken some, we don’t know).

R20223

Could your Dad  just sell holiday property ?
could then do what he wants with proceeds. 

Eg pay part of your mortgage

open isa for grandchildren ?

The_Unready

^^^^^^^^^^^^
That does seem to be the most sensible option, especially if the house is only breaking even each year.....