This blog post aims to answer the question of whether or not you have to declare your inheritance if you claim benefits. For a holistic review of the topic, we will discuss the benefits that are affected by a change in circumstances such as inheritance as well as those that remain unaffected by it; whether it is in the form of a lump sum amount or property. We will also review the consequences of not declaring your inheritance if you claim benefits.
Do You Have To Declare Your Inheritance If You Claim Benefits?
Yes, you have to declare your inheritance if you claim benefits. Your inheritance can be in the form of a lump sum amount of cash or property and still affect some of the benefits that you claim. Therefore declaring them to the DWP is essential to continue with your benefits claim as they count as a change in circumstance.
If you deliberately hide information regarding your inheritance from the DWP to protect your benefits payments from being affected, you can be fined by the authorities and even face a prison sentence.
If you choose not to declare your inheritance to the DWP, you will be sanctioned by them as well. This means that not only will your current benefits payments stop, but you will also not be able to claim any new benefits for the next three years.
The reason why one must declare their inheritance to the DWP if they claim benefits is because their inheritance will increase the capital of the claimant. This capital increase will change the results of the previous means test conducted by the DWP by reducing the eligibility of the claimant due to a capital increase.
However, not all forms of inheritance need to affect your benefits claim. For instance, if you claim Universal Credit, your payments will start reducing as your capital increases from a minimum limit of £6,000 and you will lose your eligibility if your capital exceeds £16,000.
Even if your inheritance does not stand to have a substantial impact on your benefits claim, you should still declare them to the DWP.
Why Do You Have To Declare Inheritance If You Claim Benefits?
You must declare your inheritance if you claim benefits as the inheritance you get, whether it is in the form of a lump sum amount or property, will count towards your means test to qualify you for benefits payments.
If you inherit a lump sum amount of money 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.
If you inherit a house while on benefits, the property will be considered an asset and will affect the means-tested benefits that you receive such as Housing Benefit or Universal Credit.
As a result of this reassessment, there may be changes to your benefits claim. Since your savings are accounted for during a means test for benefits claim, an inheritance can potentially reduce the benefits you currently receive.
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.
Which Benefits Are Affected By Declaring Your Inheritance?
Means-tested benefits are affected by declaring your inheritance. When a claim for means-tested benefits is assessed by the DWP, they take your and your partner’s income, savings and capital into account to decide whether or not you are eligible to claim the benefit. Your inheritance, in such cases, is added to your savings during a means test.
If you were previously receiving a means-tested benefit and have recently inherited cash or property, you should inform the DWP so that future benefits payments can be adjusted accordingly.
Means-tested benefits that are affected by inheritance include the following:
- Universal Credit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Pension Credit
- Tax Credits (Child Tax Credit and Working Tax Credit)
- Housing Benefit
- Council Tax Support
Which Benefits Are Not Affected By Declaring Your Inheritance?
Non-means tested benefits which mostly include Disability Benefits are not affected by declaring your inheritance as they do not assess the financial position of a claimant but take their health condition or disability into account.
Non-means-tested benefits that are not affected by your inheritance include the following:
- Attendance Allowance
- Carer’s Allowance
- Contributory Employment and Support Allowance
- Disability Living Allowance
- Personal Independence Payment
Nonetheless, even if your benefits payments are not affected by your inheritance, you should keep the DWP updated with changes in your circumstances so that there is no risk of deliberately withholding information or committing benefit fraud.
How Do You Declare Inheritance If You Claim Benefits?
How you declare your inheritance to the DWP while claiming benefits depends on the benefit(s) that you are claiming.
For instance, if you are claiming Universal Credit, you can report a change in your circumstances such as receiving an inheritance by using your Universal Credit online account or calling the Universal Credit hotline at 0800 328 5644, from Monday to Friday between 8 am and 6 pm.
In the case of Pension Credit, you can update the authorities regarding changes to your circumstances such as an inheritance by calling the Pension Service helpline at 0800 731 0469.
If you claim disability benefits such as Attendance Allowance, Disability Living Allowance or Personal Independence Payments, you can declare your inheritance by calling the Disability Service Centre.
For most of the benefits, you can report a change in circumstances to Jobcentre Plus.
The discussion in this blog post has not only answered the question that one does need to declare their inheritance if they claim benefits but also outlined the consequences of not declaring inheritance to the DWP. The reason why one must declare their inheritance is that an addition to one’s capital directly impacts their means test and consequently their eligibility to claim means-tested benefits.