{"id":118,"date":"2025-11-22T20:36:40","date_gmt":"2025-11-22T20:36:40","guid":{"rendered":"https:\/\/myinformernews.com\/uk\/?p=118"},"modified":"2025-11-22T20:36:40","modified_gmt":"2025-11-22T20:36:40","slug":"does-a-gift-of-money-affect-your-benefits-uk","status":"publish","type":"post","link":"https:\/\/myinformernews.com\/uk\/does-a-gift-of-money-affect-your-benefits-uk\/","title":{"rendered":"Inheritance and Benefits: Does a Gift of Money Affect Your Benefits?"},"content":{"rendered":"\n

Receiving a financial gift from a family member or friend can be a welcome event, whether it is an unexpected inheritance or simply a cash gift to help with a major purchase. <\/p>\n\n\n\n

However, for people living in the UK who claim state benefits, a sudden lump sum of money can introduce a layer of complexity. <\/p>\n\n\n\n

Many of the benefits paid by the Department for Work and Pensions, known as means-tested benefits, are directly affected by the amount of capital or savings you hold. <\/p>\n\n\n\n

The rules are clear that money, savings, and investments you own count as capital and will be taken into account when calculating your entitlement. <\/p>\n\n\n\n

What UK benefits are considered means-tested?<\/h2>\n\n\n\n

Means-tested benefits are those where your eligibility and the amount you receive are determined by your income and capital, which includes savings and investments. <\/p>\n\n\n\n

The main benefits that are means-tested and therefore affected by a gift of money include Universal Credit, Income-related Employment and Support Allowance, Income Support, Housing Benefit, and Pension Credit. <\/p>\n\n\n\n

These benefits are designed to provide financial support<\/a> to people with lower incomes and limited savings. <\/p>\n\n\n\n

In contrast, non-means-tested benefits, such as Personal Independence Payment, Attendance Allowance, and Carer\u2019s Allowance, are generally not affected by the amount of savings you have.<\/p>\n\n\n\n

What is the capital limit for means-tested benefits?<\/h3>\n\n\n\n

For most working-age means-tested benefits, including Universal Credit and Housing Benefit<\/a>, the capital limit is set at \u00a316,000. <\/p>\n\n\n\n

If your total capital, including the gifted money, is above this figure, you will not be eligible to claim the benefit. If your capital is below \u00a36,000, it will not affect your benefit payment at all. <\/p>\n\n\n\n

For those with capital between \u00a36,000 and \u00a316,000, your benefit payments will be reduced. <\/p>\n\n\n\n

For Universal Credit, your payment is reduced by \u00a34.35 a month for every \u00a3250, or part of \u00a3250, that you have over the \u00a36,000 threshold.<\/p>\n\n\n\n

How does a lump sum gift affect Universal Credit?<\/h3>\n\n\n\n

A gift of money, whether from an inheritance or a living donor, is typically treated as a lump sum of capital or savings. <\/p>\n\n\n\n

If receiving this lump sum causes your total capital to exceed the \u00a316,000 limit, your Universal Credit claim will end. <\/p>\n\n\n\n

If the gift takes your capital into the \u00a36,001 to \u00a316,000 bracket, your Universal Credit award will be reduced based on the tariff income rules. <\/p>\n\n\n\n

You must report any significant gift or change in your capital to the Department for Work and Pensions as soon as possible to ensure your benefit is calculated correctly.<\/p>\n\n\n\n

Are small, regular gifts counted as income?<\/h3>\n\n\n\n

Small, regular payments received from family members, often referred to as voluntary payments, are generally not counted as earned or unearned income for Universal Credit purposes, provided they are genuine gifts with nothing expected in return. <\/p>\n\n\n\n

This means that a relative sending you a small amount each month to help with living costs will not reduce your monthly benefit award. <\/p>\n\n\n\n

However, if these regular gifts build up over time and increase your total savings above the capital limits, they will then begin to affect your benefit entitlement.<\/p>\n\n\n\n

What is ‘deprivation of capital’ and why is it important?<\/h3>\n\n\n\n

Deprivation of capital is a rule used by the Department for Work and Pensions. <\/p>\n\n\n\n

It applies if you deliberately reduce your savings or capital to qualify for a means-tested benefit or to receive a higher amount. <\/p>\n\n\n\n

This might involve giving money away as a gift or spending it on things that are not considered reasonable. <\/p>\n\n\n\n

If the Department for Work and Pensions decides you have intentionally deprived yourself of capital, they may treat you as if you still have that money. <\/p>\n\n\n\n

This is called notional capital, and your benefits will be calculated based on the notional amount, even if you no longer possess the funds.<\/p>\n\n\n\n

What should I do if I receive a gift of money?<\/h3>\n\n\n\n

If you receive a gift of money, your first and most important step should be to report this change in your circumstances to the Department for Work and Pensions immediately. <\/p>\n\n\n\n

You must be open and honest about the amount received. <\/p>\n\n\n\n

You should also carefully consider your options for spending the money, especially if the gift brings your total capital close to or over the \u00a36,000 threshold. <\/p>\n\n\n\n

You may choose to spend the money on necessary items or pay off debts that you have. <\/p>\n\n\n\n

However, be aware that any spending to deliberately manipulate your capital to maintain benefit entitlement may be viewed as a deprivation of capital.<\/p>\n\n\n\n

Do I have to pay tax on a gifted lump sum?<\/h3>\n\n\n\n

Gifts of money received are generally not treated as taxable income for the person receiving the money in the UK. <\/p>\n\n\n\n

The tax rules around gifts, known as Potentially Exempt Transfers, primarily affect the person who gave the gift, especially in relation to Inheritance Tax if they pass away within seven years of making the gift. <\/p>\n\n\n\n

For the person receiving a lump sum, the main financial concern is how the money affects their eligibility for means-tested benefits, not Income Tax. <\/p>\n\n\n\n

You should always seek professional advice if you are dealing with a large inheritance or a complex financial situation.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Receiving a financial gift from a family member or friend can be a welcome event, whether it is an unexpected inheritance or simply a cash gift to help with a major purchase.  However, for people living in the UK who claim state benefits, a sudden lump sum of money can introduce a layer of complexity.  […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":44,"footnotes":""},"categories":[14],"tags":[],"class_list":["post-118","post","type-post","status-publish","format-standard","hentry","category-benefits"],"_links":{"self":[{"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/posts\/118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/comments?post=118"}],"version-history":[{"count":1,"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/posts\/118\/revisions"}],"predecessor-version":[{"id":119,"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/posts\/118\/revisions\/119"}],"wp:attachment":[{"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/media?parent=118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/categories?post=118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/myinformernews.com\/uk\/wp-json\/wp\/v2\/tags?post=118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}