savings and child tax credit!

In general, life insurance payouts are not taxable - and the tax credit rules mostly mimic the income tax rules. I see that you are considering either paying off your mortgage with the payout (or offsetting in a flexible mortgage), but if you have a significant remainder to invest/save, you will need to declare any interest etc you receive (beyond the £300 limit) as part of your tax credit income.

Pensions are generally taxable (apart from any tax-free lump sums) so will count as income.

Are you working? If not, your pension plus savings income will need to be more than £13,910 before it starts to affect your tax credit award.

Good luck - sorting all this out during what is already such a difficult time must be very hard.

irs