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Single parent claiming only child tax credits - will I lose them after 'profit' from divorce settlement.

(7 Posts)
what2eatwhenurbored Tue 02-Aug-16 15:11:57

Any experience or insight welcome (please no unkind comments or judgments I'm not claiming benefits)

I'm getting divorced, renting a flat, and have a young preschooler. I earn around 12K a year and get basic alimony. I get child tax credits which make a huge difference after outgoings.

When the divorce settlement comes through I may be able to buy a smaller flat outright (new area, a bit isolated but v fortunate to a have a roof). I'm lucky as I'll never get a mortgage with my circumstances.

I'm wondering if when the final settlement comes through, which will probably go to the solicitor and then hopefully into a property if it will effect my tax credits for 2016/17. I could owe money potentially if it's viewed as income which is a real concern.

On top of this I wonder if I'm lucky enough to get a flat somewhere for us what my new monthly income without tax credits will look like long term I'd be saving on rent but in my own place I'd need to cover emergencies and I have no savings or pension.

Tax Credit advice line won't 'predict' or help at all. I'm about to hire an accountant to help advise me. He's expensive and doesn't seem to know much about child tax credits.

Any experience v welcome! Thanks.

Tryingtosaveup Tue 02-Aug-16 20:58:12

Don't hire an accountant. Go to citizens advice centre (CAB). They will give you better advice and they are free

Babyroobs Wed 03-Aug-16 00:01:26

If you buy a property with the money then it won't affect tax credits. However if you had a large lump sum of money in the bank for any length of time then you would need to declare any interest of above £300 per tax year( I think) earnt on that money . So say you had a large sum of money in the bank and it earnt say £5K interest you would declare that and I think it would betreated as income.Tax credits are a benefit but they are treated differently to other benefits such as Housing benefit and Income support. With these benefits if you have over £6k in the bank your benefits start to reduce.

AndNowItsSeven Wed 03-Aug-16 00:09:43

Are inheritance is treated as capital not income. Any interest in the lump sum will count as income and reduce you tax credits as if you were earning that money.
So basically it will have no or very little affect on your tax credits.

Babyroobs Wed 03-Aug-16 00:10:01

This is why tax credits are seen by some to be very unfair. If there were two claimants both on the same wage with the same number of children, one owning a home outright and one paying a high rent, they would both currently receive the same amount in tax credits. The one renting might get some help from housing benefit but would still be a lot worse off . tax credits also take no account of child maintainence being paid, it is completely disregarded. One lone parent getting a decent sum of cm each month would still get the same tax credits (assuming the same income and circumstances) as a lone parent getting no cm.

43percentburnt Wed 03-Aug-16 00:10:38

An accountant is unlikely to know the answer (unless they have an interest or experience in this area). So save your money!

You need to see if there is a local money advice centre in your area. They will also check you are getting all your entitlements - council tax help, prescriptions etc, This advice will be free. Baby above explained any interest earns over £300 will reduce entitlement but the capital won't (at the moment, this could change). You won't get council tax help or free prescriptions whilst the capital is in your bank account.

You could go onto entitled to and enter your future details.

If you are buying a property I'm guessing that will use most the money anyway.

Good luck!

AndNowItsSeven Wed 03-Aug-16 10:54:13

Op doesn't need an any advice it's already been given, she will still receive tax credits.

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