Inheritance and tax credits

[curtaintrail]

I'm due to inherit about £20k from sale of a relative's house who passed away recently.

Am assuming this is taken into account for child tax benefit eligibility?

Does anyone know as to when exactly that I have to let them know? Now or when it hits my bank account?

Ironically I believe its not taken Into account for tax credits as its tax free income.

But I'd still tell them to make sure its all above board

Yes savings don’t count.

Capital isn't included for child tax credits but you will need to report the interest you get as income.

"you will need to report the interest you get as income"

Yes, but remember that the personal savings allowance allows you to earn interest up to £1,000 interest tax-free if you're a basic-rate (20%) taxpayer, so unless you find some super-duper bank account paying 5% interest or have significant savings earning interest elsewhere than this is unlikely to be an issue.

It's not taken into account. I called them when I inherited they didn't want to know as not earned income.
Do check but that was what I was told.

It will be taken into account when you move over to universal credit, so worth bearing this in mind when you decide what to do with it.

If you put the inheritance into a cash ISA the interest is tax free and therefore doesn’t count. ISA limit is £20k

It doesn’t count for tax credits.

Universal credit it will, however.

Been wondering about this as well- does anyone know what restrictions there are on using your own savings eg are you allowed to buy non essentials like a car, pay down mortgage, pay off cc debt or start paying into a pension? Does money in a LISA count even though you can’t take it out till you are 60?

Oddly it isn't counted as it's not earned income. If you were on universal credit it woukd stop you from claiming. Very unfair.

I think on universal credit it doesn’t affect anything for a year if you are moving over from tax credits.

it doesn’t affect anything for a year if you are moving over from tax credits.

True, but if you spend it in that time you are open to accusations of depriving yourself of assets deliberately. Best to sort it now before you move over.

I think those transitional protection rules for Uc only affect people who are moved under managed migration ( which has not yet started) rather than natural migration ? I may be wrong.

As others have said, although the £1,000 interest allowance is for income tax not tax credits or child benefit.
Your savings and capital, however accumulated, are not relevant for tax credits - only your income, earned or unearned (investment income). Child maintenance is also not relevant.

Universal credit is a different matter.

Thanks all.