Benefits and Inheritance

blhok
blhok Online Community Member Posts: 4 Listener
in Benefits and income
Hi, I might be due to get an inheritance of over £16000, would it still effect my benefits (ESA income based and council tax reduction) if it immediately went to pay off debt? The debt is due to much needed work on my house and also my mortgage. Also if I would put some in my childrens savings accounts, would that be seen as wrong in some way?  Thanks.

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  • poppy123456
    poppy123456 Online Community Member Posts: 64,463 Championing
    edited January 2023
    Savings of more than £16,000 will end any entitlement to all means tested benefits. You can have some work done on your home but giving any money away to your children is likely to be seen as deprivation of capital and you'll still be classed as having that money.

    If any part of your ESA is contributions based then this will continue.

    Some local Authorities have a maximum savings limit of £6,000 for Council Tax reduction.
  • blhok
    blhok Online Community Member Posts: 4 Listener
    edited January 2023
    poppy123456 said:
    Savings of more than £16,000 will end any entitlement to all means tested benefits. You can have some work done on your home 
    So, it would still be classed as savings, even if it goes out of account the same day to pay off debt? I'd lose benefit because of it?
  • calcotti
    calcotti Online Community Member Posts: 10,001 Championing
    edited January 2023
    blhok said:
    So, it would still be classed as savings, even if it goes out of account the same day to pay off debt? I'd lose benefit because of it?
    For the benefits you on a Decision Maker has to decide whether or not it was reasonable for you to pay off the debt and/or you did so to keep your benefits.

    If you tell them about the inheritance and paying off the debt they will then decide.

    If you do have your existing benefits stopped you will be able to claim UC because paying off debt is never deprivation of capital for UC.

    Do you include anything besides ESA and CTR? What does your ESA award include? You may be better off on UC anyway in which case it would make sense to switch over to UC anyway and then you wouldn’t have worry about how paying off debt will be treated.

    When do you think you might receive the inheritance.

    Obviously if there will still be more than £16,000 after paying off the debts it is all moot because savings will still be too high to qualify for UC. You can however pay off as much of your mortgage as you wish (although there may penalty charges on the mortgage depending on the terms and conditions).
  • blhok
    blhok Online Community Member Posts: 4 Listener
    calcotti said:
    blhok said:
    So, it would still be classed as savings, even if it goes out of account the same day to pay off debt? I'd lose benefit because of it?
    For the benefits you on a Decision Maker has to decide whether or not it was reasonable for you to pay off the debt and/or you did so to keep your benefits.

    If you tell them about the inheritance and paying off the debt they will then decide.

    If you do have your existing benefits stopped you will be able to claim UC because paying off debt is never deprivation of capital for UC.

    Do you include anything besides ESA and CTR? What does your ESA award include? You may be better off on UC anyway in which case it would make sense to switch over to UC anyway and then you wouldn’t have worry about how paying off debt will be treated.

    When do you think you might receive the inheritance.

    I guess I have to tell them then.  I don't know when I get it.  It's been a bit of a wait so far. It's ESA support group, income based with SDP that I get. Also PIP and Carers allowance but I don't think those would be affected. For some reason I thought if it gets switched over to UC I'd probably get less.  It doesn't seem fair. Ho hum.
  • poppy123456
    poppy123456 Online Community Member Posts: 64,463 Championing
    Carers allowance and PIP are not affected. Yes, you'll need to report the changes when the money goes into your bank. As your ESA includes the SDP you would be worse off if you claimed UC.
  • blhok
    blhok Online Community Member Posts: 4 Listener
    calcotti said:
    blhok said:
    So, it would still be classed as savings, even if it goes out of account the same day to pay off debt? I'd lose benefit because of it?
    For the benefits you on a Decision Maker has to decide whether or not it was reasonable for you to pay off the debt and/or you did so to keep your benefits.

    If you tell them about the inheritance and paying off the debt they will then decide.

    ...

    Obviously if there will still be more than £16,000 after paying off the debts it is all moot because savings will still be too high to qualify for UC. You can however pay off as much of your mortgage as you wish (although there may penalty charges on the mortgage depending on the terms and conditions).
    Hang about. Sorry, just to be clear.  Are you saying that if I use it to pay off my mortgage and I'm left with less than £16,000, I won't lose the ESA? Or is that just for claiming UC?

    Thanks for your replies
  • calcotti
    calcotti Online Community Member Posts: 10,001 Championing
    blhok said:
    calcotti said:
    blhok said:
    So, it would still be classed as savings, even if it goes out of account the same day to pay off debt? I'd lose benefit because of it?
    For the benefits you on a Decision Maker has to decide whether or not it was reasonable for you to pay off the debt and/or you did so to keep your benefits.

    If you tell them about the inheritance and paying off the debt they will then decide.

    ...

    Obviously if there will still be more than £16,000 after paying off the debts it is all moot because savings will still be too high to qualify for UC. You can however pay off as much of your mortgage as you wish (although there may penalty charges on the mortgage depending on the terms and conditions).
    Hang about. Sorry, just to be clear.  Are you saying that if I use it to pay off my mortgage and I'm left with less than £16,000, I won't lose the ESA? Or is that just for claiming UC?

    Thanks for your replies
    Just for UC. I would not expect paying off a mortgage to be accepted for ESA.

    For ESA guidance says that paying off debt that is immediately repayable is not deprivation of capital. A mortgage doesn’t meet that description.

    For UC regulations say paying off debt is not deprivation of capital. A mortgage is debt.

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