Share this content
0
226

Inheritance and tax credits

Does an inheritance need to be declared for tax credit purposes?

A client of mine has a historic dispute going with the tax credit office, so this does not apply to any new rules that have come in under Universal Credit.

My client notified the tax credit office of a £50,000 inheritance from his father's estate. The tax credit office confirmed on the telephone that an inheritance did not need to be declared as income, however, he then received a new tax credit award document advising this HAD been taken into account. He has complained and the complaint is ongoing. 

I have trawled through their guidelines and a hundred other websites. All websites I have looked at state clearly something along the lines of this "Unlike most other means-tested benefits there is no limit on how much capital or savings you can have" (in relation to working and child tax credit).

HMRC themselves are much more vague. I finally found under other income on their guidance document for claimants that "Income from trusts, settlements and estates" needs to be declared. However, as this is not a taxable amount when does it stop being savings and become an income that needs to be declared to be offset against your reward? 

On their own internal manual for example it states under "Eligibility - income (other than earnings): Income - other than earnings (Introduction)" absolutely nothing about an inheritance being a declarable amount. 

I think the discrepancy lies in whether this is a capital amount or whether it's an income.

Has anybody else dealt with this issue? 

Replies

Please login or register to join the discussion.

By DJKL
22nd Nov 2017 16:21

Check with solicitors, who no doubt distributed ,what, if any, part of the payment is income.

No idea re Tax Credit rules but generally most of any inheritance is capital received not income, it may be that Tax Credit office have been misinformed/ have misunderstood and think it is income from a trust etc

Thanks (1)
Share this content