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ESA - Effected by inheritance?
Merlin84
Member Posts: 3 Listener
A close relative receives ESA and PIP (higher rate).
He is about to receive an income (rental) due to inheriting a property which is being let.
I am trying to ascertain whether he will lose all or some of his ESA and other associated benefits:.
warm home discount
car tax
eye wear discount
dental treatment discount
council tax discount
bus pass
green waste collection
free prescriptions
The ESA is old style - it dates back many years. A letter outlining is entitlement states: "“You are entitled to both contribution based and income related employment and support allowance. This assessment is based on how much the law says you bees to live on and your national insurance contribution record."
The concern is that the rental income will be less than the loss of benefits and eventually he would have to sell the property.
Answers and advice welcome please.
He is about to receive an income (rental) due to inheriting a property which is being let.
I am trying to ascertain whether he will lose all or some of his ESA and other associated benefits:.
warm home discount
car tax
eye wear discount
dental treatment discount
council tax discount
bus pass
green waste collection
free prescriptions
The ESA is old style - it dates back many years. A letter outlining is entitlement states: "“You are entitled to both contribution based and income related employment and support allowance. This assessment is based on how much the law says you bees to live on and your national insurance contribution record."
The concern is that the rental income will be less than the loss of benefits and eventually he would have to sell the property.
Answers and advice welcome please.
Replies
The second property is a capital asset and if the value, combined with any other existing savings, is more than £16,000 then he is no longer entitled to any means tested benefits.
The PIP is not affected.
The contribution based part of ESA is not affected (£114.10/week if in the Support group).
There will no entitlement to income based ESA (or Housing Benefit and Council Tax Reduction if relevant).
There will also be no entitlement to the passport benefits you list - because entitlement to these is based on the income based ESA.
When they inherit the property if they take immediate steps to sell the property it can be disregarded until the sale is complete - but obviously the proceeds will lead to the same end result.
If you have a freehold interest in the property then the rental income counts as capital along with the capital value of the property itself. However, there is more than one circumstance in which the property can fall to be disregarded as a capital asset and those are worth working through. If there's a mortgage on the property then that can also be offset against the capital value. Merlin84 said: As regard these then:
Warm Home Discount - they could still qualify via the low income route.
Car tax - PIP is the route and that will be unaffacted in all this so... no issue.
Bus pass - depends on the qualification route. The grounds for the national scheme are well documented on the web but these are often supplemented by local additional routes into qualification. So, they need to understand how they got it in the first place. After that it may come down to where they live. Most likely qualified through PIP though so it wouldn't be top of my concerns.
Green waste collection - has nothing to do with benefits unless there's some local scheme in play.
Free prescriptions - full criteria here.
All that said, here is some real world advice. Being a landlord is a job. Even being a landlord of one property is a job and periodcially it will be a full time job. It carries legal responsibilities that if not carried out can result in fines or even imprisonment. Is that manageable by a person on ESA and PIP? Well in a small number of cases yes. Overwhelmingly though "no".
I'd be less worried about the impact on benefits and focus more on getting rid of the property.
On reflection I should have made clear that the value of the property is bequeathed to two individuals. The other person (not the ESA claimant) doesnt wish to sell given the direction of property values but wishes to hold on for (probably) up to 12 months. The other person is the one who would be managing the property.