Universal Credit and Asset Dilemma

Hi all,

I'm new to the forum and am hoping on getting some good advice.

Myself and partner are both disabled and both get PIP and carers. We used to both work 18/30 hours a week each and get tax credits but recently had to migrate to UC.

The issue is we used to own rental flats but slowly sold them over the years, as my mother was getting older and her mother passed away she found herself in need and asked if she could buy a flat from us. We agreed and she gave us £30k for it about 5 years ago. Less than it was worth but hey it's my mum and she had limited funds. She has been living in it since but chose to leave it in our names to make it easier when she died. We didn't see an issue with this.

When we applied for UC we realised we had to declare the property as technically it was in our name, we did so and it was exempt as we had an elderly relative living in it, even though they valued it at £68k which it is nowhere near worth.

Getting tax credits this would not have been an issue when it was sold but now if she sells it officially it looks like our money and our UC will be stopped, even though she will get all the money.

I am happy to transfer it into her name but don't want to be accused of disposing of assets.

Any suggestions greatly accepted.

Thanks


«1

Comments

  • NedS
    NedS Posts: 4,328 Forumite
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    edited 31 March at 5:04PM
    For UC purposes, the property will be disregarded indefinitely (as long as the close relative who is over state pension age is living in it).
    So for UC purposes, I don't see it really matters if the property is in your name or that of your mother. Once your mother passes, presumably they would leave the property back to you in their will so it would come back to you anyway and fall within the scope for consideration at that point (and it's well below the level for IHT consideration).

  • Newcad
    Newcad Posts: 1,642 Forumite
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    edited 31 March at 5:20PM
    Reading that as if I was the DWP:-
    You freely admit that there has been no change of ownership - The property is still in your name as owner(s).
    So what you are actualy saying is -
    "We own a rental property that we rented to my mother for her lifetime use, for which she paid us the advance sum of £30,000 lifetime rent".
    In which case once the '12-month disregard of capital/savings when migrating to UC from Tax Credits' expires then you will no longer be eligible for UC.
    Transfering the property to her name now (gifting her the property) would be disposal of your assets.
    As you are aware disposal of assets in order to claim or increase benefits is not allowed.
    Sorry if that's not what you hoped to hear but it is my opinion from what you have told us.
  • NedS
    NedS Posts: 4,328 Forumite
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    edited 31 March at 5:24PM
    Newcad said:
    Reading that as if I was the DWP:-
    You freely admit that there has been no change of ownership-the property is still in your name as owner.
    So what you are actualy saying is -
    "We own a rental property that we rented to my mother for her lifetime use, for which she paid us the advance sum of £30,000 lifetime rent".
    In which case once the '12-month disregard of capital/savings when migrating to UC from Tax Credits' expires then you will no longer be eligible for UC.
    Transfering the property to her name now (gifting her the property) would be disposal of your assets.
    To clarify, the £30,000 cash capital paid in respect of lifetime rent would be disregarded for 12 months under managed migration, but the property is disregarded indefinitely (H2048-H2049) so there is no benefit in transferring it now.
    https://assets.publishing.service.gov.uk/media/67d982dba87d546feeda0193/admh2.pdf

  • Newcad
    Newcad Posts: 1,642 Forumite
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    edited 31 March at 6:16PM
    There is no indication in the OP that the mother has LCW or has reached the age for SPC.
    The OP says that they and their partner have PIP and CA, but nothing is mentioned about the mother (close relative) being LCW or SPC age.
  • Spoonie_Turtle
    Spoonie_Turtle Posts: 10,105 Forumite
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    Newcad said:
    There is no indication in the OP that the mother has LCW or has reached the age for SPC.
    The OP says that they and their partner have PIP and CA, but nothing is mentioned about the mother (close relative) being LCW or SPC age.
    From tbe OP (easily missed):

    "When we applied for UC we realised we had to declare the property as technically it was in our name, we did so and it was exempt as we had an elderly relative living in it, … "
  • Grumpy_chap
    Grumpy_chap Posts: 17,878 Forumite
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    Jason35x said:
    Hi all,

    I'm new to the forum and am hoping on getting some good advice.

    Myself and partner are both disabled and both get PIP and carers. We used to both work 18/30 hours a week each and get tax credits but recently had to migrate to UC.

    The issue is we used to own rental flats but slowly sold them over the years, as my mother was getting older and her mother passed away she found herself in need and asked if she could buy a flat from us. We agreed and she gave us £30k for it about 5 years ago. Less than it was worth but hey it's my mum and she had limited funds. She has been living in it since but chose to leave it in our names to make it easier when she died. We didn't see an issue with this.

    When we applied for UC we realised we had to declare the property as technically it was in our name, we did so and it was exempt as we had an elderly relative living in it, even though they valued it at £68k which it is nowhere near worth.

    Getting tax credits this would not have been an issue when it was sold but now if she sells it officially it looks like our money and our UC will be stopped, even though she will get all the money.

    I am happy to transfer it into her name but don't want to be accused of disposing of assets.

    Any suggestions greatly accepted.

    Thanks


    It seems clear that the Mother did not buy the property from the OP.  It may be, as others have mentioned, that the Mother paid a life-time rent.

    AIUI, either transferring the property now, or allowing the property to be sold and gifting the proceeds would both be considered as DoC.
  • peteuk
    peteuk Posts: 1,939 Forumite
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    What happened to the £30K?

    Property technically in your name, so therefore not sold to a relative (as others have pointed out) so how would she sell it? No one would buy a property and keep it in someone else’s name, so therefore she sells it, you transfer the titles to new owner, youve nothing if relative pockets the money. 

    The other aspect to look at is the likely hood the elderly relative needing care?  If this is for a long term illness that she had when she paid you the £30K this might be seen as DOC by her.  Is she/was she claiming Pension credit?

    This appears to me to be another case of great idea at the time, but without the full consequences thought out/checked through.
    Proud to have dealt with our debts
    Starting debt 2005 £65.7K.
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  • 8dayweek
    8dayweek Posts: 206 Forumite
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    Have you migrated from Working Tax Credits and Child Tax Credits, or just Child Tax Credits? You mention you USED to work 18/30 hours per week but now get UC, but UC is an in and out of Work benefit. It might be more of a concern that any Transitional Protection ends because of changes to Earnings. 
  • NedS
    NedS Posts: 4,328 Forumite
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    Newcad said:
    There is no indication in the OP that the mother has LCW or has reached the age for SPC.
    The OP says that they and their partner have PIP and CA, but nothing is mentioned about the mother (close relative) being LCW or SPC age.
    From tbe OP (easily missed):

    "When we applied for UC we realised we had to declare the property as technically it was in our name, we did so and it was exempt as we had an elderly relative living in it, … "
    Indeed, the fact that it has been disregarded (exempt) means the relative must be of SPC age or in receipt of LCW, although this is something I concluded from the disregard rather than being explicitly stated by the OP.

  • Newcad
    Newcad Posts: 1,642 Forumite
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    edited 1 April at 11:52AM
    Yes, I'll admit that I had missed that.
    So a rethink.
    As the OP says "recently had to migrate to UC." and "... she gave us £30k for it about 5 years ago." then the timescale means it doesn't really matter what happened to the £30K unless it was kept as savings/capital.
    If there was over £16K in the OPs accounts when they claimed UC then the 12-month TC to UC transitional disregard will apply.
    If the OP's savings/capital other than the disregarded property have reduced below £16K then they can continue to receive UC after any 12-months transitional disregard has ended.
    The possibility of Deprivation of Capital if the property is transferred is what needs thinking about.
    Remember that for it to be DoC there has to be the intention to claim* or increase benefits.
    If the property is currently disregarded anyway then giving it away now means it is no longer theirs so doesn't need to be disregarded, but that change has no effect on their current UC entitlement and no increase to entitlement means no DoC can have happened.
    The question then is would giving the property away change their future entitlement to UC? ie. at the end of any 12-month transitional disregard.
    If the property hasn't changed hands it is still disregarded and there's no change there, - so no DoC can have happened.
    If the property has changed hands then it is no longer theirs so doesn't need to be disregarded, but that change still has no effect on their UC entitlement, - so no DoC can have happened.
    So it appears that whether the OP changes the property into their mothers name or not it does not make any difference to their entitlement to UC, - so it cannot be DoC.
    *The one thing that I would be cautious about is if there is a transitional capital disregard in place for other savings/capital, and if UC will end after the 12-month capital disregard.
    Having given the property away might then have an affect on any new UC claim made once savings have reduced, depending on timescales it could possibly be seen as DoC at that time.

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