December 2023
Universal Credit is a means-tested benefit programme in the United Kingdom providing financial assistance to low-income individuals and families. The system combines six special monthly payments, including tax credits, housing benefits, and income support.
With over six million claimants, Universal Credit is the most prevalent welfare benefit in the United Kingdom.
In contrast, inheritance is a windfall of assets received upon the death of a family member or close friend.
This article examines the impact of inheritance on Universal Credit and the eligibility of beneficiaries who inherit assets.
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In 2013, Universal Credit was introduced, a means-tested benefits system in the United Kingdom. It was intended to replace six distinct benefits, such as tax credits, income support, housing benefit, and jobseeker’s allowance, with a single monthly payment.
The system is intended to assist individuals and families with a low or nonexistent income. To qualify for monthly Universal Credit payments, claimants must meet specific eligibility requirements, such as being over 18, residing in the United Kingdom, and not having savings exceeding the upper limit.
An inheritance is a windfall of assets received upon the death of a relative or close friend. It consists of funds, real estate, and investments.
Anyone can receive an inheritance, regardless of their financial status or income. When a person inherits property, they become the legal owner.
Inheritance can impact eligibility for Universal Credit and the monthly payment amount. If a claimant inherits assets exceeding the maximum savings limit, they may not be eligible for Universal Credit.
Currently, the maximum savings limit for those claiming Universal Credit is £16,000 for single claimants and $24,000 for couples. If a claimant’s savings exceed the upper limit, their Universal Credit payments will be reduced, and they may lose eligibility for the benefit altogether.
The value of an inheritance impacts eligibility for Universal Credit. If the inherited assets exceed the savings limit, they will not affect the claimant’s eligibility or monthly payment amount.
However, if the claimant’s assets exceed the savings limit, they may become ineligible for Universal Credit or receive a reduced amount.
There are numerous ways inherited assets can affect eligibility for Universal Credit. If a claimant inherits a property, the property’s value will be considered when calculating the claimant’s assets.
The rental income will be included in the monthly income calculation if the property is rented. The same holds for all investments and other income-generating assets.
There are exceptions to the rule regarding inheritance and eligibility for Universal Credit. Suppose the inherited assets are a lump sum, such as redundancy pay or a compensation payout.
In that case, the claimant may be eligible for Universal Credit if they demonstrate that the inheritance money will be used to meet their basic needs, such as paying their rent or utility bills.
In addition, the value of the claimant’s assets does not include certain types of assets, such as personal possessions and household goods.
In addition to Universal Credit, inheritance can impact other means-tested benefits, such as Pension Credit and Council Tax Support. Pension Credit is a means-tested benefit for low-income retirees who have reached the state pension age.
Inherited assets, such as property or lump sum, can affect eligibility for Pension Credit and the monthly payment amount.
Council Tax Support is a means-tested benefit that assists with council tax payments to low-income individuals and families.
Inherited assets can affect eligibility for Council Tax Support, and the amount of support received. It is imperative for claimants who have received an inheritance to notify the appropriate authorities and seek guidance on how the inheritance may affect their benefits.
National Capital is the amount of capital a claimant is assumed to have, even though they do not possess it. It determines eligibility for means-tested benefits, such as Universal Credit.
Notional capital is calculated based on rules that consider the claimant’s assets, including any disregarded assets, such as personal property.
Notional capital is calculated based on rules that consider the claimant’s assets. The calculation considers the actual value of the claimant’s assets and any disregarded assets.
The rules for calculating notional capital can be complicated, and claimants must seek guidance on how it may affect their benefits.
Exemptions exist for fictitious capital amounts when claiming benefits. For instance, a claimant’s notional capital amount will be reduced if they receive Personal Independence Payment (PIP) or Disability Living Allowance (DLA).
Likewise, if a claimant is a caretaker for an individual who receives a disability benefit, their notional capital amount will be reduced.
A person’s eligibility for means-tested benefits may be affected if they receive an unexpected windfall, such as an inheritance or lottery win, during the period they claim benefits.
The amount of windfall will be considered when evaluating their assets, which could result in a reduction or elimination of benefits.
It is imperative that claimants promptly report any changes in their circumstances to the appropriate authorities.
Relatives or carers claiming benefits for deceased individuals are subject to different rules regarding their estate and assets.
The rules for claiming benefits on behalf of a deceased individual are intricate, and it is essential for family members and carers to seek guidance throughout the process.
There may be exceptions to the rules governing the assets of deceased persons when applying for benefits on behalf of a deceased loved one.
For instance, if the deceased had established a trust or made other arrangements to distribute their assets, it may affect the claimant’s eligibility for means-tested benefits.
When applying for benefits for a disabled person or someone with severe responsibilities, the rules regarding their assets, property, and savings differ.
It is essential for family members and carers to seek guidance regarding the process of applying for benefits on behalf of disabled or severely obligated individuals.
A person’s eligibility for means-tested benefits, such as Universal Credit, a monthly payment designed to assist with living expenses, may be affected by inheritance.
If an individual receives an inheritance, their savings may exceed the limit, resulting in reduced benefits.
The savings limit varies depending on the claimed benefit, but it is £6,000 for most means-tested benefits. If the inheritance causes the total savings to exceed the upper limit, the beneficiary’s benefits will be terminated.
Yes, the Department of Work and Pensions (DWP) must be informed of any inheritance received. Benefit fraud, a criminal offence with a potential prison sentence, can be committed by failing to report an inheritance.
When applying for Universal Credit, it is essential to disclose any changes in circumstances, including the receipt of an inheritance, to avoid potential legal issues.
The DWP can reassess the claimant’s eligibility and adjust their benefits accordingly if the inheritance is reported.
It is not recommended to conceal an inheritance from the DWP. Deliberately concealing information about an inheritance may constitute benefit fraud and result in incarceration.
The Department of Work and Pensions (DWP) has sophisticated systems for detecting fraud, and concealing an inheritance can result in severe consequences.
It is essential to be truthful and forthright with the DWP and promptly report any changes in circumstances.
An inheritance is a money received through a will or an inheritance. This includes proceeds from the sale of inherited property or stocks and shares. Inheritance funds are considered capital and can impact eligibility for means-tested benefits.
Other sources of income, such as wages, benefits, and pensions, are not considered inheritance.
The amount of money an individual can have in the bank and still be eligible for benefits in the United Kingdom depends on the use being claimed. The savings limit for means-tested benefits, such as Universal Credit, is £6,000 for most individuals.
The savings limit for those aged 60 or older is £10,000, higher than the £5,000 limit for those under 60. Pension Credit recipients have a higher savings limit of £10,000 for singles and £16,000 for couples.
If the claimant’s savings exceed the limit, their benefits will be reduced or lost entirely.
A person’s eligibility for Pension Credit, a means-tested benefit that provides additional financial support to low-income retirees, can be affected by inheritance. If the claimant’s total savings exceed the limit, they may no longer qualify for Pension Credit.
Moreover, inherited assets can impact the calculation of the notional capital amount, which is used to determine Pension Credit eligibility. The notional capital amount is computed based on the assumption that the claimant earns a particular annual interest on their savings.
Inherited assets can increase the notional capital amount and decrease the claimant’s Pension Credit eligibility. It is essential to seek advice regarding the impact of an inheritance on pension benefits.
Employment and Support Allowance (ESA) benefits those who cannot work due to illness or disability. If the inherited assets exceed the ESA’s savings limit, eligibility for ESA may be affected.
Currently, the ESA savings limit for individuals is £16,000, and for couples, it is £24,000. If a claimant’s savings exceed the maximum limit, their ESA payments will be reduced or eliminated.
The tax credit savings limit for individuals is £16,000, and for couples, it is £24,000. If a claimant’s savings exceed the maximum allowed, their tax credit payments will be reduced or eliminated.
The Savings Credit is a means-tested benefit for individuals who have reached the state pension age and have below-threshold savings or income.
The Savings Credit threshold is currently £13,270 for single claimants and £14,850 for couples. Inherited assets can impact the calculation of the Savings Credit threshold and decrease the claimant’s eligibility for the primary benefit.
The Lower Capital Limit is the minimum savings a claimant may have without affecting their eligibility for means-tested benefits.
The Lower Capital Limit for means-tested benefits like Universal Credit is £1,000. If a claimant’s assets exceed the Lower Capital Limit, their eligibility for help may be affected.
Premium Bonds are a type of national savings instrument that provides the opportunity to win tax-free prizes. If the total value of inherited Premium Bonds exceeds the savings limit, it may affect eligibility for means-tested benefits.
Premium Bonds are regarded as capital and may affect a claimant’s eligibility for benefits.
If the total value of savings exceeds the savings limit, it may affect eligibility for means-tested benefits.
The limit on savings varies based on the type of benefit being claimed. If the total value of the savings exceeds the limit, the claimant’s eligibility for help may be reduced or eliminated.
Other savings, such as investments and cash savings, are regarded as capital and may affect eligibility for means-tested benefits if their total value exceeds the savings limit for a benefits claim.
The limit on savings varies based on the type of benefit being claimed. If the total value of the savings exceeds the limit, the claimant’s eligibility for help may be reduced or eliminated.
Mortgage payments are considered regular expenses and excluded from the asset calculation for means-tested benefits.
Suppose a claimant receives an inheritance that exceeds the savings limit. In that case, they may be required to use the inheritance to pay the mortgage loan or off their mortgage, which may affect their eligibility for benefits.
Contracts for mobile phones are regarded as regular expenses and are excluded from the calculation of assets for means-tested benefits.
If a claimant receives an inheritance over the savings limit, they may be required to use the inheritance to pay off any outstanding debts, including mobile phone contracts.
If a recipient of benefits has been overpaid, they may be required to repay it. Overpayments can be refunded with inheritance funds, reducing savings and increasing the beneficiary’s inheritance.
Rob writes and edits the content produced by the rest of the team. He has a degree in History from Leeds University and has producing, reviewing and editing the site since 2016
If the total value of inherited assets exceeds the benefit’s savings limit, eligibility for Universal Credit may be impacted. Universal Credit savings limits are £16,000 for single claimants and £24,000 for couples.
If the claimant’s savings exceed these limits due to inherited assets, their Universal Credit payments may be reduced or eliminated.
It is not recommended to conceal an inheritance from the DWP, as doing so may constitute benefit fraud and result in severe penalties, including imprisonment.
To avoid legal issues, it is essential to be honest, and report any changes in circumstances, including the receipt of an inheritance.
There are exceptions to the inheritance and benefits regulations.
For example, suppose the inherited assets are a lump sum, such as redundancy pay or a compensation payout. In that case, the claimant may still be eligible for benefits if they demonstrate that the money will be used to meet their basic needs, such as paying their rent or utility bills.
Personal property and household items are also excluded from the calculation of notional capital.
A person’s eligibility for means-tested benefits may be affected if they receive an unanticipated windfall, such as an inheritance or lottery win when they claim benefits.
When evaluating their assets, the windfall amount will be considered, which could result in reduced or eliminated benefits. It is essential to promptly report any changes in circumstances to the relevant authorities to avoid overpayment or asset deprivation problems.
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