Do I have to tell the DWP about an inheritance?
Short answer
Yes — capital changes must be reported as soon as the money becomes available to you. For Universal Credit, savings between £6,000 and £16,000 reduce your award and anything above £16,000 stops it. Report it through your journal; unreported changes are the commonest cause of overpayments.
An inheritance is capital, and capital affects means-tested benefits. Report it through your Universal Credit journal — or to the office handling your benefit — as soon as the funds become available to you, not when you spend them.
How savings are treated
- Universal Credit: savings below £6,000 are ignored. Between £6,000 and £16,000 the DWP applies a tariff income of £4.35 a month for every £250 (or part of £250) above £6,000. Above £16,000, UC stops entirely.
- Pension Credit: different rules — there is no upper capital limit, but savings above £10,000 generate a notional income of £1 a week for each £500 above the disregard.
Spending an inheritance quickly to get back under a limit is risky: money disposed of to secure benefits can be treated as notional capital you still hold. Take advice before making large gifts or repayments.
The wider duty to report
Universal Credit changes must be reported in the assessment period in which they happen. Beyond capital, the changes people most often overlook are:
- Moving home, or someone joining or leaving the household
- Starting work, or a change in hours or earnings
- The person you care for going into hospital or a care home for more than 28 days, which ends Carer’s Allowance at that point
- The cared-for person’s PIP or Attendance Allowance stopping or being reduced, which can end your Carer’s Allowance from the same date
What happens if you do not
Unreported changes produce overpayments, which the DWP will recover from ongoing payments, earnings or your bank account. A failure to report can also attract a £50 civil penalty added to the debt, and deliberate concealment of significant sums over time can lead to prosecution for benefit fraud. Honest mistakes reported promptly are treated very differently.
Report changes that increase your entitlement just as quickly — a new diagnosis, taking on caring responsibilities, or falling earnings. Increases usually run only from the date you report them, so every week of delay is money lost.
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