Ask an Expert - Upcoming Benefits Changes - March 2011

Pregnancy and benefit changes

• I am expecting my first child in May and I am leaving a temporary job on the 31st March. As it is a temporary position I am not entitled to maternity leave. Please can you tell me what benefits I would be entitled to and whether I can qualify for any grants to help me with things for the baby as I can not afford the essentials that will be needed and for carpets as I have just moved into a flat with no flooring what so ever. (Toni)

Karen Holmes: As part of next month’s benefit changes, the baby elements of Child Tax Credit and Housing Benefit (HB) (HB England, Scotland and Wales) (HB Northern Ireland) have been removed. These provided an additional amount when calculating entitlement for those who had a child under one in the household. Child Benefit rates have also been frozen for three years, meaning a reduction in the value of the benefit over this period. Although these changes mean awards will be comparatively less than they may previously have been, people should not be deterred from checking benefit entitlement and making the relevant claims.

Below, John and Victoria explain what is still available for people in Toni’s situation.

John Harris: The first thing to say is that even if you have not been working for your employer long enough to qualify for Statutory Maternity Pay you may still be entitled to Maternity Allowance. This could be paid if you have worked for at least six months (even for different employers) in the year and a quarter before the baby is due. Maternity Allowance is paid for nine months and is currently £128 a week, so once you stop work you will need to look at claiming means-tested benefits to top your income up.

If you have a partner, their income would affect any means-tested benefits, but if you are single you would need to look at claiming Housing Benefit (HB) (HB England, Scotland and Wales) (HB Northern Ireland) and Council Tax Benefit as soon as you stop work. Note that there are limits on the amount of rent that Housing Benefit can meet but if your rent is considered too high, you can ask for a Discretionary Housing Payment to cover the shortfall.  If it turns out that you are not entitled to Maternity Allowance you will also need to make a claim for Income Support. 

Once you are getting a means-tested benefit, you should also be able to claim a Sure Start Maternity Grant of £500 (but note that from now on this grant is only paid for your first baby). With regard to help with carpets and furniture for your new home, you can apply to the Social Fund for a Community Care Grant and/or a Budgeting Loan to help with these costs.

Victoria Todd: You will be able to claim Child Tax Credit when your baby is born. Child Tax Credit is paid by HM Revenue and Customs (HMRC). If you are claiming benefits from Jobcentre Plus, such as Income Support or income-based Jobseeker's Allowance, then you should ask them to fast track your claim for Child Tax Credit. They can help you complete the form and send it to a special team in HMRC. If this doesn’t happen, you can ring the Tax Credits Helpline on 0845 300 3900 to ask for a claim form. The amount you get depends on income. Initially the Tax Credits you will receive will be based on your income from the previous tax year (2010-2011 in your case), but if you think your income for 2011-2012 will be lower than 2010-2011, you can ask the Tax Credit Office to base your Tax Credits on an estimate of your 2011-2012 income. However, you should be careful about giving an estimate as if it turns out to be too low, for example if you go back to work later in the year, you may be overpaid. If you are in receipt of Income Support or income-based Jobseeker's Allowance your income will not be taken into account at all and you will receive maximum Child Tax Credit.

Child Tax Credit can only be backdated up to three months, so it is important you apply quickly after your baby is born.

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Over 60s and tax credits

• I'm 60 years of age. My partner died last year so I am struggling to pay my bills as I have lost his income. I work 16 hours a week at £95. My daughter is moving out in two weeks so I will lose her income as well. I get no benefits whatsoever. I’m too young to get my state benefit so all I have to pay my mortgage, bills and eat is £95 a week and I can’t survive. (Sue)

John Harris: Your current situation is difficult as although you are 60, recent changes to State Pension age mean you will have to wait until some time in 2012 before qualifying for State Retirement Pension and Pension Credit. You can check when your exact State Pension age is by phoning the Pension Service on 0800 99 1234 or using the Pension Service online calculator (link opens in a new window). They will also be able to give you a forecast of how much State Retirement Pension you will receive.

Until you reach State Pension age, you can only claim help with your mortgage via Jobseeker’s Allowance and this can only be claimed if you are working less than 16 hours a week - so you would not be able to claim at present. You can however claim help with Council Tax – a 25% sole occupier discount once your daughter moves out, and also Council Tax Benefit based on your low income. You do this by contacting your local council (link opens in a new window).

Once you reach State Pension age, you should have your benefit situation checked again, as you may become entitled to Pension Credit, which can provide help with mortgage interest whether you are working or not. You can use the Turn2us Benefit Calculator to see what might be available to you or you could contact your nearest Citizens Advice Bureau (use the Turn2us Find an Adviser tool to find a local one) who would be able to check this for you.

Victoria Todd: As you are 60 years of age and work 16 hours a week, you may be able to claim Working Tax Credit from 6 April 2011. Working Tax Credit is paid by HM Revenue and Customs (HMRC)and gives help to low income workers. Currently, if you don’t qualify for the disability element of Tax Credits or the 50+ element, you have to work at least 30 hours to get Working Tax Credit. But from 6 April 2011, if you are aged 60 or over, you can qualify for working tax credit by working at least 16 hours. You can find out more about this on the HM Revenue and Customs (HMRC) website (link opens in a new window). The amount of Working Tax Credit you will get depends on your circumstances and your income (either for the previous tax year or the current tax year). If you decide to claim certain other benefits as well, you may find that the Working Tax Credit you receive will affect the amount of other benefits you get. Working Tax Credit is made up of different elements depending on your circumstances. In your circumstances, you will entitled to the basic element of Working Tax Credit and if you decide to work at least 30 hours you may also qualify for the 30 hour element which will give you a bit more than the basic amount. HMRC will add together the elements you qualify for to calculate your maximum amount, which will be reduced by 41p for every £1 that your income goes above £6,420.

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Better off after changes

• Is anyone going to be better off as a result of these benefits and Tax Credit changes? (Bridget)

John Harris: There are a couple of changes taking place in April 2011 that will leave some people better off.

The main one is a change to the rules for Disability Living Allowance. Visually impaired people who had no physical walking problem could previously only receive the lower rate mobility component. They will now be able to receive the higher rate mobility component based on an assessment of their “visual acuity”. The Royal National Institute for Blind People (RNIB) website (link opens in a new window) has more information on this.

A further change is that people with disabilities who have non-resident carers can have an extra bedroom taken into account in their Housing Benefit (HB) (HB England, Scotland and Wales) (HB Northern Ireland) Local Housing Allowance limit.

Victoria Todd: Some of the Tax Credits changes that have been announced are beneficial for claimants. The child element of Child Tax Credit has been increased by £255 per child from April 2011 which will offset some of the more negative changes. Whether a family is better off or not will depend on their circumstances and income. There will be some families who are better off and some who will lose as a result of the changes. Other families may see an increase in Tax Credits next year, but that increase will not be as big as it would have been had the changes not been made. It is crucial that families make sure they are claiming all of their entitlements and that they check their Tax Credit award notices carefully to ensure that they are being paid the right amount.

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Increased tax allowance and the effect on benefits

• The Government says that the lowest paid will no longer have to pay tax and national insurance or not as much as before. The lowest paid are usually claiming Tax Credits, Housing Benefit and Council Tax Benefit or at least one of these. My question is, will the increase in wages from paying less contributions affect these benefits? (KF)

John Harris: The personal tax allowance for people aged under 65 will increase by £1,000 to £7,475 for the 2011-12 Tax Year. This is the amount you can earn before tax is deducted.  It will then increase by £630 on 6 April 2012 to £8,105 for the 2012-2013 Tax Year. 

Any increase in net wages gained from the changes to tax allowances and national insurance for low paid people will not reduce net Tax Credits as HM Revenue and Customs (HMRC) use gross income (i.e. before tax and national insurance are deducted) to assess entitlement. However, Housing Benefit (HB) (HB England, Scotland and Wales) (HB Northern Ireland) and Council Tax Benefit are assessed on net income (ie after deducting tax and national insurance). So yes, any increase in net income as a result of the changes will reduce these benefits. For every extra £1 of net income you receive, you will lose 65p in Housing Benefit and 20p Council Tax Benefit, so if your income rose by £4 a week you would lose £3.40 in total and be 60p a week better off.

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Couples with children

• Can you  tell me if you work 16 hours just now then on the first of April do I need to change to 24 hours as I am working 16 hours just now? (John)

Victoria Todd: The Government has announced several changes to the Tax Credits system in the last year - some will start from April 2011, others won’t affect the Tax Credits system until April 2012 or 2013. If you have responsibility for a child, or if you qualify for the disability element or the 50+ element of Tax Credits, then you can get Working Tax Credit by working at least 16 hours. There will be no changes to this rule for the 2011-2012 Tax Year. However from 6 April 2012, if you are part of a couple who are responsible for a child, you will need to work at least 24 hours to qualify for Working Tax Credit. These 24 hours can be worked by one person, or by both between them as long as one person is working at least 16 hours. So for example, one partner could work 16 hours and the other 8 hours. You can find out more about the qualification criteria for tax credits on the HM Revenue and Customs (HMRC) website (link opens in a new window).

If you or your partner qualify for the disability element of Tax Credits, you will continue to qualify for Working Tax Credit by working at least 16 hours. The 24 hour requirement will not apply in these circumstances.

So you won’t need to increase your hours from April 2011, but you may need to do so in April 2012 if you want to continue to qualify for working tax credit. You can find more about the budget changes that will apply from 6 April 2011 on the HM Revenue and Customs (HMRC) website (link opens in a new window) .

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Income and Child Tax Credit

• Is it true that any one family earning over £25,000 in the future will lose all of their Child Tax Credits? (Terry)

Victoria Todd: While there have been lots of changes announced to the Tax Credits system, it certainly isn’t true to say that any family earning over £25,000 in the future will lose all of their child tax credits. Currently, you are guaranteed at least the family element of Child Tax Credit (£545) providing your household income for Tax Credit purposes is below the ‘second income threshold’ which for 2010-2011 is £50,000. From 6 April 2011, that second income threshold will be reduced to £40,000. This means that families with an income of up to £40,000 are guaranteed at least £545, although in many cases they will receive much more than that. It is important to note that some families with incomes above £40,000 may still qualify for Child Tax Credit as it isn’t an absolute cut off point. If you have more than one child and high childcare costs, it is likely you will qualify even with a higher income.

From 6 April 2012, the second income threshold will be removed altogether. This means that the family element of Tax Credits will no longer be guaranteed to families with incomes up to £40,000. For families with only one child, no disabilities and no childcare costs the changes from 6 April 2012 mean they may not receive any child tax credit at an income of £25,000, but there is no set rule. The level of income where Tax Credits stop from April 2012 will depend on your family circumstances. So it isn’t possible to state one level that will apply to everyone, for some people will continue to get Tax Credits at incomes much higher than £25,000.

• My husband's is the only earned income in our household. We have two children 5 and 1 years old, no disabilities. At present entitled to some housing benefit but not applied yet and get normal child benefit, no working tax credit, and child tax credit. Salary is £18000, current Tax Credits around £100 per week. Will we likely be affected by any changes? (Jayne)

Victoria Todd: The changes announced to the Tax Credits system from April 2011 will affect all Tax Credit claimants. However some of the changes are positive, such as the increase to the child element of Child Tax Credit whilst others are negative because they reduce the amount you are entitled to. In your situation, although your claim will be affected by some of the negative changes, the extra increase in the child element of Tax Credits will make up for that meaning you should see an overall increase in your Tax Credits of around £6.50 per week from April 2011 providing your income and circumstances stay the same.

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How much Housing Benefit can I get?

• I claim Jobseeker's Allowance and have no home so I am looking at private rent. How much Housing Benefit can I claim as I don't want to take a place that is over priced ? (Philip)
• I am on Incapacity Benefit long term and have been for a number of years. I want to know how much Housing Benefit does a male aged fifty years get as I am looking for a property on my own after living with relatives and I need a starting point to know what to look for. (Paul)

Karen Holmes: Several people have contacted us asking what their entitlement to Housing Benefit (HB) (HB England, Scotland and Wales) (HB Northern Ireland) is. Especially those looking to rent in the private sector who do not want to move in to a new home which they later find they can’t afford.

For those who have similar concerns there is no clear cut answer. Housing Benefit entitlement varies based on your particular circumstance; your income, the property you are renting, and the area it is in will affect your award.

You can find out the Local Housing Allowance (LHA) rate for your area, or the area you wish to move to, by going to the HB Update website link opens in a new window) and entering the postcode. This will tell you the LHA rate (maximum rent) that applies when your Housing Benefit is calculated - these rates are updated monthly. The rates vary depending on how many bedrooms a household is deemed to require, for example an adult couple will be deemed to require a one bedroom property, two children under ten are expected to share a bedroom, and a single person under 25 is allowed only a ‘shared accommodation’ rate .

If you input your details into the Turn2us Benefit Calculator you will be given an estimate of your entitlement but you will need to have a property in mind so that you can put in the rent amount and LHA rate for the property.

• As I’m under 25, I only qualify for the shared accommodation rate of Local Housing Allowance and living in London I already have a shortfall to meet. Will I have a national maximum rate imposed on my benefit? (Neil)

John Harris: Yes, the national maximum rate for one bedroom accommodation will apply to shared accommodation as well as self contained accommodation. The maximum from April 2011 will be £250 a week so hopefully this will not be higher than the current limit for your area. If the new limit is lower, then you will get some transitional protection for up to 9 months. Remember you may be able to get a discretionary housing payment from your local council to help meet any shortfall.

See the Government's Gov.UK website for more information on Local Housing Allowance (link opens in a new window).

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Discretionary Housing Payments

• I live with my partner and our rent is £85 a week  and receive 72.50 a week in Housing Benefit, we also get joint Jobseeker's Allowance. We have had a letter from our council saying the Housing Benefit is going down to £63.  I don't think our's is changing until the anniversary of our claim but I am still worried about how we are going to cope when it does go down as we are struggling enough to pay rent and afford other things. (Sinead)

Karen Holmes: The Discretionary Housing Payment budget is to be increased by £10million meaning the budget for 2011/12 will be £30 million. This will be targeted on the local authorities most needing it to offer some assistance to those most affected by the cuts to Housing Benefit (HB) (HB England, Scotland and Wales) (HB Northern Ireland). This is however discretionary, so there is no guarantee it will be made available to you. Each local authority will have criteria by which payments are awarded and it is likely to go to those with priority needs or to offer a limited amount of time to ‘ease’ the situation for those who have to move somewhere else because they can’t afford to stay where they are.

Make sure you use the Turn2us Benefit Calculator and Grants Search to ensure you are not missing out on any other money that may be available to you.

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Grants for costs of moving house

• I need to apply for a grant to help with moving to another home  and to pay deposit to a landlord first and last months rent.  Could you seek the right charities for me to get funding. (Angela)

Karen Holmes: Changes to Housing Benefit (HB) (HB England, Scotland and Wales) (HB Northern Ireland) from April 2011 include a nationwide cap on Local Housing Allowance rates, and setting the rates so that only three in ten houses in an area are affordable to Housing Benefit claimants, instead of five in 10. Although most existing claimants will be protected by up to nine month’s ‘transitional protection’, as a result of these changes many people will find they can no longer afford the property they are currently living in and they may have to move.

Financial support at such times is important as there are many expenses associated with moving house, including the ones Angela mentions here. Each charitable fund has its own criteria of who they can assist and what they can help with. You can find relevant charitable funds that might be able to help you by using the Turn2us Grants Search database. Simply input your details, for example, where you live, a past or current occupation and/or the item you want help financing and the results will be provided.

Also, if you can’t afford an initial deposit, you may be eligible for a deposit guarantee scheme whereby your local authority sends a guarantee to your landlord for the deposit. For more information about such schemes, contact your local council (link opens in a new window).

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Further Help

• Turn2us Benefits Calculator
• Turn2us guide to the April Benefits Changes
• Turn2us guide to the changes to benefits and the benefits system
• Low Incomes Tax Reform Group website (link opens in a new window) has useful information on tax and national insurance for people on low incomes

Disclaimer:

The opinions expressed are those of the expert only. The answers and associated material are for general information only and do not constitute financial, legal or other form of advice. You should not rely on this information as an alternative to financial, legal or professional advice from a qualified professional for your own particular situation. The answers are given in response to specific questions submitted by other users. You should not rely on this information alone to make (or refrain from making) any decisions.

Whilst effort has been taken to ensure the accuracy of the information, Turn2us does not accept any liability for this information. It is the responsibility of users to check the accuracy of relevant facts and opinions given as part of any answer before entering into any commitment based upon the information given.

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Date of publication: 31 March 2011