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bigduckontax
bigduckontax, Accountant
Category: Tax
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Three years ago, I was left 50.000 pounds in a will. This

Customer Question

Hi, three years ago, I was left 50.000 pounds in a will. This was deposited and transferred to my savings account. I have been living on disability benefits for the past ten years since becoming unemployed and therefore using some of my inheritance to live off.
I was not aware that this money needed to be declared to DWP who are now asking for bank statements dating back to receiving the money and I am now liable to repay any tax, maybe even a fine.
Any help or advice will be gratefully received.
Many thanks.
Mike
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello Mike, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Although the bequest comes to you tax free it is capital, Disability Living Allowance (DLA), which I assume you are receiving, is not usually affected by any savings or income you may have. The interest from the deposit of the bequest is, of course, income and should have been declared on your annual self assessment tax return. However, most deposit takers deduct tax automatically at the basic rate unless advised to the contrary so this should not be a problem. My first reaction if you are in receipt of DLA would be to challenge the DWP as to why they need this detail at all. It would only be if you were in receipt of a means tested benefit that the matter of the capital from the bequest would arise in the assessment. You may need to come back to me on this with more detaii.
Customer: replied 2 years ago.
Hi Keith, many thanks for your response. I am receipt of DLA and ESA, which I believe is taxable income.In view of this, I'm assuming this is the reason DWP are saying any amount of savings over £16000 I will need to pay £50 per £1000??
Expert:  bigduckontax replied 2 years ago.
You may well be right, Mike. Have a look here for the benefits which are taxable income and those which are not: https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits DLA is not taxable, but ESA is. ESA is indeed the 'ni**er in the woodpile' to use an old non PC expression for: 'Your income may affect your income-related or contribution-based ESA. Income can include:you and your partner’s incomesavings over £6,000pension incomeYou won’t qualify for income-related ESA if you have savings over £16,000' Thus, depending upon the type of ESA you were receiving, there may have been an over issue of the allowance which DWP, not unreasonably, will wish to recover. I am so sorry to have to rain on your parade.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.