Factsheet: Tax Credits and Benefits

November 2006

Benefits law is complicated; this factsheet aims to give examples of what benefits are available to families in and out of work. Everyone's circumstances will be different, so it is important to take specialist advice before making any decisions.

Not all benefits are included here, and this is just an outline of the eligibility rules for benefits. For more details see www.adviceguide.org.uk or call into your local Citizens’ Advice Bureau.

If you have come to this country from abroad you may not be able to claim all the benefits listed; you must seek advice before you apply.

Introduction

The biggest change to the benefits system in recent years is to put large parts of it under the control of Her Majesty’s Revenue and Customs (HMRC, previously the Inland Revenue). Most people with children will be able to claim financial help from HMRC. Many people will be in a situation where they are making claims to both HMRC and the Department for Work and Pensions.

Since the introduction of the new tax credit system in 2003, money for children is now usually paid through Child Benefit and Child Tax Credit. If you are currently receiving Income Support or income- based Jobseekers Allowance which include amounts for children you will be moved onto Child Tax Credit for your children at some point, but this has not yet been confirmed. Providing you still meet the conditions, you will carry on getting Income Support or income-based Jobseeker’s Allowance for yourself. The amount of money you get in total will not be affected.

Child Benefit

Child Benefit is administered by the Child Benefit Office, part of HMRC. It is paid to people who are responsible for a child under 16, or a young person over 16 and under 20 if in full time non advanced education, or certain types of approved training, which the young person started before they were 19. Full-time education means 12 hours or more a week supervised study up to A Level or NVQ Level 3. Training which a young person can do whilst somebody continues to get Child Benefit for them includes the Modern Apprenticeships scheme and similar programmes. The person responsible for the child does not have to be the parent, but note more than one person cannot claim Child Benefit for a child at the same time. A person who receives child benefit for a child under 16 will automatically receive "Home Responsibilities Protection" which will help you meet the conditions if you claim benefits based on national insurance contributions, for example, retirement pension.

Child Benefit is paid at the rate of £17.45 per week for the eldest child and £11.70 for any younger children. There is a lone parent rate which was abolished for new claimants from 6 July 1998, although some people may still receive it.

If you have twins the first twin to be born is the elder child. You can only receive the higher rate of Child Benefit for one child.

Child Benefit is the simplest benefit we have, and also the one with the highest take up rate. However, if you have come to this country from abroad and there are conditions on your right to be here, you may not be able to claim – you will need to seek advice about this.

Claiming Child Benefit is usually straightforward. You receive a claim form in your Bounty Pack when you have a baby or you can call the Child Benefit Office on 0845 302 1444. You can also claim online via the HMRC website. There is more information about claiming Child Benefit for a new child in our leaflet ‘What to claim for a new child’.

Guardian's Allowance

Guardian's Allowance is paid to the guardians of children who cannot be looked after by their parents because :

• Both the child’s parents have died
• One of the child’s parents has died and the whereabouts of the other is unknown and was unknown at the time of the death
• One of the child’s parents has died and the other is serving a jail term for at least 2 years or is detained in a hospital by order of the court.

Guardian's Allowance is currently paid at £12.50 per week. You will usually be entitled to Child Benefit for the child as well.

Like Child Benefit, Guardian’s Allowance is administered by the Child Benefit Office, or you can ask about it at your local Jobcentre. You can also download a Guardian’s Allowance claim form from the HMRC website.

Tax Credits

Introduction

Over 6 million families in Britain are entitled to Tax Credits. Working Tax Credit and Child Tax Credit are administered by the Tax Credit Office, part of Her Majesty’s Revenue and Customs (HMRC). Child Tax Credit replaces amounts for children in most means tested benefits (see above). Working Tax Credit is designed to top up a working household’s income and help with childcare costs (although this is limited, see below).

You may qualify for just Child Tax Credit, just Working Tax Credit, both together, or neither, but both use the same form and an application for one is an application for both.

Single people must claim on their own whereas couples must claim as a couple, with both their incomes taken into account. If you change your partner, become single or become a couple you must tell the Tax Credit Office within 3 months as this will end your old claim and start a new one. You must also make a fresh claim if your partner leaves the UK for more than 8 weeks (12 weeks in certain circumstances), or if you or your partner lose the right to stay in the UK. If you don’t report the change in time, you may have to pay a penalty (there are also other changes which it is compulsory to report – see below).

Child Tax Credit

Child Tax Credit is available to people responsible for one or more children, or young people under 20 in certain types of education or training. The definition of children, and the young people who qualify, are the same as for Child Benefit. From November 2006, if you stop being responsible for a child or young person, or they stop qualifying (for example because they leave school), you must report this to the Tax Credit Office within three months or you may have to pay a penalty.

There are four potential elements of Child Tax Credit:

1) Family element

This is available to all families and the amount will not be reduced until household income reaches £50,000. The standard family element is currently £545 a year, equivalent to about £10.50 per week. There is a higher rate paid to families with a baby of under one year. This is £1090 a year, or around £21.00 a week. Your tax credit award notice may state the family element as a different amount (eg £547.50 for the standard family element). This is because of the way tax credits are worked out; it does not mean you are getting more than the family element.

2) Child Element

This is a figure paid per child, so if you have five children your maximum award will include five child elements. Note that there is only space on the form for three children; you can get extra sheets from the Tax Credit helpline.

This is currently £1,765 per year, approximately £33.88 per week

3) Disabled Child Element

This is paid per child. It is for children who receive DLA, or would be paid DLA if they were not in hospital; or who are registered blind or were taken off the blind register in the last 28 weeks. It is paid in addition to the child element.

This is currently £2,350 per year or £45.08 per week.

4) Severely Disabled Child Element

If you have a child who receives the highest rate care component of DLA you can claim this as well as the child and disabled child elements.

This is currently £945 per year or £18.13 per week

Working Tax Credit

Working Tax Credit is available to certain people who work more than 16 hours a week. The categories of people are

• people responsible for a child
• people with a disability which puts them at a disadvantage in getting a job
• people over the age of 50 who have been receiving certain benefits

In addition to these, people who are over 25 and work more than 30 hours a week may qualify.

From November 2006, if you stop working at least 16 (or 30) hours, you have to tell the Tax Credit Office within three months, otherwise you may have to pay a penalty.

Like Child Tax Credit, Working Tax Credit is made up of different elements. These are:

1) Basic Element

Anyone who qualifies for Working Tax Credit will qualify for the basic element

This is currently £1,665 per year or about £31.99 per week.

2) Second Adult Element/ Lone Parent Element

This is an element for lone parents or couples (except couples who only qualify through the 50+ route where neither of them works more than 30 hours, and they are not responsible for a child or qualifying young person or disabled)

This is currently £1,640 per year or about £31.50 per week.

3) 30 hour element

If a claimant works 30 or more hours per week they can receive this. Couples who are responsible for a child or qualifying young person can add up their hours, but only if one of them works at least 16 hours. For example, if you and your partner each worked 15 ½ hours you would not qualify.

This is currently £680 per year or about £13.09 per week.

From November 2006, you must tell the Tax Credit Office within three months if you/your partner stop working at least 16 hours a week or you are no longer working at least 30 hours in total, or you may have to pay a penalty.

4) Disability Element

This is available if the claimant has a disability which puts them at a disadvantage in getting job, and is or was getting certain benefits for disability. The disabled adult must be working at least 16 hours per week.

This is currently £2,225 per year or about £42.70 per week.

5) Severe Disability Element

This is available if a claimant receives DLA Higher Rate Care or the higher rate of Attendance Allowance. It can still be paid if payment of these benefits has stopped because the claimant is in hospital. It can be paid on top of the disability element, or on its own. (For this element, the disabled person does not have to be working). This is currently £945 per year or about £18.13 per week.

6) 50+ Return to work Element

This is available to people who are over 50 and are returning to the job market after at least 6 months on qualifying benefits. Two rates are available, one for those working 16 - 29 hours per week, and a higher rate for those working 30 or more hours.

For 16 - 29 hours this is currently £1,140 per year or about £21.91 per week.

For 30 or more hours this is currently £1,705 per year or approx £32.76 per week.

7) Child Care Element

Families using registered or approved childcare may be able to get some of the costs back through Working Tax Credit, depending on their income. The rules for the childcare element are as follows:

• Childcare costs can be claimed for children up to the end of the week including 1st of September following their 15th birthday, or the 1st of September following their 16th birthday if the child is registered blind, or has been taken off the blind register within the last 28 weeks, or you receive Disability Living Allowance for the child (including where Disability Living Allowance has been suspended because the child is hospital).
• The childcare must be registered or approved and not provided by a close relative if it is being given in your own home.
• If it is a one-parent household the parent must work 16 hours or more. If there are two adults both must work 16 hours or more unless one is incapacitated, in hospital or in prison.
• The maximum childcare costs taken into account are £175 a week for one child or £300 a week for more than one child (2006/7 rates).
• The maximum award is 80% of what you pay or 80% of the maximum childcare costs, whichever is lower. This means the most help you can get is £140 a week for one child or £240 for two or more children.
• If you stop using childcare for at least 4 consecutive weeks you must tell the Tax Credit Office. There is a penalty for not disclosing this within three months of the change. You will be treated as not using childcare for that time. If your childcare follows a pattern, such as term time only, you can claim for an average, see below.
• If your average childcare costs reduce by £10 or more per week for at least 4 consecutive weeks you must tell the Tax Credit Office within three months of the change, as there is a penalty for not disclosing this. Reductions of less than £10 a week, or reductions which do not last for at least 4 weeks, do not affect your childcare element. Similarly, increases of less than £10 a week or which last for less than 4 weeks do not affect the childcare element. You do not have to report increases, but if an increase is at least £10 a week and lasts for at least 4 consecutive weeks you should report it within three months of the start of the increase to make sure you get all the money you are entitled to.
• If you use Childcare Vouchers take the amount of the vouchers away from your total cost of childcare (but the value of the vouchers will not count as income).
• The amount you will actually get will depend on your household income.
• If your childcare costs are not the same every week you may have to average them, see below.

Registered or approved in home care

It is possible to have in home care which is registered or approved so you can claim back some money from Tax Credits, as long as the care is not provided by a close relative of the child. For more information on this see our Childcare factsheet.

Income

Unlike most other benefits, Tax Credits use gross (before deductions) figures to work out your income. As a general rule only taxable income (including some benefits) is counted and capital is ignored completely. Some income can be disregarded, for example the first £100 a week of Statutory Maternity Pay. Check with the Tax Credit Office if you have income which comes from sources other than employment.

 

Calculation

The calculation for tax credits is very complicated; to do it properly you have to work out daily rates. The Working Families helpline can give you an estimated figure over the phone, as well as telling you what that figure would be in different circumstances. Below are some examples of tax credits calculations.

Jessica is a lone parent with one child, Karl, who is 4. Karl receives Disability Living Allowance component at the highest rate. Jessica is self employed as a hairdresser and works around 32 hours a week. Last tax year she earned £8000. Karl goes to a private nursery which costs £350 a week.

The elements of tax credit she is entitled to are:

Child Tax Credit Family Element - £545
Child Element - £1765
Disabled Child Element - £2350
Severely Disabled Child Element - £945
Working Tax Credit Basic Element - £1665
Lone Parent Element - £1640
30 Hours Element - £680
Childcare Element - £7280 (see above for examples of how the childcare element is calculated)
Maximum Award = £16870

Her threshold is £5220. £8000 - £5220 = £2780. 37% of £2780 is £1028.60, this is the amount the maximum award will be reduced by so her actual award will be £16870 - £1028.60 = £15841.40 per year

Ceri and Ioan both work part time, Ceri works 15 hours a week and Ioan works 10. They have two children called Samantha and Daniel who are 6 and 8. Their household income is £15000 per year.

As neither of them work 16 hours per week, they do not qualify for Working Tax Credit, just for Child Tax Credit. Their maximum award is

Family Element £545
Two times the Child Element £3530
Maximum award is £4075

Because they do not qualify for working tax credit, their threshold is £14155. £15000 - £14155 =£845. 37% of £845 is £312.65. £4075 - £312.65 is £3762.35, their actual award for the year.

Mike and Eileen have two children who are in their teens. They both work 35 hours per week and earn £30000 between them.

The elements they are entitled to are

Child Tax Credit Family Element £545
Two times the Child Element £3530
Working Tax Credit Basic Element - £1665
Second adult element - £1640
30 Hours Element - £680
Maximum award £8060

As they are entitled to Working Tax Credit, their threshold is £5220. £30000 - £5220 = £24780. 37% of £24780 is £9168.60. This is more than £8060, so at first it looks like they get nothing. However, the family element doesn't taper until household income reaches £50000, so they will just get the family element of £545 per year.

Problems

Changes in circumstances

It is always a good idea to report all changes of circumstances which affect your maximum award (see tax credit elements described above) to the Tax Credit Office as soon as possible, and make a note of the date and time you rang and what was said. Reporting changes should reduce problems with overpayments (see below), and make sure you get the right amount for your circumstances. Changes which increase your tax credits (eg having another child) can be backdated by three months, so you should not lose any money if you report it within three months of the chance. Changes which decrease your tax credits (for example, no longer getting Disability Living Allowance) always take affect from the date of the change, so you should try to report them as soon as possible to avoid being overpaid.

Remember that changes in income do not have to be reported until after the end of the tax year, but it is a good idea to tell the Tax Credit Office if:

• you want your tax credits to be based on the current tax year’s income because this is lower than the previous tax year (remember not to underestimate your income for the rest of the tax year)
• you have already given an estimate for the current tax year, but realize it was too low (report this as soon as possible to keep the overpayment to a minimum)
• your income has increased and your current tax year’s income is going to be more than £25,000 higher than the previous tax year (report this as soon as possible to keep the overpayment to a minimum).

Changes which it is compulsory to report

You must report the following changes or you may be asked to pay a penalty as well as being overpaid:

• change in relationship status (you split up with someone or move in together, or your partner dies – see ‘What is a couple’ above)
• your or your partner leave the UK for more than a few weeks, or lose the right to stay in the UK
• your childcare costs stop or go down by £10 a week or more for at least four weeks in a row. You can report this change in advance if you know about it beforehand
• you stop being responsible for a child you are claiming for (eg because they move out)
• one of the children you are claiming for stops counting as a child (eg because they leave school or approved training)
• you or your partner stop working for 30 hours or more a week, or your combined hours with your partner fall below 30 hours a week (see 30 hour element of Working Tax Credit)
• you or your partner stop working for 16 hours or more a week.

You should report any of these changes within 3 months of knowing about it to avoid a penalty, but you could still be overpaid unless you report the change as soon as possible.

You should also report any changes which could affect payment of your award, for example, changes in your address or bank account details. Penalties can be imposed for giving HMRC incorrect information or failing to comply with their requirements to provide information.

Overpayments

Below is an explanation of how the Tax Credit Office treats overpayments - where they have paid you more Tax Credits than you should have had. Until November 2006, they treated overpayments discovered during the tax year differently to overpayments at the end of a tax year.

If you have had your award changed because of either type of overpayment you should speak to a specialist benefits adviser.

The Tax Credit system works out an annual award, unlike the rest of the benefits system which tends to award on a weekly basis.

Overpayments are most likely to occur because the award is based on last tax year's income, and then usually adjusted at the end of the tax year (although you can ask for tax credits to be adjusted based on the current tax year’s income if you know it is going to be much lower or over £25,000 more than last year). If your income is over £25,000 more than the previous tax year then you will have been paid too much. This could also happen if your tax credits are based on an estimate of current year income which turns out to be too low. Overpayments can also occur because you stop being entitled to an element and your award is not adjusted immediately, for example, if one of your children leaves school at 16. Or the overpayment could be because the Tax Credit Office are using wrong information about your income or your circumstances – so you should make sure that you keep them up to date and notify them about changes. But even if you report all changes in circumstances as soon as you can, there will still be an overpayment if the Tax Credit Office does not adjust your award until after the change has happened.

In-year overpayments

In-year overpayments mean overpayments discovered during the tax year, for example when you report a change in circumstances.

If you have an in-year overpayment then until November 2006, the Tax Credit Office could stop or reduce your tax credit payments to try to avoid there being an overpayment at the end of the tax year. There was no limit on how much the Tax Credit Office could take off your award in order to make sure there was no overpayment at the end of the tax year, although you could ask for additional payments if this caused you hardship (which would mean you paid back the overpayment more slowly). From November 2006, there are maximum amounts they can deduct from your award (see box below).

End of year overpayments

At the end of the tax year the Tax Credit Office will compare what your award was based on with what actually happened in that tax year, and they will decide whether the award should be based on that tax year’s income or the previous tax year. If your income was less than the amount used to calculate your tax credits during the tax year, they may owe you money, but if it was more you may have been overpaid. End of year overpayments are recovered by making standard maximum deductions from your award, depending on your circumstances.

Housing and Council Tax Benefit

Housing benefit is to help pay for rent. If you have a mortgage you may be able to get some help with the interest payments through Income Support, income based Jobseeker’s Allowance or Pension Credit, although this is beyond the scope of this factsheet. Council Tax Benefit is to help with paying Council Tax in a home where you live, whether you are renting or own the property.

Housing benefit and council tax benefit is worked out in three stages.

First you work out the maximum Housing Benefit or Council Tax Benefit you could be paid. This is not always all your rent for Housing Benefit. There are rules about the size of home you can be paid housing benefit for and there are also rules about how much rent housing benefit will cover. If the housing benefit officer thinks your rent is too expensive your maximum benefit will be restricted as if you were living in a cheaper property. This is worked out locally so will depend on the area you live. In addition to this, some of your rent might be for heating or electricity, or a service charge. These things will not be paid for by Housing Benefit. Both Council Tax Benefit and Housing Benefit may also be reduced if an adult lives with you who is not your partner or someone who pays rent to you, for example, an elderly relative or grown up son or daughter.

The next step is to work out your "applicable amount". This is a figure based on your circumstances and whether you have a partner and/or children who live with you.

You then work out your income. This includes your net (after deductions) earnings (some of which will be disregarded, depending on your circumstances) and the amount you get from benefits (although some such as Disability Living Allowance and Guardian's Allowance are ignored). If you have a dependant child with earnings these will also count. Some other income can be disregarded. Childcare costs can be deducted from your earnings to a certain extent. The rules about what childcare is eligible are very similar to the childcare element of Working Tax Credit (see above).

If your income is less than your applicable amount then you will get the maximum Housing Benefit payable (although it still may not cover all your rent), or the maximum Council Tax Benefit. If your income is more than your applicable amount, your Housing and Council Tax Benefit will be reduced by a proportion of the difference, 20% for Council Tax Benefit and 65% for Housing Benefit. So if you earn £10 over the "applicable amount" you will get £2 less Council Tax Benefit and £6.50 less Housing Benefit.

If you receive Income Support, Income Based JSA or the guarantee credit of Pension Credit you will receive maximum Housing and Council Tax Benefit, so only stage one of the calculation applies.

People who live in one adult households receive a rebate of 25% off their council tax – you just have to tell the local authority that you live alone. If you live with an adult who is not your partner, is on a low income or claiming Income Support, income-based Jobseeker’s Allowance or Pension Credit, and they do not pay you rent, you may be able to apply for a ‘second adult rebate’. This means that if you qualify, your council tax is reduced by a certain percentage. To claim this, you need to give details of the income of the ‘second adult’, so you will have to ask them if they are on benefits or how much they earn. If you are entitled to second adult rebate and Council Tax Benefit, the local authority should award you whichever gives you the greatest reduction in your council tax.

If you are entitled to any Housing Benefit or Council Tax Benefit, but it is not enough to cover your rent and/or council tax, you may be able to apply for additional help from the local authority called discretionary housing payments. However, you won’t necessarily get this help as it depends on your circumstances and how much money the local authority has which is intended for the payments. You should give as much information as you can about how the problems with your housing costs affect you. You can’t get discretionary housing payments on top of second adult rebate unless you would be entitled to Council Tax Benefit if you didn’t get the rebate.

Example

Mark is a single parent of two children, who works 30 hours per week. His net income is around £225 per week. He has childcare costs of £70 per week, for the after school club. He receives £136.77 in Tax Credits and £29.15 in Child Benefit. £39.90 of his income can be disregarded as he is a lone parent and works more than 16 hours a week. In addition to this his £70 childcare costs can be deducted. His income for Housing Benefit purposes is £281.02.

His applicable amount is £57.45 for himself, as a lone parent over 18, £45.58 for each of his two children and a family premium at the lone parent rate of £22.20. His applicable amount is £170.81.

His income is £110.21 over the applicable amount. 65% of £110.21 is £71.64.

Mark's rent is £125 per week, £5 of which is service charge. His maximum Housing Benefit is £120. £120 – 71.64 is £48.36. He will receive £48.36 Housing Benefit per week.

His council tax liability is £11 per week. He will have the same applicable amount and income as for Housing Benefit, so the excess will still be £110.21. 20% of £110.21 is £22.04. This is more than his weekly council tax liability, so he will not get any Council Tax Benefit.  

Disability Living Allowance and Attendance Allowance

Disability Living Allowance and Attendance Allowance are non contributory benefits (so your National Insurance record doesn't matter), and are also non means tested, so your income is not taken into account.

Disability Living Allowance is paid to people under 65, including children, Attendance Allowance is paid to those 65 and over.

There are two components of DLA, Mobility and Care. The mobility component is paid to people who have trouble walking and is paid at two levels, Higher and Lower.

Higher mobility rate is paid to those unable or virtually unable to walk outside due to a physical condition. The rules about what "virtually unable to walk" means are beyond the scope of this factsheet; you should speak to a benefits adviser who specialises in this area.

The Lower rate is paid to those whose physical or mental impairments are so severe they cannot walk outside without guidance or supervision from another person most of the time. Again it is beyond the scope of this factsheet to go into details, but note that the test ignores ability on familiar routes.

The care element is paid to those who need help in looking after themselves.

There are three levels of Care component, Higher, Middle and Lower.

Lower Rate is paid to:

those who need attention from another person for a significant portion of the day because of their bodily functions. A significant part of the day is usually taken to mean an hour, but can be made up of lots of shorter periods or shorter spells of concentrated activity.

those who are 16 and over and cannot prepare a cooked meal for themselves given the ingredients because of a mental or physical impairment. This is known as the cooking test. The meal is a meal for one on a traditional cooker (ie not microwave) using fresh ingredients, not reheating or boil in the bag. This is a test of whether you are physically and mentally able to cook for yourself, and assumes you are willing to learn to cook if you don't know.

Middle Rate is paid to people who, because of a physical or mental impairment, need:

Frequent attention from another person throughout the day in connection with bodily functions, or

Continual supervision throughout the day in order to avoid substantial danger to themselves or others, or

Prolonged or repeated attention at night, in connection with your bodily functions, or

Another person to be awake at night to watch over them to avoid substantial danger to themselves or others.

Higher Rate is paid to people who are:

Terminally ill, or

Require frequent attention from another person throughout the day in connection with bodily functions or continual supervision throughout the day in order to avoid substantial danger to themselves or others, and

Require prolonged or repeated attention at night, in connection with their bodily functions or another person to be awake at night to watch over them to avoid substantial danger to themselves or others.

Attendance Allowance is paid at two rates, Higher and Lower. The disability conditions for these are the same as for Higher and (confusingly) Middle rate Care Component DLA

DLA and AA stop if you are in hospital for 28 days, or after 12 weeks if you are a child under 16.

It is recommended that you get advice from a Citizens Advice Bureau or disability support group before filling out the forms for DLA and AA as they are very complicated.

Carer's Allowance

Carer's Allowance is paid to people who are 16 or over and are providing 35 hours a week of care to someone receiving the higher or middle rate care components of DLA, or any rate of AA. You cannot take an average of two or more weeks to make up 35 hours a week; you have to be actually caring for 35 hours a week in each week for which you claim. You also can't add together periods of care for different people, for example if you look after your aunt for 20 hours a week and your neighbour for 15 hours a week you would not qualify. If you gave your aunt 35 hours a week of care you would qualify, no matter how much care you gave your neighbour.

You do not have to be related to the person you care for.

You cannot be gainfully employed, that is, earning more than £84 per week, although your earnings are ignored if you are on a break from caring or the person you care for is in hospital.

You cannot claim Carer's Allowance if you are in full time (21 hours or more) education.

You continue to get Carer's Allowance if you have been caring for the person for at least 22 of the past 26 weeks. This means that in any 6 months you can have a break of up to 4 weeks as long as you have already been caring for 22 weeks before that.

If you have been caring for at least 14 weeks, and you or the person you care for goes into hospital, you can continue to claim Carer's Allowance for 12 weeks. If the person you are caring for dies you continue to get Carer's Allowance for 8 weeks, as long as you still meet the other requirements (e.g. not earning more than £84 per week etc.)

Carer's Allowance is non means tested so it doesn't matter how much anyone else in your house earns.

Carer's allowance is paid at £46.95 per week. If you have an adult dependent you may be able to get an extra £28.05. You may also be able to claim Income Support, see below.

Incapacity Benefit and Statutory Sick pay

Normally if you are an employee then for the first 28 weeks you are ill you will receive Statutory Sick Pay. To receive SSP you must have had earnings of at least the Lower Earnings limit (£84 a week in the tax year 06/7). SSP is administered and paid by your employer (although they can get some money back from HMRC). If you leave your job (unless you have been sacked by your employer purely to avoid paying SSP), or you have been sick for longer than 28 weeks, you will no longer receive Statutory Sick Pay but you may be able to claim Incapacity Benefit (see below).

Statutory Sick Pay is currently £70.05 per week

Incapacity Benefit is paid to people who are incapable of work and are either not in paid work, or have been sick for more than 28 weeks (unlike Statutory Sick Pay, see above). It is contribution- based so usually depends on your national insurance contributions record (there are exceptions for some people who have been incapable of work since they were young, see a specialist benefits adviser for details).

How much you will get depends on your age and how long you have been incapable of work. If you live with an adult dependant you may be able to get more, depending on how much the dependant earns.

For the first 196 days of claiming Incapacity Benefit you need to prove you are incapable of work by sending in medical certificates from your doctor. After 196 days you will be given a "personal capability assessment". This will look at whether you are capable of working and will usually involve a medical examination.

If you are pregnant and within six weeks of the expected week of childbirth, you can be treated as automatically incapable of work. This allows you to get incapacity benefit if you are not entitled to statutory maternity pay or maternity allowance (see our Maternity Leave and Pay factsheet for more details about these benefits). You still have to meet the contribution conditions. You can carry on getting Incapacity Benefit for 14 days after you have the baby.

There has been a lot of press coverage about potential changes to Incapacity Benefit which would replace it with a different benefit with rules that mean some claimants would have to agree to look for work or have their benefit reduced. However, these changes are not due to come in until 2008, and people who are already claiming when the rules change will stay on their existing benefit at a protected level.

There are many rates of incapacity benefit and a full explanation is beyond the scope of this factsheet. For more details speak to a specialist benefits adviser.

Jobseeker's Allowance

Jobseeker’s Allowance is a benefit for people who are expected to look for work. If you do not have to look for work (for example, if you are a single parent), you should check whether you can claim Income Support instead.

To claim Jobseeker's Allowance you must satisfy the "Labour Market Conditions". These are:

• You are available for work
• You are actively seeking work
• You have a current "Jobseeker's Agreement"

The rules about being available for work are beyond the scope of this factsheet but will be detailed in your Jobseeker's Agreement. If you have a dispute about this you should see a specialist benefits adviser.

You must not work 16 or more hours a week or be a full time student. You must be below state pension age and you can't get JSA if you are receiving Income Support.

Contribution-based

Contribution-based JSA is for people who have sufficient national insurance contributions. It is paid to individuals and is not means tested in the same way as means-tested benefits, although it can be affected by certain payments like occupational or personal pension payments, earnings from a part-time job, and some payments you may get when a job ends, such as pay in lieu of notice. Your partner's earnings will not be taken into account. It is paid for 6 months. So, for example, if you have just lost your job but you have been working for a while, you are may be entitled to contribution-based JSA.

Income-based

Income-based JSA is paid to those seeking work who do not have sufficient NI contributions for contribution-based JSA or have used up their 6 months contribution-based JSA. It can also be paid on top of contribution-based JSA, for example if you have a partner and your income including contribution-based JSA is not as much as income-based JSA for a couple.

It is worked out in the same way as Income Support (see below).

The conditions for income-based Jobseeker's Allowance are stricter than for Income Support or Pension Credit, so if you can claim one of these benefits instead, you should – for example, you won’t have to attend the Jobcentre regularly for these benefits.

Income Support

Income Support is available to various groups of people who are not expected to be available for work and look for work as a condition of getting benefit. For the purposes of this factsheet we will concentrate on which parents and carers can claim Income Support, but please be aware there are other circumstances where it can be claimed, such as if you are incapable of work because of illness or disability. See a specialist benefits adviser for more details.

Income Support cannot be claimed if you work 16 or more hours a week. If you do work 16 or more hours a week, you may be able to get help through Working Tax Credit. Similarly, if your partner works 24 hours or more per week you would have to claim through WTC, not Income Support. Usually you are not allowed to claim Income Support if you are studying full time, although there are limited exceptions.

One category of people who may be able to claim Income Support are lone parents. You must have a child under 16 who lives in your household. In addition, if you are fostering a child under 16 and are not a member of a couple you may be able to claim.

If you are normally part of a couple and your partner is temporarily out of the UK you are counted as a lone parent.

If you are taking parental leave and receive no pay for it from your employer, you can claim Income Support if you were entitled to Working Tax Credit or Child Tax Credit of more than the Family Element (see above), Housing Benefit or Council Tax Benefit before the leave began. If you are taking parental leave, you must live in the same household as your child or children to use this route.

If you are taking paternity leave you can claim Income Support either if you get no payment from your employer OR if you were entitled to Working Tax Credit, Child Tax Credit of more than the family element, Housing Benefit or Council Tax Benefit before the leave began. However, if you do get Statutory Paternity Pay (SPP), you can only get Income Support on top if your SPP and other income is less than the amount of Income Support for your circumstances.

If you are looking after your partner or child while they are temporarily ill and they normally live with you, you may be able to claim Income Support. If you are looking after a child under the age of 16 because the person who normally looks after them is temporarily away or ill you may also be able to claim.

If you are a carer who cares regularly and substantially for someone who receives or is claiming Attendance Allowance, or Disability Living Allowance care component at the highest or middle rate, or if you yourself receive Carer's Allowance, you will be able to claim Income Support. However, if you get Carer’s Allowance, this will be taken into account as income when your Income Support is worked out.

If you are incapable of work because of pregnancy you may be able to claim Income Support. This could apply at any stage of your pregnancy. Also, if you are pregnant and there are 11 or fewer weeks before the birth you may be able to claim (in this case you don’t have to show you are incapable of work). You can claim Income Support for this reason up until 15 weeks after the birth. So, for example, if you cannot claim Statutory Maternity Pay, Maternity Allowance or Incapacity Benefit around the time of your baby’s birth, or if you usually claim income-based Jobseeker’s Allowance, you can claim Income Support instead for this period. For more information about maternity rights see our Maternity Factsheet.

If you do not fall into any of the categories of people who do not have to be available for work there may be something else you can claim, for example income-based JSA (see above).

Example

June is a single parent claiming Income Support. Amounts for her 2 children are paid through Child Tax Credit. As a lone Parent over 18 her personal allowance is £57.45. She does not qualify for any premiums. She works a few hours a week for which she gets paid £30 net (after deductions). She gets £15 per week child support from her ex husband (under the 3 March 2003 child maintenance rules), and has £2900 savings.

£20 of her earnings from work are disregarded so her earnings are deemed to be £10. Similarly, £10 of her child support is disregarded, so that is deemed to be £5. Her savings are below £6000 and so ignored. Her income for the purposes of calculating Income support is £15 per week. She will therefore get £42.45 per week Income Support.

If you are over 60 you may be better off claiming Pension Credit (see below).

Income Support and income-based Jobseeker’s Allowance and other benefits

Income Support and income-based Jobseeker’s Allowance act as a "passport" to other benefits, such as free school meals, or free vitamins if you are pregnant. If you are on Income Support or income-based Jobseeker’s Allowance and have children you will get maximum Child Tax Credit. It is worth thinking hard about how much these additional benefits are worth to you before you make any decisions about leaving benefits for work. If you want to talk this over ring the helpline on 0800 013 0313, or if you are a lone parent, you could get help from a New Deal for Lone Parents adviser based in your local Jobcentre Plus office.

Your Income Support or income-based Jobseeker’s Allowance may be reduced for various reasons, these include refusing to apply for Child Support (if you are apart from the child's other parent) or refusing to go to a work focused interview.

If your benefits are stopped or reduced you should see a specialist benefits adviser straight away.

Sure Start Maternity Grant

The Sure Start Maternity Grant is available to people who receive (or will receive):

• more than the family element of Child Tax Credit,
• Working Tax Credit including a disability or severe disability element,
• Pension Credit,
• Income Support, or
• Income Based Jobseeker's Allowance.

If you would receive these benefits but are too young to claim them, a member of your family can claim the grant on your behalf.

It is available to people who have given birth, adopted a child younger than 12 months old at the time of the claim, or have been granted a parental order if having a child through a surrogate mother. Following a court case, if you have a residence order for a child, you may also be able to claim a maternity grant.

You must have received health and welfare advice from a health professional, usually your health visitor, midwife of doctor. They have to sign the back of the form to certify this.

You must claim within 11 weeks of the expected week of childbirth or within 3 months of the birth, adoption or parental order or residence order.

The Sure Start Maternity Grant is currently £500 per child. There is more information in our leaflet ‘what to claim for a new child’.

Other Social Fund Payments

The Social Fund makes two types of payment, regulated and discretionary.

The Sure Start Maternity Grant (see above) is an example of a regulated social fund payment, others are funeral expenses payments, cold weather payments and winter fuel payments. Regulated payments have rules about who is eligible, and if you meet these conditions then you will always get the payment. You don't have to pay regulated payments back.

Discretionary payments are different to most other benefits in that there is no legal entitlement or right to appeal, they depend on the priority of your needs. This is decided by an officer at your local Jobcentre Plus. In addition they are budget limited, so if your local office has used up its budget you will not get anything.

Discretionary payments include Community Care Grants, Budgeting Loans and Crisis Loans. As the names suggest, Budgeting and Crisis Loans have to be paid back. They are paid back by deducting an amount from your weekly benefit.

Community Care Grants are grants to help people live independently in the community, but they can only be paid in certain circumstances. These include helping someone who has left residential or institutional care to set up home in the community, or helping prevent them going into care, or in some cases helping people who have been homeless. They can also be paid to ‘ease exceptional pressures’ on you and/or your family. This is a very wide category. You should think about what would happen if you did not get the help, for example, would there be a risk to health? Community Care Grants can also be paid for certain travel expenses, for example to visit someone who is ill or attend a relative’s funeral. You can get more information about when you can apply for a Community Care Grant from other advice agencies like the Citizens Advice Bureaux. Community Care Grants do not have to be paid back, so it always a good idea to ask for one of these first if you can.

Budgeting Loans are to help people who have been on Income Support, income based Jobseeker's Allowance or Pension Credit for more than a few months. They can only be paid for certain types of one-off expenses; categories include furniture, clothes, rent in advance to secure accommodation and expenses you might have with looking for or going back into work. You must be able to repay the loan.

Crisis Loans are to help you if you do not have the resources to meet your family’s immediate short term needs. You do not have to be on benefit. They can usually only be paid if you have expenses because of an emergency or a disaster, and the Crisis Loan is the only way to prevent serious damage or serious risk to health. The only other time you can apply for a Crisis Loan is if you are getting a Community Care Grant when you leave care and you need rent in advance for a landlord. You must be able to pay the loan back.

You cannot borrow more than £1500 from the social fund at any one time. The main advantage of social fund loans over commercial loans is that they are interest free.

There are many rules about who can get payments from the social fund and what they can be spent on. These rules are beyond the scope of this factsheet; you should see a specialist benefits adviser to find out more.

State Retirement Pension and Pension Credit

The State Retirement Pension is currently based on your National Insurance contributions over your working life, or you may be entitled to some pension based on your spouse or civil partner’s contributions. It is available to those over state retirement age, which is currently 60 for women and 65 for men. You don’t have to stop working to get Retirement Pension. You can choose to defer it if you want, which means that you choose not to claim it at retirement age, and when you do claim you get either a higher pension, or a lump sum plus your normal pension (if you defer for at least 12 months).

You have to claim Retirement Pension; it is not paid automatically. However, the Department for Work and Pensions will usually send you a claim form near the time, or you can claim over the phone on 0845 300 1084 (textphone 0845 300 2086) once you are within four months of retirement age. You can also find the claim form on the Pension Service website, or you can claim on line via the DWP website.

Pension Credit is a means-tested benefit for people aged 60 or over, and is made up of two parts, Guarantee Credit, available to those over 60, and Saving Credit available to those over 65. You do not have to have stopped working to get Pension Credit. Guarantee Credit guarantees pensioners a minimum income and is made up of elements depending on your circumstances. You add up each element you are eligible for. The total is the income you are guaranteed. What you will receive is the difference between your income and this guarantee if your income is lower. The Standard Guarantee Credit for a single person is £114.05, and for a couple it is £174.05. You may receive more if you have a disability (in some circumstances) or caring responsibilities, or if you are entitled to help with mortgage interest.

The Savings Credit is to reward people who have saved a "modest amount" for their old age, although in effect it doesn't make any distinction between income from investments or pensions and income from jobs. How much Savings Credit you will get depends on your circumstances and what your income is. You may get it on top of Guarantee Credit or on its own.

To find out more about Pension Credit call 0800 991234 (textphone 0800 1690133), or go to the Pension Service website.

Civil Partnership Act

On the 5 th December 2005, the Civil Partnership Act came into force. From the 5 th of December, same-sex couples who are civil partners or who live together “as if they were civil partners” are treated as a couple. Living together as if you are civil partners means living together in a stable relationship; this is now the same as the way unmarried opposite sex couples are treated.

For the purposes of Tax Credits, the new law coming into force was a change in circumstances. This means that, within three months of the change in the law, same sex couples should have informed the Tax Credit Office and begun a new claim as a couple. The rules about becoming part of a couple or splitting up with a partner now apply to same sex relationships in the same way as opposite sex relationships, which means that if this happens to you, you should inform the Tax Credit Office and make a new claim.

Child Benefit may also be affected because once you are treated as a couple, only one of the children who live with you can be treated as the eldest child (previously, both you and your partner might have been claiming Child Benefit separately for your children). You should check with the Child Benefit Office and make sure they know about your circumstances.

For benefits provided by the Department for Work and Pensions claimants will be expected to report that they are part of a couple as soon as possible. For housing benefit and council tax benefit the new rules will apply when “anything which responds to a relevant change reported by the claimant, which results in us having to intervene in the case. In general, we are likely to accept this as reasonable unless there are specific reason(s) to the contrary” (from DWP guidance). This means you were not expected to let them know on the 5 th December, but you should report it the next time you deal with them. The DWP also produce a leaflet called ‘Getting it Right’ which explains how the new law affects DWP benefits and child support.

For more information about how the Civil Partnership Act might affect your entitlement to benefits, speak to your local CAB or call the London Lesbian and Gay Switchboard (see Further Information).

Amounts for Children in Income Support and Income based Job Seeker’s Allowance

People who are still getting amounts for their children in Income Support and income-based Jobseeker’s Allowance will be moved onto Child Tax Credit at some point, but we do not know when this is going to happen.

Useful Contacts:

To find your Jobcentre Plus, use www.jobcentreplus.gov.uk

If you do not have access to the internet, they will also be listed in phone directories

Child Benefit

Telephone: 0845 302 1444
Textphone: 0845 302 1474
Northern Ireland 0845 603 2000
www.hmrc.gov.uk/childbenefit

Citizens’ Advice Bureau

www.citizensadvice.org.uk
w$ww.adviceguide.org.uk

To find CABx near you look in the phone book or use the website.

Advice on a whole range of issues from employment to benefits and debt advice.

Disability Alliance

www.disabilityalliance.org

Information about benefits for disabled people

National Debtline

Tricorn House,
51-53 Hagley Road
Edgbaston
Birmingham B16 8TP
Telephone: 0808 808 4000

www.nationaldebtline.co.uk

Free confidential advice on debt and useful factsheets.  

National Minimum Wage Enquiries

National Minimum Wage
BP7102
Norham House
Benton Park View
Newcastle upon Tyne
NE98 1ZZ

Telephone: 0845 6000 678
Minicom: 0845 915 3296
Northern Ireland: 0845 6500 207

www.hmrc.gov.uk/nmw

Information about the minimum wage. You can also complain if you are not being paid the minimum wage.

One Parent Families

Helpline: 0800 018 5026

Advice for lone parents.

One Parent Families Scotland

Helpline: 0808 801 0323

Pensions Credit helpline

Telephone: 0800 991234
Textphone: 0800 169 0133

Tax and Benefits Confidential

Telephone: 0845 608 6000

HMRC helpline for those who have been working "cash in hand" but want to get their tax and national insurance affairs in order.

Tax Credits Helpline

Telephone: 0845 300 3900
Textphone: 0845 300 3909
Northern Ireland telephone: 0845 603 2000
Northern Ireland textphone: 0845 607 6078

Working Families

1-3 Berry St, London, EC1V 0AA
Telephone: 0800 013 0313

Waving not drowning project for parents of disabled children: Janet on 020 7253 7243

To order factsheets ring the office on 020 7253 7243 or you can download them from the website.

www.workingfamilies.org.uk
info@workingfamilies.org.uk

Registered Charity No 1099808
Company No 4727690

London Lesbian and Gay Switchboard

A nationwide charity providing information, support and a referral service to lesbians, gay men and bisexual people.

Telephone 020 7837 3724
Minicom 020 7689 8501
www.llgs.org.uk  

The advice given in this factsheet is accurate at November 2006. It may not be accurate after that date.

Working Families operates a complaints procedure to ensure any complaints are dealt with thoroughly and fairly. If you would like to have details of the procedure or to make a complaint please contact the Chief Executive at Working Families.

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