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to wonder if getting a big insurance payout affects your benefits?

(33 Posts)
MorallyBankrupt Thu 07-Jul-11 17:45:41

Someone I know has been in an RTA... they will be getting a big payout but will be putting the money into an account in their DD's name as apparently 'the DSS' check their accounts...

Am I right in thinking their benefits would be cut if they declared this big payout? It sounds seriously dodgy to put the money is their DD's name doesn't it?

meditrina Thu 07-Jul-11 17:50:35

Putting money into a child's name is something the revenue is on the look out for: they will be taxed on it, if it exceeds the annual permitted gift ceiling, and legally the money will no longer be theirs (in practice, no-one would notice if they spent it, but if for any bizarre long-shot reason it was noticed then I could be another source of bother).

dexter73 Thu 07-Jul-11 17:52:50

Wouldn't they have to pay it into their account first before transferring it to their children's account?

MorallyBankrupt Thu 07-Jul-11 17:53:16

Oh the DD is an adult too (just)

MorallyBankrupt Thu 07-Jul-11 17:54:36

I think they will just give the insurance company the DD's bank details from the off.

dexter73 Thu 07-Jul-11 17:56:39

I'm am pretty sure the insurance company would only pay out to the person getting the payout, and not to a relative. Will check with dh later.

LaurieFairyCake Thu 07-Jul-11 17:57:48

It would be counted as savings - think you're only allowed 6k or something? But they wouldn't find out I suppose.

I know through a friend someone who sold her house in Ireland - put the 100k in an account and then declared themselves homeless in the UK (no reciprocity between here and Eire) - got a lovely house and then she had her 100k in an offshore account to spend.

A few people fiddle - most people don't.

BitsyVonMuffling Thu 07-Jul-11 17:58:01

No solicitor would pay someone else. They'd be done for money laundering, and it WOULD be picked up in their annual audit.

MorallyBankrupt Thu 07-Jul-11 17:58:47

Thanks Dexter. Do you know then if it just went into their accounts if their benefits would be cut... plus one person in the couple owes a lot to the CSA...

CogitoErgoSometimes Thu 07-Jul-11 17:59:08

Awards for compensation for personal injury are not classed as taxable income. However, over a certain amount and they would probably affect benefit payments. It's best for your friend to declare the award rather than try to hide it. There are checks and balances and it's inevitable someone would make the connection.

dexter73 Thu 07-Jul-11 18:01:43

I'm sorry I don't know how it would affect their benefits.

lachesis Thu 07-Jul-11 18:04:06

That is fraud.

ellisbell Thu 07-Jul-11 18:06:36

I'd be very surprised if something like this didn't affect their benefit. There is something called "deprivation of resources" that means if they give the money to a child they are counted as still having it. The "savings" mean that they will not get means tested benefits until their savings drop below the threshold.

MorallyBankrupt Thu 07-Jul-11 18:06:47

Oh I see Cognito, I think they will be getting about 12k so 6k ish.

catgirl1976 Thu 07-Jul-11 18:07:27

I don't know. I feel like it shouldn't affect benefits as it is compensation - not income - the person recieiving it is being compenstated for something that happened, but that does mean it won't affect benefits. Seems a little unfair if it does.

GiddyPickle Thu 07-Jul-11 18:11:16

No not really catgirl. Some people have a lot of savings because for example their mum died at a young age and left them a house. Should we let them have benefits too just because the way they got their money was in sad circumstances.

However you come by it, if you have 12k in savings then it should affect your benefits because there are people out there with not a penny to their name and not enough benefits to go around.

MorallyBankrupt Thu 07-Jul-11 18:12:49

That's how I feel. I think they are hiding it so they don't have to pay back the CSA and other debts which I think is wrong.

CogitoErgoSometimes Thu 07-Jul-11 18:13:11

Changes you need to report

From the www.direct.gov.uk website

You must report any change in your circumstances to your local benefit office as soon as it happens, whether or not you think the change is directly related to your benefits.

Some examples of the changes you need to report include:

•getting married, entering into a civil partnership or moving in with a partner
•moving house
•getting a new job
•getting a pay rise
•inheriting or unexpectedly coming into money

PenguinPatter Thu 07-Jul-11 18:13:54

We were told we would have to inform the DWP of our compensation money if we were receiving means tested benefits as it would affect payouts amounts and eligibility for these benefits.

That wasn't applicable to us we just needed to know if it would be counted as taxable income - which it wasn't.

MorallyBankrupt Thu 07-Jul-11 18:17:20

I think by the way they were talking they know it's wrong so they must be getting means tested benefits...

catgirl1976 Thu 07-Jul-11 18:17:30

Difficult one - I can see that if someone gets a big payment it is wrong for them to keep getting benefits on top of that as they can use that money instead, but then I feel a bit bad if they lost an arm or something as they are then not actually getting any compensation as they are simply getting that money insteado of thier benefits whereas if they worked it would be ^ as well^ as wages s it seems a bit unfair. Especially if the benefits they were getting in the first place were due to incapacity or something. But yes, there is not an unlimited pool of money so I guess things cannot always be fair.

CogitoErgoSometimes Thu 07-Jul-11 18:23:43

@morallybankrupt. Of course they know it's wrong. Bad enough to swindle the taxpayer but dodging their CSA obligations and denying their own children money due as well doesn't makes them sound pretty irresponsible as well. I'd be questioning this friendship...

MorallyBankrupt Thu 07-Jul-11 18:26:00

TBH, I am. Hence the thread! I just felt so grubby hearing about it. Plus I get the feeling the injuries from the crash are typically exaggerated hmm

CogitoErgoSometimes Thu 07-Jul-11 18:26:28

(That made no sense) ... denying their own children money makes them sound pretty irresponsible.... I meant to say.

CogitoErgoSometimes Thu 07-Jul-11 18:30:30

This friend wasn't bragging about how clever their little scheme was, by any chance? That would be when the Benefits Hotline started to look appealing to me... smile

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