Inheriting Money and Property: What It Means for Your Benefits

When life brings you an unexpected windfall, like an inheritance, it can be both a blessing and a cause for confusion. Whether it’s a small sum or a massive amount, understanding how this will affect your finances, especially if you’re on benefits, is crucial. Inews published a summary.

The Benefits Impact of Inheritance

Not all benefits will be affected when you inherit money or property. However, if you’re on means-tested benefits, which consider your income or savings, then your eligibility might change.

Universal Credit: For single individuals on Universal Credit, if your savings exceed £16,000, you won’t qualify. For couples, the limit is £24,000. Plus, any savings over £6,000 will affect the amount you receive.

Pension Credit: There’s no strict savings limit for Pension Credit, but if your savings are over £10,000, they could be seen as an income. This could affect how much you’re eligible for.

Understanding Capital in Benefits Terms

Often, when we discuss savings in the context of benefits, the term “capital” is more fitting. Capital isn’t just the cash you have in your bank. It covers a broader range: from investments and premium bonds to properties you might own but don’t live in. So, when considering how inheritance impacts benefits, it’s essential to remember this broader perspective.

Does Inheritance Boost My Income?

While you might think of inheritance as an income, it’s not classified as such. The good news? It’s not taxable. By the time you get your inheritance, any inheritance tax should already be settled by the estate.

However, there’s a twist. If your inheritance boosts your savings beyond certain thresholds, it can affect your benefits. For instance, Pension Credit recipients with savings over £10,000 are seen to have an added income of £1 a week for every extra £500. Consequently, their Pension Credit amount gets adjusted.

Inheriting Property: A House of Questions

Inheriting a house brings its own set of considerations. If the house becomes your primary residence, its value won’t affect your savings or capital. Even if you haven’t moved in yet, the property’s value will be disregarded for six months, assuming you plan to live there eventually.

However, if you choose not to move into the inherited property, its value will count towards your capital. If you decide to rent it out, the rental income will be considered when determining your benefits eligibility.