Universal Credit Review After Inheritance - Need Advice

ScottCooper

Hello everyone,

I'm currently facing a Universal Credit review and would really appreciate some guidance from anyone with expertise or similar experiences.

My Situation

I started claiming Universal Credit in April 2024 after receiving a migration letter from Tax Credits. Just before this migration, I received a £33K inheritance from my grandfather. I've been completely honest about this inheritance during my UC review, but I'm worried about the outcome.

Timeline of Events

• 5th April 2024: Received £33K inheritance from my grandfather
• 8th of April 2024: Used the majority of the inheritance to clear credit card and loan debt that we had accrued during a home extension
• 9th of April 2024: Received official migration letter from Tax Credits instructing us to move to Universal Credit.
• 9th of April 2024: Applied for Universal Credit as instructed
• 5th of MAy 2025: UC has started a review and I've disclosed the inheritance

Background Context

The debts we paid off weren't from frivolous spending but from a really difficult situation:

1. Three years ago, we remortgaged to fund a home extension
2. We were victims of fraud - a contractor took our money without completing the work
3. We spent years fighting with the banks to resolve this
4. Meanwhile, building costs skyrocketed
5. We had to use credit cards and a loan to complete the extension we had originally budgeted for adequately

We also used about £4,800 of the inheritance for flights for our family of six during the summer break. This was our first holiday after years of stress dealing with the fraud, plus it was following my grandfather's passing, and it was the first opportunity for our two youngest children to travel abroad.

My Questions

1. We didn't think we needed to declare the inheritance when applying for UC because it was already spent before we made our claim. The questionnaire asked if we HAD capital, not if we HAD HAD capital recently. Was this understanding incorrect?
2. Does it make a difference that we only applied for UC because of an official migration letter from Tax Credits? We wouldn't have claimed UC otherwise and would have continued with Tax Credits.
3. I understand that paying off debts isn't considered "deprivation of capital" - is this correct?
4. Is there any special protection for people moving from Tax Credits to UC through the managed migration process?
5. What are the likely outcomes of this review? Could we face:
   • Termination of our UC claim?
   • Being asked to repay benefits received?
   • Penalties or sanctions?
   • Or will they understand our situation?
6. Will the holiday spending be viewed differently than the debt repayments?

I'm genuinely confused about the rules and worried about potential consequences. We've been transparent in the review process, but I'm concerned about how this will be interpreted.

Any advice, experiences, or knowledge would be greatly appreciated.

Thank you.

(disclaimer: I used AI to put my confused ramblings and thoughts into something more structured and sensible)

huckster

1) No
2) Not relevant
3) Yes
4) Capital over £16000 disregarded for 12 Universal Credit assessment periods where UC paid after migration to UC.

5)  They will understand the situation.

Not an issue for UC. You are allowed to pay down debt in the way you did.

The UC review team are just part of the wider UC team.  There is no issue that I can see that would merit referral to a Decision Maker about capital. A Decision Maker referral is raised where a UC agent is required to ask for a decision on a claim.  

ScottCooper

Thank you so much - wife and I are sitting here rather nervous and your comments have helped. I've since been asked to provide statements back to 2022 and explain any payment in excess of £500.00 which i'm trying to do - its just a little difficult in some cases working out what happened when moines have moved, but i'm sure i'll get there.

Once again really REALLy appreciate your help