Employment and Support Allowance (ESA)
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Would owning a property affect my benefits?

bubbles40bubbles40 Member Posts: 8 Listener
Hi all was wondering if someone could help me? I am currently in receipt of income based ESA (support group), live in rented accomodation and in receipt of Housing benefit but having to top up by £125pm.  Landlord is useless does only the very necessary repairs and has this week sent me a note to increase rent by another £50pm. Financially I cant afford this and had started to look at what other options I had when my Dad came round last night with an amazing offer!

Basically, he has sold a property and is in a position to offer to buy a house for me and my 2 children that would be mortgage and rent free, in effect he wants to give me my inheritance while he is still around to see us enjoy it!! And giving us security, saving me money and meaning that we can get a house that is suitable for us all long term! Obviously I feel very blessed and grateful that he would do this for us but what I don't know is will this effect my benefit?  The money would never come to me, would go directly into a property in my name so not directly an income and the offer is the gift of a house or nothing so not like I have the option to take the cash and live off it as an income.  If he cant buy us a house he plans to use it to travel in his retirement but he would prefer to help make life a little easier for us!

Sorry for the long post and hope I've made sense my brain fog is at full force today and he has put my head in even more of a spin with his unexpected offer.

Thanks for any help!

Replies

  • Chloe_ScopeChloe_Scope Scope Posts: 10,652 Disability Gamechanger
    Hi @bubbles40 and a warm welcome to the community! Thank you for sharing your story with us. I hope someone in the community is able to help you with this. @BenefitsTrainingCo may be able to offer you some advice on this as well :) 

    This is what I have found online:

    Your income and savings

    Your income may affect your income-related or contributory ESA. Income can include:

    • you and your partner’s income
    • savings over £6,000
    • pension income

    You will not qualify for income-related ESA if you have savings over £16,000.

    (https://www.gov.uk/employment-support-allowance/eligibility)

    However, I would definitely get this clarified and speak to a benefit advisor.
    Community Partner
    Scope

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  • atlas46atlas46 Member Posts: 827 Pioneering
    Hi @bubbles40

    Welcome to the community.

    That is one special dad.

    There might be an inheritance tax issue, but that could be overcome, by putting the property in a Trust for you.

    You would need to speak to a solicitor.

    It should have no impact on benefits. You would still be able to relief on council tax.

    This is a good news story for you and your children.

    Give your dad, a big man hug from me.

    Best wishes
  • TopkittenTopkitten Member Posts: 1,263 Pioneering
    It will certainly affect your benefits and also it would exceed the amount of transferred money that parents are allowed to give to their children so most likely would be subject to Capital Gains Tax or whatever it's equivalent is called. I don't know how much of an effect it would have nor how much tax it might be. We do not live in a country that let's people help their children very much and the blame for that is on the rich that tried to avoid tax in the past.

    TK

    "I'm on the wrong side of heaven and the righteous side of hell" - from Wrong side of heaven by Five Finger Death Punch.
  • bubbles40bubbles40 Member Posts: 8 Listener
    Thanks for the welcome and advice @Chloe_Scope yeah thats what I figured and as I will never actually physically have the money I won't ever have over the savings limit or any other income. Just don't know if it falls into a bit of a grey area! Hopefully @BenefitsTrainingCo will be able to offer further advice or I will have to find a benefits advisor.
  • wilkowilko Member Posts: 2,284 Disability Gamechanger
    Hello and welcome, a lot of views opinions advice, firstly get some benefit advice. Just a thought, what if you moved into your dads house and he became your land lord make it official you may still be able to claim certain benefits ect but your rent would be counted as income to your father and with his pension or pensions he could become liable for tax unless he rented it to you below market value. A lot to think about and get sorted out. Good luck and keep us up dated and continue to post.
  • wilkowilko Member Posts: 2,284 Disability Gamechanger
    Hello and welcome, a lot of views opinions advice, firstly get some benefit advice. Just a thought, what if you moved into your dads house and he became your land lord make it official you may still be able to claim certain benefits ect but your rent would be counted as income to your father and with his pension or pensions he could become liable for tax unless he rented it to you below market value. A lot to think about and get sorted out. Good luck and keep us up dated and continue to post.
  • bubbles40bubbles40 Member Posts: 8 Listener
    Thanks @atlas46 very special! I am totally blown away!! He had looked into the inheritance tax issue and seems to think that as long as he survived 7yrs from the gift that it would be exempt and obviously he and I hope he would last at least that long (and not for the tax reasons lol) however if he didnt I would be looking at inheritance tax issues unless he had spent it quickly!

    Thanks @Topkitten oh right I will have to look into that aspect, it's a minefield and I don't want him to give up the chance of a lovely retirement! He's worked hard to get to this point and is fortunate enough to be in the position of being well enough to enjoy it if he can! 

    Thx 
  • debsidoodebsidoo Member Posts: 327 Pioneering
    Hi Bubbles40
    Any property in your name will affect your benefit.May I suggest he puts it in a trust for your children until they reach majority or charge you a token amount of rent as a tenant. This way you shouldn’t be breaking any rules but I am no expert so you would need to check this.He could then still use the income to travel.
        Debsidoo.x
  • atlas46atlas46 Member Posts: 827 Pioneering
    Hi

    The "gift" if under £350,000 would not be liable to IHT, only money above would be liable.  The advice your dad has been given, 7 year rule is correct. Put would only apply to money above threshold.

    Why do I know so much, ask my daughter!
  • bubbles40bubbles40 Member Posts: 8 Listener
    Thanks everyone! @wilko he doesn't actually have a house anymore just has the funds in order to buy one and he doesn't really want to go into the whole landlord situation I did suggest that yesterday.  Perhaps in trust for the children is the way to go but either way think we need to get some more investigating and advice! But has been good to get peoples views and advice my poor head has been spinning today withbthe shock and all sorts of thoughts! xx
  • wilkowilko Member Posts: 2,284 Disability Gamechanger
    bubbles40, I, we all hope you get the answers you find helpful from professional advisers and your dad can enjoy his retirement knowing you are taken care of.
  • [Deleted User][Deleted User] Posts: 273 Pioneering
    Hello bubbles40

    As others have said, one cool Dad...and which parent wouldn't love to do this?!
    I think that this isn't a problem, benefits- wise. The value of capital assets is disregarded for a specified time in some circumstances. 

    One of these is where you have property and intend to move in within 26 weeks and do move in, in that time scale (or if it takes longer then within a reasonable time. I wouldn't push the "is this reasonable or is that reasonable" aspect of this; unless you have alterations to make to a house to accommodate your disabilities, then I would accept your Dad's offer and  move in asap!

    I will try to find a nice bit of legislation for you next...

    ESA
    http://www.legislation.gov.uk/uksi/2008/794/schedule/9/made

    Universal credit
    http://www.legislation.gov.uk/uksi/2013/376/regulation/48/made

    http://www.legislation.gov.uk/ukdsi/2013/9780111531938/schedule/10

    I think that if your father gives you money with which to buy a house, this is a problem benefit-wise - a huge problem. This is because you would have a choice on how to spend the money. If you buy a house, the DWP will very likely say that this is deliberate disposal of capital you could have lived on - though of course longer -term,  that doesn't make sense. If you are given a house, and then you go and live init within 26 weeks, you have had no choice and have not deliberately spent money in order to get more benefit. 

    Please check this with a solicitor. 

    I hope this is helpful. 

    Best wishes


    Gill_Scope
    Benefits and Finance Specialist 
    Scope Helpline
    Tel: 0808 800 3333
  • bubbles40bubbles40 Member Posts: 8 Listener
    Thanks @Gill_Scope the intention is that the house will be purcahsed in my name but the money will never come to me it will go straight from my dad to the solicitors to purchase a house and I would move in pretty much straight away. He has point blank said he will not gift me the cash, he will only buy a property in my name.

    I will take the advice of a solicitor as well before any purchase.
  • [Deleted User][Deleted User] Posts: 273 Pioneering
    Wishing you well bubbles40. Owning a house would give you real financial security. A solicitor is likely to be able to offer clarity as to any implications for your benefits and your father's tax. I think that you'r e ok if you don't have the cash yourself and so have a choice about how to spend it, if you move in  soon after the house is bought, and as you say, your Dad needs to survive 7 years to avoid inheritance tax issues. Good luck.

    Gill_Scope 
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