From 7 January 2013, a new income tax charge was introduced. It is payable if you have an individual income of over £50,000 and you or your partner get Child Benefit.
The amount of the charge will depend on how much over £50,000 your income is.
If your income is between £50,000 and £60,000, the charge applied to your income tax will be 1% of your Child Benefit for every £100 of income between £50,000 and £60,000. The income tax charge will never be more than the amount of Child Benefit you receive.
If your income is over £60,000 the charge will be equal to the full amount of your Child Benefit so you are no better off for receiving the benefit.
The amount of Child Benefit you can claim and receive is not affected. It can still be paid to you or your partner even if one of you will then be liable for the income tax charge.
You can decide not to receive Child Benefit if you or your partner do not wish to pay the new charge. You will remain entitled to Child Benefit, even if you choose not to have it paid. This is in order to protect your entitlement to national insurance credits, which will count towards your State Retirement Pension entitlement.
You can change your mind at any time, but the person who has an income above £50,000 will become liable for a charge when Child Benefit becomes payable again.
This new charge will affect single income and two income families differently:
If you are in a single income family where one person has earnings over £50,000 you will have to pay the new income tax charge if you get Child Benefit
If you are in a couple where both of you earn up to £50,000 (potential joint income of £100,000) you will not be affected
For more information, see the HM Revenue and Customs information on the Child Benefit income tax charge (link opens in a new window)
The Guardian has also published a useful guide to Child Benefit changes and what they mean(link opens in a new window)
The Department for Work and Pensions (DWP) is revising its appeals process for the benefits it administers. The aim is to make sure more appeals against DWP decisions are resolved without being referred to Her Majesty’s Courts and Tribunals Service (HMCTS).
The changes were introduced in April 2013 for Universal Credit and Personal Independence Payment cases and from October 2013 all other DWP administered benefits will use the new appeals process.
See October 2013 Appeals process changes for full details
The Government has introduced a cap on the amount of benefits a working-age household can receive, capped at the level of the average earnings of a working family.
This is being trialled in four London boroughs - Bromley, Croydon, Enfield and Haringey - with national roll out over the summer of 2013.
See our Benefit Cap information guide for further details
Benefits and tax credit rates
Most benefit rates will only be uprated by one per cent each April until 2015, as announced by George Osborne, the Chancellor, in his Autumn Statement 2012.
See the list of benefits rates for 2013-2014 published on the Parliament UK website (PDF file size 92.43kb opens in new window)
See Tax and tax credit rates/thresholds for 2013-2014 on the Gov.UK and HM Revenue and Customs website (PDF file size 100.73kb link opens in a new window)
Council Tax Benefit
Council Tax Benefit has been replaced by localised Council Tax Support. Local authorities have set up new schemes to support people in their own areas within a 10% reduced budget. This only affects people of working-age who currently receive Council Tax Benefit.
Disability Living Allowance (DLA) and Personal Independence Payment
DLA has started to be replaced with a new benefit called Personal Independence Payment (PIP) for people aged 16-64.
This involves the introduction of ‘objective assessments’ to decide eligibility. The stated intention is to target support on those most in need through this new benefit. The government is hoping for a 20% reduction in expenditure by 2017 by bringing in this process.
The first stage of PIP started in April with people who live in the north-east and north-west of England who are claiming for the first time. This is the area covered by Bootle Disability Benefits Centre (link opens in a new window).
If you do not live in one of these areas you will still be able to claim DLA until June 2013.
See the Turn2us Personal Independence Payment (PIP) information guide
Housing Benefit (HB) - Bedroom size criteria
In England, Wales and Scotland size criteria will apply in the social rented sector (e.g. council and housing association properties) replicating the size criteria that applies to Housing Benefit claimants in the private rented sector under the Local Housing Allowance rules. This means that people living in houses larger than they need (under-occupiers) will have to move to somewhere smaller or make up the difference in rent because their Housing Benefit will be reduced. There will be:
A 14% cut in the eligible rent used to calculate your Housing Benefit if you under-occupy by one bedroom
A 25% cut in the eligible rent used to calculate your Housing Benefit if you under-occupy by two or more bedrooms
See Turn2us Housing Benefit information guide for more details.
In Northern Ireland, bedroom size criteria remains subject to approval by the Northern Ireland Assembly and the Northern Ireland Executive. Until then, current arrangements will remain in place. See NI Direct website for more information (link opens in a new window) on potential changes to Housing Benefit from 2013
Housing Benefit - Local Housing Allowance rates
LHA rates will be increased in line with the Consumer Price Index instead of the market rents in each area. The connection with actual rents will be lost.
Crisis Loans when waiting for benefit claims to be processed will be replaced by Short Term Benefit Advances
Budgeting Advances will be introduced for Universal Credit claimants
Crisis Loans for other reasons and Community Care Grants are to be abolished. A budget will be passed to Local Authorities in England and the devolved governments in Northern Ireland, Scotland and Wales to set up their own local welfare provision schemes.
Any rise in income of £5,000 or more during the award year will be taken into account when finalising your Tax Credit award. Previously only income rises of £10,000 or more were taken into account.
The current complex system of working-age benefits and Tax Credits is to be replaced by a new benefit called Universal Credit. From April 2013, the Department for Work and Pensions, working with HM Revenue and Customs and selected local councils, will launch its Pathfinder project to introduce Universal Credit to claimants within certain areas of the North-West of England.
This “pathfinder” stage aims to ensure that Universal Credit is ready to go live across the rest of Great Britain later in 2013 and Northern Ireland in 2014.
See our Universal Credit information section
Personal Independence Payment
All new claimants aged 16-64 will have to claim Personal Independence Payment (PIP) instead of Disability Living Allowance from the 10th June.
From 1 July 2013 single job seekers in Wigan will be able to make a claim for Universal Credit instead of claiming Jobseeker's Allowance.
Single job seekers in Oldham and Warrington will be able to make claims for UC from 29 July.
To find out more about the UC roll-out see our Universal Credit timetable.
From 15 July local authorities with up to 275 households affected by the cap will begin the capping process.
From 12 August local authorities with 275 or more households affected by the cap will begin the capping process.
See the Benefit Cap information guide for details of which local authorities are within each stage.
Local Housing Allowance
From 1 September there will be changes to how and when local housing allowance (LHA) rates are determined.
Rent officers will determine LHA rates by using the lower of either:
The new LHA rates will be determined on 15 January 2014.
From then on the rates will be determined on 15 January each year - if that falls on a Wednesday - or the first Wednesday following 15 January if it does not.
Winter Fuel Payment
From 16 September there will be a requirement - already being applied following a European Court of Justice application - for people claiming Winter Fuel Payments from Switzerland and European Economic Area (EEA) countries outside the UK, to have 'a genuine and sufficient link' with the UK.
Appeals process changes
The Department for Work and Pensions (DWP) is revising its appeals process to make sure more appeals are resolved without being referred to Her Majesty’s Courts and Tribunals Service (HMCTS). The following changes will be introduced:
From 28 October 2013 if you receive a decision from DWP that you don't think is right, you will have to ask for a ‘mandatory reconsideration’ before being allowed to appeal. The aim is to resolve more disputes at an earlier stage and help ensure that people receive their correct entitlement earlier. If you want to appeal after the mandatory reconsideration you will need to send your appeal directly to HMCTS instead of DWP.
For more information see our Challenging decisions section
The current complex system of working-age benefits and Tax Credits is to be replaced by a new benefit called Universal Credit.
Starting from October 2013 Universal Credit will expand to 6 new Jobcentres by March 2014:
Hammersmith (from 28 October 2013)
Rugby (from 25 November 2013)
Inverness (from 25 November 2013)
All Jobcentres will move to the new Universal Credit commitment regime and access to digital services will be improved so that jobseekers will become used to claiming their benefit online.
See our the Turn2us Universal Credit information guide
Personal Independence Payment
From 28 October 2013 some people receiving DLA will have to claim PIP instead. This will apply to you if you are living in Wales, East Midlands, West Midlands or East Anglia and:
you notify DWP of a change in your care or mobility needs on or after 28 October; or
your existing award of DLA expires on or after 17 March 2014; or
you turn 16 years old on or after 7 October 2013 (unless you have been awarded DLA under the Special Rules for terminally ill people)
You could also choose to claim PIP instead of their DLA.
See our Personal Independence Payment (PIP) information guide
Housing Benefit and Universal Credit
Amendments to the size criteria rules for Housing Benefit and Universal Credit from 4 December 2013:
allow for an extra bedroom for a disabled child who is entitled to the middle or higher rate care component of Disability Living Allowance (DLA) if they would normally be expected to share a bedroom under size criteria rules but are unable to do so due to their disability;
for joint tenants, ensure that a bedroom is not treated as spare when it is occupied by another joint tenant’s overnight carer or child of a qualifying parent or carer; and
allow for an approved foster carer who is a single person under 35 to be exempt from the definition of a 'young individual' for the shared accommodation rate.
When considering whether a child’s disability makes it unreasonable for them to share a bedroom, the factors a local authority should consider include -
whether the child is currently sharing a bedroom without difficulty;
whether the frequency and nature of any overnight care causes prolonged and/or repeated disruption to another child;
whether the nature of the disability increases the likelihood that the child may behave disruptively during the night;
whether sharing a bedroom poses a risk of physical harm to either child; and
how long the situation is likely to last - to qualify for an extra bedroom the inability to share would be expected to be long term.
Local authorities will now need to review all cases awarded under previous guidance to see whether or not reassessment is required due to these amendments.
If the disabled child is not in receipt of middle or high rate care component of DLA but is still unable to share a bedroom due to disability, the Local Authority should consider whether a Discretionary Housing Payment award is appropriate.
See the Turn2us Housing Benefit information sheet for more details.
Habitual Residence Test
The government has announced the introduction of a new, 'improved' habitual residence test to be rolled out in Jobcentres in England, Scotland and Wales this week (w/c 16 December).
Claimants will have to answer more individually-tailored questions, provide more detailed answers and submit more evidence before having their claim accepted. They will also be asked about what efforts they have made to find work before coming to the UK and whether their English language skills will be a barrier to them finding employment.
The new test is part of a range of reforms around 'migrant access to benefits' which will come in over the next year including:
time-limiting new Jobseeker's Allowance (JSA) claims made by European Economic Area (EEA) jobseekers and retained workers to 6 months unless they can demonstrate they are actively seeking work and have a genuine prospect of work;
EEA jobseekers will be unable to access JSA until they have been resident in the UK for 3 months;
introducing a test to check that someone isn’t claiming to have a job, or be self employed to access benefits.