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

Grumpy_chap

Beachcomber372 said:

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 🤔

Exactly what information was given to the DM?
Exactly what did they say?

Anyway, if this is to be declared as income resulting from your sole trader activity, then you will incur income tax liability, possible increased NI and the income in the period will affect your UC.
What is not spent will then become capital and continue to affect your UC.

What sort of value of inheritance is in consideration here?

TELLIT01

My suspicion is that the person who took the call basically heard something about money from a client and didn't take in the fact that this is a bequest from a will, not payment for work done.  I would call back again and make it very clear that this is a bequest, not payment for work done and see if you can get the correct answer.  The person you spoke to is wrong.

Beachcomber372

TELLIT01 said:

My suspicion is that the person who took the call basically heard something about money from a client and didn't take in the fact that this is a bequest from a will, not payment for work done.  I would call back again and make it very clear that this is a bequest, not payment for work done and see if you can get the correct answer.  The person you spoke to is wrong.

This wasn't just a phone call. It was discussed in my journal and in person at the job centre and been looked into for about 3 months and I believe it was also looked at by the case manager at head office.🤔 I'm don't think I can be bothered to challenge this as I get the feeling I will be banging my head against a brick wall 😒

Grumpy_chap

Beachcomber372 said:

TELLIT01 said:

My suspicion is that the person who took the call basically heard something about money from a client and didn't take in the fact that this is a bequest from a will, not payment for work done.  I would call back again and make it very clear that this is a bequest, not payment for work done and see if you can get the correct answer.  The person you spoke to is wrong.

This wasn't just a phone call. It was discussed in my journal and in person at the job centre and been looked into for about 3 months and I believe it was also looked at by the case manager at head office.🤔 I'm don't think I can be bothered to challenge this as I get the feeling I will be banging my head against a brick wall 😒

Possibly, especially if you described the situation as you have in this thread, your description was unclear.  You have, in this thread, described this as "money from a Client", a "gift", and as "inheritance".  That may well have resulted in the apparently incorrect advice.

What sort of value of money is in consideration?
Is there any protocol by which this money could be assessed as payment for services?  (A debt settled by the deceased's estate.)
What is the nature of work with Clients that means the relationship becomes one where being left an amount in the Will is typical?

Anyway, declare it as income.  It will give rise to income tax liability.  It will affect the monthly UC assessment.  Anything then left over unspent will become capital and affect UC.

Beachcomber372

Grumpy_chap said:

Beachcomber372 said:

TELLIT01 said:

My suspicion is that the person who took the call basically heard something about money from a client and didn't take in the fact that this is a bequest from a will, not payment for work done.  I would call back again and make it very clear that this is a bequest, not payment for work done and see if you can get the correct answer.  The person you spoke to is wrong.

This wasn't just a phone call. It was discussed in my journal and in person at the job centre and been looked into for about 3 months and I believe it was also looked at by the case manager at head office.🤔 I'm don't think I can be bothered to challenge this as I get the feeling I will be banging my head against a brick wall 😒

Possibly, especially if you described the situation as you have in this thread, your description was unclear.  You have, in this thread, described this as "money from a Client", a "gift", and as "inheritance".  That may well have resulted in the apparently incorrect advice.

What sort of value of money is in consideration?
Is there any protocol by which this money could be assessed as payment for services?  (A debt settled by the deceased's estate.)
What is the nature of work with Clients that means the relationship becomes one where being left an amount in the Will is typical?

Anyway, declare it as income.  It will give rise to income tax liability.  It will affect the monthly UC assessment.  Anything then left over unspent will become capital and affect UC.

 The amount was' £2500. It wasn't a payment for any debt owed by the deceased customer it was a gift. I was his gardener. We are transitioning over from tax credits so capital should be disregarded for 12 months so that shouldn't be an issue either. I don't know how or if I should challenge this decision as we have savings and our universal credit will stop anyway in March. On the other hand I don't think we should be given a wrong decision if that is indeed the case? 🤔

Grumpy_chap

Beachcomber372 said:

 The amount was' £2500. It wasn't a payment for any debt owed by the deceased customer it was a gift. I was his gardener. We are transitioning over from tax credits so capital should be disregarded for 12 months so that shouldn't be an issue either. 

Thanks for clarifying.  

With regard to the capital disregard on transition from tax credits it may be worth verifying whether all capital gets disregarded or only that capital already held at the start of the transition period.
I ask as a genuine because I truly do not know.
If an individual had a large lottery win just after entering the transition period, would that still be disregarded for UC purposes?

HillStreetBlues

Beachcomber372 said:

Grumpy_chap said:

Beachcomber372 said:

TELLIT01 said:

My suspicion is that the person who took the call basically heard something about money from a client and didn't take in the fact that this is a bequest from a will, not payment for work done.  I would call back again and make it very clear that this is a bequest, not payment for work done and see if you can get the correct answer.  The person you spoke to is wrong.

This wasn't just a phone call. It was discussed in my journal and in person at the job centre and been looked into for about 3 months and I believe it was also looked at by the case manager at head office.🤔 I'm don't think I can be bothered to challenge this as I get the feeling I will be banging my head against a brick wall 😒

Possibly, especially if you described the situation as you have in this thread, your description was unclear.  You have, in this thread, described this as "money from a Client", a "gift", and as "inheritance".  That may well have resulted in the apparently incorrect advice.

What sort of value of money is in consideration?
Is there any protocol by which this money could be assessed as payment for services?  (A debt settled by the deceased's estate.)
What is the nature of work with Clients that means the relationship becomes one where being left an amount in the Will is typical?

Anyway, declare it as income.  It will give rise to income tax liability.  It will affect the monthly UC assessment.  Anything then left over unspent will become capital and affect UC.

 The amount was' £2500. It wasn't a payment for any debt owed by the deceased customer it was a gift. I was his gardener. We are transitioning over from tax credits so capital should be disregarded for 12 months so that shouldn't be an issue either. I don't know how or if I should challenge this decision as we have savings and our universal credit will stop anyway in March. On the other hand I don't think we should be given a wrong decision if that is indeed the case? 🤔

It sounds like you have over £16k capital if you're UC will end in March.
As the increase capital wouldn't have affected UC there was no need to even tell them as about the inherence.

It's such a pity you never posted about this before you reported it, would have saved all the hassle you're going though.

Beachcomber372

HillStreetBlues said:

Beachcomber372 said:

Grumpy_chap said:

Beachcomber372 said:

TELLIT01 said:

My suspicion is that the person who took the call basically heard something about money from a client and didn't take in the fact that this is a bequest from a will, not payment for work done.  I would call back again and make it very clear that this is a bequest, not payment for work done and see if you can get the correct answer.  The person you spoke to is wrong.

This wasn't just a phone call. It was discussed in my journal and in person at the job centre and been looked into for about 3 months and I believe it was also looked at by the case manager at head office.🤔 I'm don't think I can be bothered to challenge this as I get the feeling I will be banging my head against a brick wall 😒

Possibly, especially if you described the situation as you have in this thread, your description was unclear.  You have, in this thread, described this as "money from a Client", a "gift", and as "inheritance".  That may well have resulted in the apparently incorrect advice.

What sort of value of money is in consideration?
Is there any protocol by which this money could be assessed as payment for services?  (A debt settled by the deceased's estate.)
What is the nature of work with Clients that means the relationship becomes one where being left an amount in the Will is typical?

Anyway, declare it as income.  It will give rise to income tax liability.  It will affect the monthly UC assessment.  Anything then left over unspent will become capital and affect UC.

 The amount was' £2500. It wasn't a payment for any debt owed by the deceased customer it was a gift. I was his gardener. We are transitioning over from tax credits so capital should be disregarded for 12 months so that shouldn't be an issue either. I don't know how or if I should challenge this decision as we have savings and our universal credit will stop anyway in March. On the other hand I don't think we should be given a wrong decision if that is indeed the case? 🤔

It sounds like you have over £16k capital if you're UC will end in March.
As the increase capital wouldn't have affected UC there was no need to even tell them as about the inherence.

It's such a pity you never posted about this before you reported it, would have saved all the hassle you're going though.

Well actually I did post this question before I told UC about the gift. But I thought it best to tell them as apparently UC can access people's bank accounts and might have questioned me about the money later. I just wanted to be honest and make sure everything was above board.

HillStreetBlues

Have you lodged an official complaint?

HillStreetBlues

Grumpy_chap said:

Beachcomber372 said:

 The amount was' £2500. It wasn't a payment for any debt owed by the deceased customer it was a gift. I was his gardener. We are transitioning over from tax credits so capital should be disregarded for 12 months so that shouldn't be an issue either. 

Thanks for clarifying.  

With regard to the capital disregard on transition from tax credits it may be worth verifying whether all capital gets disregarded or only that capital already held at the start of the transition period.
I ask as a genuine because I truly do not know.
If an individual had a large lottery win just after entering the transition period, would that still be disregarded for UC purposes?

All capital over £16k stays disregarded for 12 months (it can actually be longer in certain circumstances). as long as it remains over £16k
If you had £17k when migrating and a month later you won the Euro Millions, UC would continue.