While a sudden influx of money can be a sign of financial relief, there can be a potential impact on one’s benefits claim as a result of it. This is the reason why we will be exploring the possible outcomes if you win money and its impact on the benefits you claim. For a deeper understanding, we will also discuss related situations such as the impact of an inheritance or purchase of a house on a claimant’s benefits claim.

What Happens If You Win Money While On Benefits?

If you’re on benefits in the UK and wondering what would happen if you won the lottery, whether or not you lose your benefits claim depends on how much money you win and what kind of benefits you are receiving.

If you win a small amount of money, it’s unlikely that your benefits will be affected. However, if you win a large sum of money, you may no longer be eligible for certain benefits, such as Income Support or Jobseeker’s Allowance.

It’s also important to remember that if your circumstances change, you may need to re-apply for benefits. So, if you do win the lottery, make sure to keep track of your finances and let the relevant authorities know so that they can adjust your benefits accordingly.

If a benefits claimant wins a large sum of money they wouldn’t automatically lose their benefits. However, their benefits could be affected if your income or assets increased to a level where you no longer met the eligibility criteria for means-tested benefits.

For example, if you won a large sum of money and used it to buy a house, your increased assets could mean that you no longer qualified for housing benefit. Or, if your winnings boosted your income to above the threshold for certain benefits, you might no longer be eligible for those benefits.

Of course, whether or not you would lose your benefits if you won a large sum of money would depend on your individual circumstances. If you’re concerned about how winning a large sum of money might affect your benefits, it’s best to speak to an expert who can advise you on your specific case.

What Happens If You Receive A Gift Of Money While On Benefits?

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 are 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.

What Happens If You Inherit Money While On Benefits?

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. 

What Happens If You Buy A House While On Benefits?

If you buy a house while on benefits you can Income Support and Job Seekers Allowance; 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.

What Happens If You Inherit A House While On Benefits?

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. 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.

Conclusion:

The above discussion has shed light on a range of similar financial siutations that can bear an impact on one’s benefits claim; bringing us to the conclusion that if you win a sum of money, the means-tested benefits that you claim will either be reduced or you stand a chance of losing your eligibility to claim them. The reason for this is simple; an increase in the cash you have will impact your savings or capital which will directly affect your benefits claim.

FAQs: What Happens If You Win Money While On Benefits?

Do gambling winnings affect benefits in the UK?

Yes, gambling winnings affect your benefits in the UK. The reason why this happens is that your winnings will be added to your savings which can affect your eligibility for a benefits claim. 

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. 

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.

References:

Here’s how winning at the bookies or bingo can affect your benefits | The Star

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

How your benefits are means-tested

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