Lump Sum Payment on cashing in Works Pension - Income or Capital?

How is a Lump Sum payment, on the cashing in of a widow’s Works Pension in respect of her late husband, treated for

a). Housing Benefit?

and

b). Tax Credits?

Is it treated as Income, or Capital?.

Sorry to ask again, but can anyone confirm how this would be treated?

Many thanks,

John.

It all depends.  If it is a lump sum payment in the usual way pensions are constructed (i.e. a pension constructed to give an income with a separate lump sum) then it is capital.  If it is accumulated income then it is usually treated as income.  The usual HB/CTB rules apply.  Capital is ignored for tax Credits.  Have a look at the terms of the pension agreement.  You might want to talk to a financial advisor for clarification.

Thanks for that re. H.B./C.T.B. and Tax Credits. I know capital is ok for Tax Credits, I just wasn’t sure if it was treated as income for them.