The Universal Credit claimant questioned if they could submit a new claim with the DWP after spending their inheritance
A benefits claimant who is due to inherit up to £150,000 has questioned whether they can still get financial support after spending all the money.
The Universal Credit recipient said they are in a shared ownership scheme and currently own 50 per cent of the flat that they live in.
They hope to use the huge pot of cash to buy the remaining 50 per cent – but this would ‘wipe out the inheritance completely’.
The claimant queried whether they could then submit a new claim with the Department for Work and Pensions (DWP) ‘after the money has gone’.
On Reddit, the claimant posted: “I own a 50 per cent share in my flat and pay rent on the other half to my housing association.
“On Universal Credit, which pays the rent and service charge.
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“It’s likely that I will inherit something like 100-150k sometime in the next 5-10 years, obvs things can change in that time but I’ve been thinking about what to do with it if/when I get it.
“Ideally I would want to buy the other 50 per cent share of my home, so I own the whole flat, that would mean only service charge is due and no more rent payments.
“The 50 per cent of my flat is currently roughly 160k (full market value is 325k) so would wipe out the inheritance completely.
“Would I be able to spend inherited money on buying the whole of my flat?
“Or would this be deprivation of capital. (Don’t know if I will still be on Universal Credit by the time this happens but I’m interested to know the rules).”
One fellow Reddit user encouraged the claimant to seek advice from Citizens Advice.
Another told how they had ‘no problem’ reclaiming benefits after spending their inheritance.
They said: “I inherited money and used it to buy a house with no issues.
“That doesn’t guarantee you’d have no problem, but paying off debt is always an acceptable use of capital.
“The only problem would be that if you get the inheritance and it’s not spent by the end of the assessment period, the claim will be closed.”
The claimant who asked the question replied: “I don’t mind the claim being closed while the money is with me as I’m going through the legal process to buy.
“I suppose it is whether I submit a claim again after the money has gone, whether DWP would think it reasonable that I’ve spent it on buying my flat as its a debt I have opted into voluntarily I suppose.”
You must report changes in circumstances to the DWP, including inheritance payments.
This is because the department takes into account ‘all money, savings and investments you have in the UK and abroad’ when you claim Universal Credit.
If you inherit more than £16,000, it is likely that your benefits will be stopped.
Charity Shelter says: “You cannot get UC anymore if you inherit more than £16,000.
“If you inherit between £6,000 and £16,000, you can still get UC but it will usually go down.
“Savings or capital between these amounts affect how your Universal Credit is worked out.
“Be careful how you spend inherited money.
“The DWP could decide you have spent it deliberately to keep getting UC. This would affect your claim.
“You can use money you inherit to reduce your debts or for other reasonable spending without it affecting your claim.”
Regarding deprivation of capital, Gov.uk says: “If you knowingly reduce your money, savings and investments, or transfer them elsewhere to get or increase your Universal Credit, this is known as ‘deprivation of capital’.
“You have not knowingly reduced your money, savings and investments if it has been used to:
- Pay off or reduce a debt
- Pay for goods and services that were reasonable in your circumstances
“If we decide you’ve deliberately reduced your money, savings or investments, your Universal Credit is based on you still having it.
“This is called ‘notional capital’.”
