Understanding how benefit changes may affect you
By the Money Advice Service
It’s all change when it comes to benefits. This year has seen changes to five key areas of financial assistance, some are amendments to existing benefits; others are new. Here’s a rundown on what the changes mean and how to claim what you’re entitled to.
Changes to Child Benefit came in at the start of this year, affecting high earners.
If either you or your partner earns over £50,000 a year, you’ll have to pay back some of your Child Benefit in the form of extra Income Tax. If either of you earns over £60,000 a year, then you’ll have to pay it all back.
You fill in a tax return and the amount of extra tax you have to pay is calculated and collected after the end of the tax year. Alternatively, you can let HM Revenue & Customs know that you don’t want to carry on receiving your Child Benefit. This avoids the hassle of paying it back via a tax return.
It’s still important to claim Child Benefit, no matter how much you earn, so that you can build up National Insurance credits to help protect your State Pension.
Council Tax Benefit
Council Tax Benefit was abolished in April this year and local councils have brought in their own Council Tax Support Schemes to replace it.
If you live in England, you’ll need to contact your local council to find out what help you’re entitled to. In Scotland and Wales, you’ll get the same amount of help with Council Tax payments as you did before the changes. This will be the case until at least April 2014. People living in Northern Ireland are not affected by the changes.
Universal Credit replaces some of the existing working-age benefits and tax credits. It was introduced in some areas in April this year, and will be rolled out to all other parts of the country by 2017. If you’re of working age and claiming income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support, Child Tax Credit, Working Tax Credit or Housing Benefit, you’ll need to claim Universal Credit instead.
With Universal Credit, payments will be made on a monthly basis rather than weekly or fortnightly. This change means people will need to budget for a monthly period. If you need help with organising your finances, use the Money Advice Service Budget planner.
Personal Independence Payment
Personal Independence Payment began replacing Disability Living Allowance for people aged 16-64 in April this year. As with Disability Living Allowance, Personal Independence Payment is designed to help with some of the extra costs associated with a long-term health condition or disability. The claims process involves an initial assessment to work out a person’s eligibility and most people are regularly assessed on an ongoing basis to make sure they’re getting the right support.
More commonly known as the ‘Bedroom Tax’, this benefit change was also introduced in April this year. Anyone renting a council or housing association property has had their Housing Benefit reduced by 14% if they have one spare bedroom, or by 25% if they have two or more spare bedrooms.
There are some exceptions to the rule. For example, disabled people who need an overnight carer are allowed an extra bedroom for the carer. Foster parents and parents with children serving in the armed forces are also exempt from the benefit reduction.
You can find out more about benefit changes on the Money Advice Service website.