Does an inheritance of £20,000 effect my mother-in-laws state pension in the UK?
If she is just receiving state pension I don’t think it will make any difference at all but if she is receiving any means tested benefit such as Housing Benefit, she will need to declare it. As a pensioner the first £16,000 of any capital is not taking into account so won’t make any difference to her pension. If she is over 65 and needs help with her every day functions or has problems getting around, your mother in law might be entitled to claim Attendance Allowance which is an extra payment that doesn’t affect any other income she has.
State Pension is not taxable, or means tested, if that is her total income.. The only ways that she would loose out by keeping it, is if she had tax credit benefits, etc. Any interest from investing it could be taxable, if she had other income from investments, or a private pension, for example. In this situation, all her income, including State Pension, would be added together for tax deduction, but she has her personal nontaxable allowance, just the same as anybody else. If she puts it in an interest-paying bank account, it will be taxed at source, unless she signs the appropriate non-taxpayer declaration form.
