Can You Inherit A House While On Benefits?

Inheritance can impact the benefits an individual claim especially if it significantly increases their assets or savings. Through this blog post, we aim to discuss whether someone who is claiming benefits can continue to do so if they inherit a house. Additionally, we will also explore different situations that change a claimant’s financial situation and may bear an impact on the benefits they claim; as well as situations that may increase your finances but will not impact your benefits claim.

Can You Inherit A House While On Benefits?

If you inherit a house while on benefits, the property will be considered as an asset and will affect the means-tested benefits that you receive such as Housing Benefit or Universal Credit. It is only in the case of non-means-tested benefits such as Personal Independence Payments and Disability Living Allowance that your benefits claim is not affected by your income, savings or assets.

Benefits that are means-tested (this means that the claimants’ income and savings affect their benefits claim) will reduce with an increase in your savings. These include the following:

  • Jobseekers Allowance
  • Income Support
  • Pension Tax
  • Housing Benefit
  • Council Tax Support
  • Universal Credit
  • Working Tax Credits
  • Child Tax Credits

However, since the following benefits are not means-tested, the amount that you claim from them will not be affected by your inheritance:

  • Disability Living Allowance 
  • Personal Independence Payment 
  • Contribution-Based Employment and Support Allowance

If you inherit a house while you are claiming benefits, you must inform the Department for Work and Pensions. An inheritance increases your savings and is counted as a change in circumstances which must be reported to local authorities to re-assess your financial situation.

While most individuals consider that transfer of savings, selling of one’s property or gifting their home to a family member is a safe way of hiding their inheritance or savings or at least keeping them away from being counted for a means-test, this is considered as deprivation of assets. 

Additionally, any of the following actions will be counted as deprivation of assets if it takes place within a short period of time prior to one’s claim for benefits:

  • To give away a large sum of money
  • To transfer the title deed of one’s property
  • To spend a large amount of money which is in contrast with the spender’s usual spending pattern
  • To lose money through gambling 
  • To use savings in order to purchase items excluded from a means-test such as a car or 

Can You Hide Inheritence To Claim Benefits?

There is no guaranteed way to physically hide one’s inheritance to claim benefits without practising redeemable actions such as keeping one’s money in offshore accounts or deliberate transfer of capital. However below is a list of ways through which individuals may be able to save some money, yet be able to claim benefits by keeping them excluded from a means-test:

  • Property is owned by the claimant but occupied by a relative who has reached pension age 
  • Property is owned by the claimant but occupied by a relative who is incapacitated
  • The property has been left unoccupied due to a relationship breakdown (up to 26 weeks)
  • Property is undergoing repairs or renovation (up to 26 weeks)
  • The claimant has received proceeds from selling their house and intends to purchase another property with them.
  • The claimant has received money from insurance claims (up to 6 months)
  • The claimant is awarded capital from damages and injury 
  • The claimant has life insurance policies that haven’t been cashed in
  • The claimant has state benefit arrears or a pension fund that hasn’t been accessed as yet
  • Purchase of personal possessions such as jewellery, furniture or car
  • Purchase of business assets
  • The value of a pre-paid funeral expense
  • Social fund grant payments

What Happens If DWP Finds Your Hidden Inheritance?

Should there be evidence found that an individual has deliberately hidden their savings from inheritance by reducing their capital with the aim to claim state benefits, the government will consider it as notional capital. This means that due to the deliberate reduction in capital, despite not being in possession of the owner, the capital items will be included in their means test and considered to be part of the owner’s possessions.

However, should a claimant be found to be in ownership of any of the following capital items, these will be accounted for and considered as savings by the Department for Work and Pensions as they assess the claimant’s eligibility for benefits:

  • Property (not your main residence)
  • Joint savings
  • Income bonds
  • Premium bonds
  • Stocks and shares

Whether these items are owned by an individual or a partner/spouse who lives with them, they will be counted as savings.

Which Benefits Can I Lose By Hiding My Savings?

While it may be tempting for some individuals to hide savings with the aim to claim benefits (or increase their claim), there are dire consequences of being caught as a result of benefit fraud. Jail for £96,000 benefit cheat Helen Ryan, who had £184,000 in savings – BBC News and Pensioner to repay benefits after hiding ‘huge’ savings pot | Haringey Council are two examples of individuals whose claim fraud was caught and they ended up serving a jail term as well payment of a fine and clearance of dues.

Below is a list of benefits that claimants may no longer be able to claim when found guilty of benefit fraud:

  • Carer’s Allowance
  • Employment and Support Allowance
  • Industrial Injuries Reduced Earnings Allowance
  • Industrial Injuries Retirement Allowance
  • Jobseeker’s Allowance
  • Severe Disablement Allowance
  • Widowed Mother’s/Parent’s Allowance
  • Housing Benefit
  • Incapacity Benefit
  • Industrial Death Benefit
  • Industrial Injuries Disablement Benefit
  • Pension Credit
  • Universal Credit
  • Working Tax Credit
  • War Disablement Pension
  • War Widow’s Pension
  • Income Support
  • Industrial Injuries Unemployability Supplement
  • War Pension Unemployability Supplement
  • War Pension Allowance for Lower Standard of Occupation

Can I Own A House And Claim Benefits?

Yes, you can claim benefits such as Income Support and Job Seekers Allowance if you own a house; however, you will no longer be eligible for Housing Benefit. The reason for this lies in the fact that to qualify for Housing Benefit, claimants need to be able to fulfil the following criteria:

  • be at least 16 years old
  • have a low income or be claiming other benefits
  • have less than £16,000 in savings

If your house is mortgaged, you can still claim benefits and use the sum of payments received to pay your mortgage interest.

If you own a house or you live with a partner who owns their house, you can claim support to help you pay your mortgage interest. This is a repayable interest accrued loan.

Does A Gift Of Money Affect Your Benefits?

No, a one time gift of money or small amounts of it at varying intervals will not affect your benefits. Additionally, the amount of money that you may receive from friends, family or charitable sources is not included in the means test for benefits.

However, should you incur regular/periodic payments from friends, family or charity, these will be added under the “savings” section for your benefit claim. This is applicable if you receive large amounts of gift money and your total savings exceed £6,000.

Monetary gifts in the form of an annuity are considered as an income and will bear an impact on your benefits claim. However, voluntary payments from a former partner or parent of a child are not considered a gift of money.

When a means test is carried out for benefits claim, the following types of income are taken into account for benefits claim and that too for income-based benefits:

  • Cash
  • Stocks and shares
  • Savings
  • Assets
  • Investments (rent, dividend, interest)
  • Unearned income (pension payments, student income)


Through this detailed discussion about inheritance and its impact on the benefits you claim, we have to learn that if you inherit a house while on benefits, the property will be considered as an asset and will affect the means-tested benefits that you receive such as Housing Benefit or Universal Credit. However, such is not the case when it comes to non-means-tested benefits such as Personal Independence Payments and Disability Living Allowance.

FAQs: Can You Inherit A House While On Benefits?

Does inheriting a house affect benefit claims in the UK?

Yes, inheriting a house will affect the benefits you claim in the UK. The reason for this is the fact that an inheritance will increase your savings from the £16,000 threshold which will reduce your payments for means-tested benefits.

Do I have to declare an inheritance to the DWP?

An inheritance increases your savings and is counted as a change in circumstances with must be reported to DWP to re-assess your financial situation. Since your savings are accounted for during a means test for benefits claim, an inheritance can potentially reduce the number of benefits you currently receive. 

Does a gift of money affect your benefits in the UK?

While gift money received voluntarily from friends and family bear no impact on the benefits that someone claims in the UK; however, significant amounts of gifts that increase the savings of recipients in a drastic manner or continue to be received over a period of time, may potentially reduce their benefits claim.

How much money can I have in my bank account before it affects my benefits?

If you have less than £6,000 in your bank account, you will be to receive the maximum amount of benefits against your claim. If your bank account savings amount to £6,000 or above, the amount of your benefits claim will continue to decrease as savings rise. If you have savings equal to or more than £16,000 in your bank account, you will not be able to claim benefits at all. 

Is inheritance classed as income in the UK?

No, your inheritance is not classed as income in the UK. However, should the inheritance money lead to rental payments or shares dividends in the future, such incomes will be considered for tax purposes as they will then serve as income for the recipient.


How do savings and lump-sum payouts affect benefits?

How much savings can I have on benefits? | Raisin UK

Check if a change affects your Income Support – Citizens Advice

How do savings and lump sum payouts affect benefits? | MoneyHelper

Can I protect my home from care fees? | QualitySolicitors

Can You Claim Benefits If You Own A House?.

Universal Credit (UC): How much will I get? I’m a homeowner – Turn2us

How do savings and lump-sum payouts affect benefits? | MoneyHelper

What will affect your Universal Credit payments | nidirect