UC and inheritance-major mess!

Cat2010

Advice needed – UC inheritance and retrospective capital review

I'm looking for some advice from people familiar with Universal Credit capital rules or anyone who has experienced a similar situation.

I've claimed Universal Credit since May 2018 and have three inheritance-related issues I'm trying to understand.

1. £18,000 in February 2018: This was received before I moved from Tax Credits to UC in May 2018. At the time, I made a telephone enquiry and understood from the advice I received that this money wouldn't affect my benefits. I'm unsure whether this can be looked at retrospectively.
2. £10,000 in 2024: I received this inheritance while claiming UC but didn't report it because I genuinely didn't understand that inheritance counted as capital that needed to be declared. I have not declared this one yet as im so scared.
4. Approximately £23,000 in 2025: I received another inheritance and have now disclosed this to UC as part of a current compliance review. The money has since been spent on ordinary living expenses, debts and family costs.

I'm trying to understand the potential implications of these situations.

I'd be grateful if anyone could help with the following:

• Does previous telephone advice from DWP make any difference?
• How are overpayments calculated when inherited money has already been spent?
• Does voluntarily disclosing an inheritance make a difference to how a case is handled?
• What is the difference between an administrative penalty and prosecution in these circumstances?

I'm not looking to avoid any repayment I'm legally responsible for. I'm very anxious about the situation and would appreciate factual advice or experiences from people who have been through something similar.

Thank you.

OverlyAnxious

Hi,

DWP advice doesn't mean anything. The advisors can and do get things wrong. You're better off asking a benefits advisor than the DWP themselves. However, the money you received while on Tax Credits is a separate thing. That wouldn't have affected the Tax Credits. And would also have been disregarded for 12 months when you moved to UC, so as long as it was spent within that time, you can forget about that one.

The other 2 inheritances should have been declared, as you now know.

Inherited money that has since been spent can be calculated in different ways. Firstly, if they decide you've spent the money in ways that purposely got you back below the £16k limit, then that is classed as Deprivation of Capital, and that money would be considered as Notional Capital, and added back on to your real savings amount. Notional Capital does decline slowly over time, there is a calculation for that, but I won't complicate this post with more maths for now. The repayments are based on exactly how much you've been overpaid, which is £4.35 for every £250 over £6000, per month.

The other problem is that if you were over £16,000 capital on the end date of any Assessment Period, the claim should have been closed completely. And they could decide that they now want the whole of that months payment to be repaid. As well as any following months, until below £16k again.

All capital changes should be declared, so what you're suggesting is a voluntary disclosure is only what was expected of you. That won't change the amount of overpayment.

The admin penalty is a fixed fee of £50 that everyone is meant to pay as a bit of a punishment or deterrent against further offences. In reality, some people get let off the payment, and for others, £50 is almost nothing compared to the amount of money that they have to pay back anyway. I really would not worry about that. Prosecution is where they believe criminal intent was behind the overpayments, and in that case they would take claimants to court, with the very rare possibility of getting a criminal conviction, but I am 99% sure that will not happen in this case.