Will DWP Know About Inheritance?

There are certain changes to one’s circumstances that can bear an impact on their benefits claim. This is the reason why a lot of benefits claimants are interested in learning whether the DWP will know about their inheritance if a claimant does not share such information on their own and this is what we aim to explore through the content of the below article.

Will DWP Know About Inheritance?

Yes, sooner or later the DWP will know about the inheritance that a benefits claimant receives. However, in such situations, it is best not to wait for the DWP to find out about a change in your circumstances and share them on your own to avoid being penalised for benefits fraud.

If you are receiving benefits from the Department for Work and Pensions (DWP), you may wonder if your benefits will be affected if you inherit money or property. The answer will depend on certain circumstances. For instance, the type of benefit you are receiving and how much money you inherit makes a lot of difference. 

If you are receiving a means-tested benefit, such as Jobseeker’s Allowance, your benefits could be reduced or stopped entirely if you inherit a large sum of money. Similarly, if you are receiving means-tested benefits, such as Income Support or Housing Benefit, your inheritance may affect your eligibility. Therefore, it is always best to check with the DWP to see if your particular benefit will be affected.

However, if you are receiving a non-means-tested benefit, such as Disability Living Allowance, your inheritance should not affect your benefits. However, it is always best to inform the DWP of any changes in your circumstances, so they can determine if your benefits will be affected.

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. 

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

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
• 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

Conclusion:

The discussion in this blog post makes it quite clear that even though the DWP can learn about the inheritance of their benefits claimants, it is in one’s own interest, in the long run, to share such information with the authorities on a timely basis. If there is a delay on this front and the DWP learns about your inheritance before you share the information with them, you stand a chance of being penalised or sanctioned from future (and existing) claims.

FAQs: Will DWP Know About Inheritance?

Will I lose my benefits if I inherit money?

You may not completely lose benefits if you inherit money but the amount of your benefits claim may be reduced in the case of means-tested benefits which include the following:

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

However, the amount that you claim from Disability Living Allowance, Personal Independence Payment or Contribution-Based Employment and Support Allowance will not be affected by your inheritance.

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.

References:

Does inheritance affect universal credit? | Taxcare Accountancy

Check if a change affects your Income Support – Citizens Advice

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