Claire writes: “I have gifted my grandchildren £15,000 of premium bonds each.
As a single mother with three children under 16, my daughter gets tax credits and is worried this money may affect it or her claim to Universal Credit, now or in the future. Could you please clarify?”
Paul Lewis replies: The good news is that for both tax credits and Universal Credit, investments owned by children do not count as the parent’s, and so do not affect those benefits, and nor do any prizes they may win. However, other older means tested benefits, such as Income Support and Jobseeker’s Allowance, may be affected.
With those benefits, if the capital of a child exceeds £3,000, then no benefit will be paid for that child, but the rest of the benefit is not affected. The income earned by a child’s capital is generally not added to the parent’s.
But if the benefit has been claimed since 2004 and the capital of a child is less than £3,000, then the income may be added to the parent’s when benefit entitlement is calculated.
Always check with the Department for Work and Pensions if your circumstances or those of your children change.