What effect does receiving an inheritance from overseas have on benefits?

CarlosTheJackass

My wife is due to inherit a substantial sum of money from the death of her mother. My wife is a foreign national, albeit she is now a UK citizen. Her mother was also a foreign national and never lived in the UK.

My wife receives disability benefits in the form of Contributions Based ESA and the higher level of PIP. She also has a small private pension from her previous employment.

How will her inheritance affect her benefits?

poppy12345

PIP isn't means tested. If all of her ESA is contributions based, with no Income Related included then this also isn't means tested and will not affect it.

Are you claiming any other benefits such as housing beneft? If so then this is means tested and savings/capital of more than £16,000 will mean all means tested benefits will end.

CarlosTheJackass

No other benefits, but I think there is an income component in her ESA as well. The regular ESA notification suggests that. So I suppose that will disappear?

tacpot12

It will depend on how much capital she has. It is my understanding that the DWP will decide how much 'notional' income she will receive from that amount of capital, and will include that notinal income in their calculation of any income-based ESA component. This might result in the income-based ESA component being reduced to zero.

As far as I know they still calculation notinal income as £1 per week for every £250 over £6000. So if the legacy was £50,000, they would assume a notinal income of £50,000 - £6,000 / 250 = £176 per week. 

So, it would be best to inform the DWP of the amount of capital she has (don't forget to include all of her savings and investments) when she receives the legacy, and they will adjust the income-based ESA if necessary. If it does go down to zero, then there is nothing she can do about this. If she were to give the money to you, the DWP would still do the calculation as though she still had the money, as the rules on Depravation of Assets allow them to do this.

This is nothing to do with benefits, but she might also want to consider that deposits in the UK are only protected by the Financial Services Compensation Scheme (FSCS) upto £85,000, so she might want to distribute the money between more than one bank to make sure she doesn't have more than £85,000 with any one bank.  

poppy12345

ESA letters arfe well known for not making make sense. If she's in the Support Group then without any deductions CB will be £129.50/week. If it's any more than this then at least part of it will be Income Related. With her pension then this will reduce any Income Related £1 for £1.

For contirbutions based any pension of up to £85/week is ignored. There's a deduction of 50p/week for every £1 over that amount.

CarlosTheJackass

Thanks both, for your info.