Inheritance and benefits

[Durab]

If a couple have no income and no savings, so are living on benefits, but then inherit £65,000 does that mean their benefits will stop? (assuming they declare the inheritance)

If they spend the cash on two luxury cars, will they get their benefits back?

Thank you

Benefits cap is around 15k savings so yes an inheritance would exceed that. If it was felt they had deliberately spent it to hide the assets then DSS could withhold payments. Income from any cash remaining ie. interest would also need to be declared.

Always best to advise the authorities when circumstances change or they'd be open to charges of fraud and all the rest. Some benefits aren't dependent on savings so those would be retained. But quite a few are so they'd be expected to declare their windfall and have awards adjusted accordingly. If they invest their inheritance and get an income from it, that's another thing to consider. Buying luxury cars or anything else would be counted as deprivation of assets and is a 'bad thing'

Thank you, in more usual circumstances, where savings have been accumulated over time and then circumstances change reducing income, does it make a difference if the savings are in non-income earning tangible investments like gold, paintings, holiday home etc? (or luxury cars?)

It's mostly going to be cash savings that the DWP is interested in. So the sharp fraudster would turn their extra cash into assets quickly but it would still be a 'bad thing' (fraud) if someone checks their statements and sees that cash has been disappearing in large chunks.

If someone had spent a lifetime accumulating assets such as you describe and then fell on harder times and fancied a few benefits to help keep the Rolls Royce in petrol, they shouldn't be too surprised if someone reported them for fraud anyway.

Yes. Their benefits will stop, and rightly so. benefits are a safety net for those without money. If someone inherits sixty five thousand pounds they can and should live off that.

I think that people are allowed to pay off debts, as that is seen as a reasonable thing to do but if they splashed out on cars and goods in order to have stuff and still claim benefits - they'd be in trouble. And they should be!

If they have lots of stuff and then need benefits then I don't know. They'd have to contact CAB perhaps and find out.

They'd certainly have to declare a second home and other assets. I believe failure to do so is benefit fraud.

undisclosed savings or other assets

two luxury cars, a second home, stuff worth thousands - all assets.

in some parts of the uk you can buy a small house, would buying a home count against you as you would be saving on HB ?

The capital upper savings limit is £16k for most means-tested benefits, apart from Pension Credit, where there is no upper limit. Not all benefits are means-tested though, you can get contribution-based JSA or ESA regardless of income for a limited time, plus DLA is not means-tested at all. If they get child tax credits, this has a different way of assessing capital - savings don't affect your claim but they'd include interest from the savings in the claim. Carer's Allowance is also means-tested on income but not savings. It's not clear what benefits you mean by 'living on benefits' and the different benefits have different rules.

There are rules on deprivation of capital if they did something like spend money on luxury items. If they decide that they deliberately deprived themselves of capital in order to be eligible for benefits, the DWP would simply assess the couple as still having those savings.

The DWP/HMRC are generally only interested in cash type assets - bank accounts, stocks, shares, second properties, national savings. They don't ask about personal possessions like art or jewellery. In most cases they don't include the value of the home you live in. So if they were reported for fraud for having expensive cars which they'd accumulated before becoming eligible for benefits, it might well trigger an investigation but if they had evidence to show when it was bought, I doubt there could be a successful prosecution.

See the Decision Maker's Guide on Capital:

"Personal possessions such as clothing, jewellery, and cars are disregarded indefinitely (JSA Regs, Sch 8, para 15; IS (Gen) Regs, Sch 10, para 10)"

But:

"For JSA personal possessions are not disregarded if people buy them to reduce the amount of capital so they can get JSA or IS or more JSA or IS. For IS personal possessions are not disregarded if people buy them to reduce the amount of capital so they can get IS or more IS2 (see DMG 29807)."

I think the rule is if it can be proved that the money was spent in order to retain benefit then they call it 'deprivation of capital'. I'd think the buying of two luxury cars would count as this.