Do I have to declare a money gift to universal credit and on my tax return?

Beachcomber372

Hi, I am self employed and my partner and I are jointly claiming universal credit. One of my regular customers passed away fairly recently and he left me a gift of some money in his will which I've just received. I'm due to declare my monthly earnings to universal credit within the next few days. Do I have to declare this amount? If so do I declare it as earnings income or something else? Also do I also declare it on my annual self assessment so I pay tax on it?

Keep_pedalling

An inheritance is not income it is capital so apart from any interest or dividends it earns it is not taxable and does not need to be declared on your tax return.

tacpot12

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Beachcomber372

Keep_pedalling said:

An inheritance is not income it is capital so apart from any interest or dividends it earns it is not taxable and does not need to be declared on your tax return.

Universal Credit have just informed me that the gift is income and I need to declare it as income.

Beachcomber372

tacpot12 said:

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Universal Credit have just informed me that the gift is income and I need to declare it as income.

HillStreetBlues

Beachcomber372 said:

tacpot12 said:

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Universal Credit have just informed me that the gift is income and I need to declare it as income.

Sadly I'm not surprised, DWP staff give the most appalling  advice. As stated earlier in the thread it's capital not income. 

Muttleythefrog

Beachcomber372 said:

tacpot12 said:

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Universal Credit have just informed me that the gift is income and I need to declare it as income.

Unfortunately their staff are very good at giving entirely incorrect information.... concerningly they tend to do it in a confident way to get rid of the issue. It's a very different matter when it comes to the UC decision makers who actually know the rules... the regulations... the law.

A financial gift or inheritance will clearly be considered capital. As above if this affects your UC entitlement it should therefore be declared... your total capital.

Grumpy_chap

Beachcomber372 said:

tacpot12 said:

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Universal Credit have just informed me that the gift is income and I need to declare it as income.

They may have been mistaken or confused, perhaps if they heard the part it was money from a client of your sole-trader business activity and overlooked that it was an inheritance rather than payment for work done.

That this is capital for UC is clear here:
https://www.gov.uk/guidance/universal-credit-money-savings-and-investments
Look to the heading "Report changes to your money, savings and investments"
Inheritance is the first example of a change:
"You must tell us about any change in your money, savings and investments or their value. This may include:
 - inheritance payments"

Sometimes, the same transaction can be different for UC and income tax, but inheritance is not income for tax purposes and does not need to be reported in your self-assessment tax return either:
https://community.hmrc.gov.uk/customerforums/sa/d3952223-e490-ed11-97b0-00155d9c7b3d

Beachcomber372

HillStreetBlues said:

Beachcomber372 said:

tacpot12 said:

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Universal Credit have just informed me that the gift is income and I need to declare it as income.

Sadly I'm not surprised, DWP staff give the most appalling  advice. As stated earlier in the thread it's capital not income. 

Universal Credit have been looking at this for about 3 months before coming to this decision. Is it because the gift came from a deceased customer of mine that it's considered income? If I recall it says on the Self Assessment tax return that gifts from customers should be declared 🤔

Beachcomber372

Muttleythefrog said:

Beachcomber372 said:

tacpot12 said:

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Universal Credit have just informed me that the gift is income and I need to declare it as income.

Unfortunately their staff are very good at giving entirely incorrect information.... concerningly they tend to do it in a confident way to get rid of the issue. It's a very different matter when it comes to the UC decision makers who actually know the rules... the regulations... the law.

A financial gift or inheritance will clearly be considered capital. As above if this affects your UC entitlement it should therefore be declared... your total capital.

Universal Credit have been looking at this for about 3 months before coming to this decision. Is it because the gift came from a deceased customer of mine that it's considered income? If I recall it says on the Self Assessment tax return that gifts from customers should be declared 🤔

Muttleythefrog

Beachcomber372 said:

Muttleythefrog said:

Beachcomber372 said:

tacpot12 said:

If the gift takes you over £6000 of savings you will need to declare it to UC - as Keep_pedalling says, it's capital. 

Universal Credit have just informed me that the gift is income and I need to declare it as income.

Unfortunately their staff are very good at giving entirely incorrect information.... concerningly they tend to do it in a confident way to get rid of the issue. It's a very different matter when it comes to the UC decision makers who actually know the rules... the regulations... the law.

A financial gift or inheritance will clearly be considered capital. As above if this affects your UC entitlement it should therefore be declared... your total capital.

Universal Credit have been looking at this for about 3 months before coming to this decision. Is it because the gift came from a deceased customer of mine that it's considered income? If I recall it says on the Self Assessment tax return that gifts from customers should be declared 🤔

Have they produced a formal decision letter (like others I had assumed this was just some swift passive advice but 3 months considering a decision raises a different scenario).... if so can we see the text of it minus obviously any personal details... and can you give us some idea of the amount gifted (not to be nosey but to try to understand why they may be giving direction as they have)

(Thinking if a UC DM has reached this conclusion.... pandora box opened on inheritance and capital manipulation)