Wife no longer working. Help with savings/tax credits

Andyboy

My wife has just stopped working to look after our 19month old son. we have savings of around 30k in ISAs and are starting to struggle to pay our 40k Mortgage and other bills. I know it looks obvious that we should pay off part of our mortgage but tie ins etc only allow for 10% penalty free payments per year for the next 5.

My main question is as our savings are counted against us (above 6k) what would be the benefit in tax credit terms of using these? Can we give a chunk of money to our son? I am trying to legally do what is best for our family and help us out of a conundrum.

I look forward to your replies.....tired but extremely happy dad

Keeping_Positive

Not too sure about the savngs but this site may help http://www.entitledto.co.uk/

seven-day-weekend

Deliberately ridding yourself of capital in order to claim State Benefits is classed as fraud.

I think transferring money to your son may come into this category.

Take advice from a Welfare Rights Advisor at the CAB

[Deleted User]

The savings do not get counted for Tax Credit purposes, only the interest you make on them. However you would disregard the first £300 (from total "other income")
I would advise calling up TCO to advise them of the change. Let them know how much she has earned this year and they should recalculate your award. As it is near the end of the financial year it may not increase your award but you can call back again from 6th April to give them her 2008/09 income estimate as the figure you give them for this year automatically carries forward, so if she is not expecting to work in 2008/09 you would give a £0 estimate for her.

Andyboy

seven-day-weekend wrote: »

Deliberately ridding yourself of capital in order to claim State Benefits is classed as fraud.

CAB

Hence the use of the word "legally"!

Since when is paying off debts early ridding yourself of capital? I do thank you for your comments but find them a little harsh.

I have entered details into Entitledto etc and was just asking for some pointers.

[Deleted User]

I dont think seven-day-weekend was trying to be harsh but if you are deemed to be giving a chunk of your money to your son in order to make it look as though you have less savings this could be classed as "fraud".

If you want to give the money to your son and it is all above board then I would maybe put the money in to a trust fund that cannot be accessed for "X" years.

It was not mentioned by seven-day-weekend that paying off bills was depriving yourself of income, I think you may have misread the post.

Andyboy

subsoniccoyote wrote: »

I dont think seven-day-weekend was trying to be harsh but if you are deemed to be giving a chunk of your money to your son in order to make it look as though you ha....

I am only looking for help in an area that I know little or nothing about. It was the use of the word fraud that I didn't like.

I apologise to anyone who is offended by my offence at being almost accused of trying to commit fraud.

S-D-W I am sure your intentions were honourable.

Now back to the original problem please.............

kelloggs36

As another poster has already said, tax credits don't give a savings limit so there would be no potential fraud whatsoever. All that needs to be declared is the annual interest you have gained. If you have claimed before, then you should notify the tax office of the reduction in your income. Good luck.

real1314

A quick pedantic clarification:-

Giving away money in the hope of getting extra benefits is NOT fraud. You can do anything you like with your money.

It would only become fraud if you made a false statement to get the extra benefit.
If you told them the full facts of what you'd done, it might be classed as "depravation of capital" but that isn't the same as fraud.

[Deleted User]

Deprivation of capital may not be straight forward fraud but placing money somewhere so that you get more benefits can be seen as somewhat fraudulent.

For example, I could win 5 million on the lottery and just put it in my child's bank account and say it is theirs now, not mine and continue to claim job seekers allowance. A bit of an exaggeration but you know get the picture.

As it is not straight forward this is why I placed it in inverted commas.

seven-day-weekend

I'm sorry if I offended you, but I was actually only telling you how it may be seen by the benefits agencies . I was not suggesting you would do anything fraudulent.

I have actually heard of cases (on these boards) where people have been penalised benefits-wise by paying off a mortgage or debts as the benefits people deemed that they should have continued to pay the normal repayment, kept their capital and not claimed benefits.

Anyway, I've just found out that it is not relevant to tax credits, so you don't have a problem in that way.