Does A Gift Of Money Affect Your Benefits?

Benefits can be calcified as means-tested and non-means-tested. This means that while certain state benefits are affected by an addition to your income, others may not be. This blog post aims to explore the possibilities of how a gift of money can affect means-tested benefits. Additionally, we will also discuss different situations related to your income and savings that bear impact on your benefits claim 

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 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)

Your income and capital need to be below a certain threshold to qualify you for means-tested benefits. Each benefit has its own criteria for assessment.

Below is a list of income-based benefits that are affected by your income, savings, assets and investments:

  • Council Tax Support
  • Housing Benefit
  • Income Support
  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance
  • Pension Credit
  • Tax Credits (Child Tax Credit and Working Tax Credit)
  • Universal Credit

Can I Claim Benefits If I Inherit Money?

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 with must be reported to local authorities to re-assess your financial situation.

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. 

Can I Claim Benefits If I Own A House?

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.

You can also continue claiming benefits if you own a home through the joint ownership scheme. In this case, you will also be able to claim Housing Benefit or Universal Credit Housing Cost element for your monthly rental or mortgage payments. 

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.

Can I Hide My 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 My 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

What Counts As Deprivation Of Assets To Claim Benefits?

When someone deliberately reduces their assets to claim benefits or avoid having to pay certain taxes or fees, it is considered a “Deprivation of Assets”.

Since certain benefits are means-tested local councils conduct a financial assessment of individuals claiming them, taking into account all of the savings, capital and incomes of claimants. This helps them decide upon the amount that the claimant should be granted through benefits.

If the claimant is found to have (a) disposed of assets whether, through sale or gift to immediate family (b) without being able to prove intention other than claiming benefits, this act will be classified as deprivation of assets.  

While carrying out a financial assessment, local council authorities conduct their own investigations to confirm the data provided by claimants. If they find out that there has been a deliberate deprivation of assets, they have the authority to refuse the benefits claim, sanction the claimant by reducing future payments or even ask for a repayment of the excess amount granted to claimants due to a false claim.

While most individuals consider that transfer of savings, selling of one’s property or gifting their home to a family member is all that counts as deprivation of assets, that is not all. 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 care home residency:

  • 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 jewellery


Considering the factors discussed in this article it may be safe to conclude that while a one time gift of money does not impact your benefits claim, should it appear as a regular payment that increases your savings or be considered as an inheritance, the means-tested benefits that you may claim will be reduced or you may no longer be eligible for them. Additionally, gifting a sum of money should not appear as a deprivation of assets by the giving party as it would affect all those who are concerned with the monetary transaction.

FAQs: Does A Gift Of Money Affect Your Benefits?

What happens if you inherit money while on benefits?

Money that you inherit while on benefits will be considered as an asset and will reduce your benefits claim or make you ineligible for it 9depedning on the amount that you receive). If it is in the form of an annuity, it will be considered as income and will still bear an impact on your benefits claim.

Do gifts count as income for Universal Credit?

No, one-off gifts received from friends, family or through charity do not count as income for Universal Credit. When a gift of money increases your savings by more than £6,000, only then will it bear an impact on your benefits claim.

How will a lump sum affect my benefits?

A  lump sum amount will be considered as part of your savings and will reduce your benefits claim for means-tested benefits. These include Council Tax Support, Housing Benefit, Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Pension Credit, Tax Credits (Child Tax Credit and Working Tax Credit) and Universal Credit.

How much money can you have in the bank and still claim benefits in the UK?

You can have up to £10,000 in the bank and still claim benefits in the UK. In the case of Pension Credit, this amount can be up to £16,000.

Do I have to inform HMRC if I inherit money?

Yes, you have to inform HMRC if you inherit money. If there is tax due on it, it will be taken from the deceased’s estate.


Income from voluntary or charity sources.

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

What will affect your Universal Credit payments | nidirect


Can You Claim Benefits If You Own A House?.

How do savings and lump-sum payouts affect benefits?

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

Deprivation of Assets