3: State Protection Provision

Question 1

How are state benefits funded?

Answer 1

• Current National insurance contribtutions
• Current taxes

State benefits are funded on a ‘pay-as-you-go basis - governments must juggle using available revenue to sustain benefit levels

Question 2

Eligibilty for benefits

List 4 factors that influence an individual’s right to benefits

Answer 2

With some benefits, the only criteria is that the claimaint has suffered a certain condition or life event

However, sometimes further eligiblity criteria apply based on:
* National insurance contribution record
* Age
* Meants testing of savings and/or income

There is also a** benefit cap** that limits the amount of overall state benefit claimed by each
household.

Question 3

Results of means testing of state benefits where income/savings exceeds certain thresholds:

Answer 3

• The scale of benefits being reduced below the maximum available level; or
• No benefits being payable at all (even if others in a similar situation, but with lower
  levels of income or savings, may be able to claim).

Question 4

Means testing: Assessment of income - what is taken into account?

List 6 and which 2 benefits are excluded?

Answer 4

• Earnings from full-time or part-time employment, self-employment, or an employment
  training scheme
• Income from other state benefits (Attendance Allowance and Disability Living
  Allowance are excluded in full, other benefits in part)
• maintenance payments
• money from trust funds
• Student grants and loans
• Any other money coming in as regular amounts.

Question 5

Means testing: Assessment of income - what can be subtracted?

Name 5

Answer 5

• Rent (less Housing Benefit) or mortgage interest
• 80 per cent of council tax
• Income tax and NICs
• Half of occupational or personal pension contributions
• .Savings can be encorporated, either additionally or alternatively to income.

Question 6

What are the main state benefits that are means tested?

List 9 (3 of which are no longer claimable)

Answer 6

• Pension Credit (If retired by 6th April 2016)
• Universal Credit
• Housing Benefit
• Council tax reduction
• Working tax credit
• Child tax credit

• Income-based job seekers allowance (No longer claimable)
• Income-based Employment and Support Allowance (No longer claimable)
• Income support (No longer claimable)

Question 7

Are pension funds included when means testing state benefit?

Answer 7

• No
• Unless individual is in receipt of pension income

Question 8

When savings are encorporated into the means testing of state benefits, what are considered?

List 8 sources of savings that may be included - investments etc

Answer 8

• Current and building society accounts
• National savings, including premium bongs
• Gilt-edged stocks
• Shares
• Unit trusts
• Investment tursts
• Payments from redundancy payouts
• Inheritances
• Lottery winnings

Question 9

What is excluded from means testing in terms of savings?

2 points

Answer 9

• Pensions (exluding income from)
• Household possessions

Question 10

What are the entitlement requirements for Housing benefit, Universal credit, Savings credit?

Answer 10

Housing and UC
* Below state penion age
* Below £16,000 of savings
* If savings are between £6,000 and £16,000, benefit is reduced proportionally.
* Savings below £6000 are disregarded

Savings credit
* For those who reached state pension age before 6th April 2016
* Means testing on savings above £10,000 with each £500 above this assumed to generate a level of income wich reduces entitlement

Question 11

Support for people on low incomes…

Name 3 state benefits (one is no longer open to new applicants)

Answer 11

• Job seeker’s allowance
• Universal credit
• Income support (legacy)

Question 12

Income support benefit - Explain, means tested? Eligibility?

Answer 12

• No longer open for new applicants
  * Tax-free
• Ages 16 to retirement
• For those that could not be in full time work due to their personal circumstances.

Means tested
* Benefit did not depend on NIC record
* Means tested on income and savings
* Payment adjusted for savings between £6000-£16,000

Eligiblity
* Worked on average less than 16 hours a week and:
* Sick or disabled
* Caring for disabled or elderly
* Lone parent
* Only able to work part time
* A student who is disabled or a lone parent

Question 13

Income Support benefit payments - how were they calculated?

The payments were also made up of two components, what were they?

Answer 13

Based on the claimants:
* Age
* Income and savings level
* Children/dependants (and their ages)

Payments were made up of:
Personal allowances - to cover day-to-day living expenses
Premiums - Additional payments based on circumstances

Question 14

Three forms of JSA

Which is open to new claims? Taxable?

Answer 14

Only New style JSA is open to new claims, people in receipt may still retain benefit until their circumstances change

• New style JSA- depends on sufficient Class 1 NICs having been paid. Paid at a fixed rate irrespective of savings or partner’s earning or children etc.
• Contribution-based JSA - depended on the same details as new style JSA. However, individuals could only claim if they either:
  Received the severe disability premium or were entitled to it
  Received or; Were entitled to the severe disablitly premium within the last month.
• Income-based JSA - For those who did not qualify for the other two forms, this was replaced by Universal credit

JSA is taxable

Question 15

Jobseeker’s Allowance (JSA) - who is it for?

Answer 15

Benefit for those:
* Between 18 and state pension age who are;
* Unemployed and actively seeking work or
* Working fewer than 16 hours per week on average
* Can be paid for 182 days
* Paid irrespective of savings or partner’s income
* Eligibility is based on NIC contributions within the last two years

Question 16

Is JSA taxable?

Answer 16

Yes
* The taxable element of income-based JSA is limited to the amount of personal allowance paid; any premiums (such as those for dependent children) are not taxed.
* Claimants are also usually credited with NICs for every week that they receive JSA. They also get NI credits if they satisfy the conditions for JSA, but are not receiving it

Question 17

Eligiblity for New Style JSA

Answer 17

• Have previously worked as an employee
• Have paid Class 1 NICs, usually in the last two to three years
• be ‘capable of, actively seeking and available for’ work, normally for at least 40 hours per week
• Be out of work or working fewer than 16 hours per week; normally be 18 or over, but below state pension age
• Not be in full-time education
• Have signed a Jobseeker’s Agreement, which sets out the steps that they must take to look for work and to improve their chances of obtaining employment.

Question 18

Eligiblity for Income-based JSA

Now largely replaced by UC

Answer 18

Same as New Style JSA, however, is means tested:
* Ineligible if savings exceed £16,000
* Entitlement reduced if savings are above £6000

Question 19

Benefits payable during pregnancy

Name 6

Answer 19

• Statutory Maternity Pay (SMP)
• Statutory Paternity Pay (SPP)
• Maternity Allowance (MA)
• Statutory Adoption Pay (SAP)
• Parental Leave (SPL)
• Statutory Shared Parental Pay (ShPP)

Question 20

Statutory Maternity Pay (SMP) - Conditions,
Eligibility, Rates, Tax?

Answer 20

Eligibility
* Must have worked for the same employer, without a break, for at least 26 weeks including the 15th week before the baby is due
* Average earnings that are relevant for NI purpose, that is, average earnings in excess of the lower earnings limit (LEL)

Conditions
* Payable for a maximum of 39 weeks
* Earliest it can begin is 11 weeks before the baby is due
* Latest is when the baby is born.

Rates
* For the first 6 weeks, the amount paid is equal to 90% of average weekly earnings
* After 6 weeks, the remaining payments are reduced to the lover of 90% of average weekly earnings or £184.03 a week.

Tax and NI
* Taxable
* NICs are due on the amount paid

Question 21

Statutory Paternity Pay (SPP) - Conditions,
Eligibility, Rates, Tax?

Answer 21

Eligibility
* Must be biological father, spouse or parter of the mother giving birth or adopting parent
* Must have worked for the same employer, without a break, for at least 26 weeks by the 15th week before the baby is due or for a minimum of 26 weeks up to and including their partner was matched with a child the baby is due
* Must continue to work for the same employer until the child is born or placed for adoption
* Have earnings above the LEL (the amount above which entitlement to NIC-dependent benefits begins).

Conditions
* Payable for a maximum of 2 weeks

Rates
Paid at the lower of:
* £172.48 per week
* 90% of employee’s average weekly earnings

Tax and NI
* Taxable
* NICs are due on the amount paid

Question 22

Maternity Allowance (MA) - Conditions,
Eligibility, Rates, Tax?

Answer 22

Available to those who are not entitled to SMP - typically those who have recently changed jobs or who are self-employed

Eligibility
* Employment test - have been employed or self-employef for at least 26 weeks out of the 66-week period running up to, and including, the week before the week in which the baby is due
* Earnings test - at least a specific minimum amount each week
* Be not entitled to SMP

Conditions
* Paid for a maximum of 39 weeks
* Earliest it can begin is 11 weeks before baby is due, latest is when baby is born
* Paid by DWP not employer

Rates
* A standard rate when average weekly earnings exceed the LEL
* Less than LEL and above minimum threshold - 90% average earnings

Tax and NI
* Not Taxable
* No NICs

Question 23

Statutory Adoption Pay (SAP) - Conditions,
Eligibility, Rates, Tax?

Answer 23

Eligibility
* Been notified that they have been matched with a child by an adoption agency;
* Been employed by their current employer for at least 26 weeks up to and including
the week during which they were notified that they have been matched with a child;
* Have average weekly earnings above a specified minimum amount.

Conditions
* Paid for a maximum of 39 weeks

Rates
* For the first 6 weeks, the amount paid is equal to 90% of average weekly earnings
* After 6 weeks, the remaining payments are reduced

Tax and NI
* Taxable
* NICs due on amount paid

Question 24

Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP)

How long can be taken? How long paid? Eligibility? How much?

Answer 24

Allows for the restructure of time of work between parents (traditionally only women have the option to take an extended time off - up to 52 weeks materinity leave)

SPL
* 50 weeks can be taken
* 37 weeks paid
* One of the parents must have worked for the same employer for at least 26 weeks by
the end of the 15th week before the baby is due.
* The other parent must have worked for at least 26 weeks in the 66 weeks preceding
the due date/date when parents are matched with an adopted child and earned at least £390 in total for at least 13 of those weeks.

ShPP
* 37 weeks can be taken
* A claimant must be an employee who is:
— eligible for SMP or Statutory Adoption Pay; or
— eligible for Statutory Paternity Pay and their partner is eligible for SMP, Maternity Allowance or Statutory Adoption Pay.

• Alternatively, a claimant may be classified as a ‘worker’ rather than an employee, and be eligible for SMP or Statutory Adoption Pay. To be classed as a worker rather than an employee, a series of tests are applied to the relationship between the person carrying out the work and the person it is being carried out for.

ShPP is paid at the lower of a statutory amount or 90 per cent of the employee’s average weekly earnings.

Question 25

Quick way to tell if a benefit is taxable?

Answer 25

Generally, if the reason why the individual is claiming is not their fault, it is not taxable

Question 26

Child benefit - Conditions, Eligibility, Rates, Tax?

Answer 26

*Child Benefit is a tax-free benefit available to parents and to others who are responsible for bringing up a child - means tested* **Eligibility** * Child Benefit is payable from birth until the child reaches the age of 16 (or the age of 20 if the child is in certain types of education or training). **Conditions** * Where household has 'adjusted net income' above **£50,000** - a Child Benefit higher income tax charge is applied at a **rate of 1% for every £100 earned over this threshold** * If the household income is above **£60,000** - benefit is payable but the tax charge applied is equal to the full amount of child benefit that has been paid **Rates** * Two rates of Child Benefit are paid with a higher rate for the eldest child and a lower rate for each subsequent child **Tax and NI** * Non-Taxable * No NICs due

Question 27

What is a tax credit?

Answer 27

*Tax credits are payments from the government for those who are responsible for a child or young person who lives with them and to people who work but earn a low income.* * **Not something that reduces a person's tax bill** - it is a payment to the individual * Tax credits are administered by **HM Revenue & Customs (HMRC).** * Streamlined in **2002** with **WTC and CTC**

Question 28

Working Tax Credit (WTC) - What is it? Eligibility? Rates?

Answer 28

*Aims to make work worthwhile for those on lower earnings - top up to earnings - means tested* * Can be paid to employed and self employed * Paid directly to the individual **Eligibility** * Based on comparing icnome in the previous tax year with a benchmark * Below benchmark, maximum payment awarded * If exceed, payment still received up to an upper income threshold. **Rates** * Two components: **Basic adult** and **additional element** **Basic element** * is paid for work they do; and * is expecting to work for at least 4 weeks; and * is aged 16 or over, is responsible for looking after a child or young person and works at least 16 hours per week; * is aged 16 or over and is disabled and usually working at least 16 hours per week; or * is aged 16 or over, is responsible for looking after a child or young person, and either the claimant or their partner works at least 16 hours per week and the two parties work at least 24 hours per week jointly; or * is aged 25–59 and working at least 30 hours per week; or * is aged 60 or over and is working at least 16 hours per week.

Question 29

Child Tax Credit (CTC) - What is it? Eligibility? Rates? (Largely replaced by UC now)

Answer 29

*Tax credit is for those who are responsible for at least one child or qualifying young person. The credit is paid to the main carer for the child(ren).* **Eligibility** * Payment is made for each child who lives with the claimant until th **31st August following their 16th Birthday** or **over the age of 20 in full-time education or training** * Only people who already get **WTC** can claim **Rates** The tax credit has two main elements: * a **family element** paid to any family responsible for at least one child * a **child element** for each child for whom the claimant is responsible. **Notes** * Paid as income * Not taxable * Means tested - have to be in receipt of Working tax credit * Benefit limited to maximum of **2 children**

Question 30

Statutory Sick Pay (SSP) - Conditions, Eligibility, Rates, Tax? | how long is it paid for?

Answer 30

*SSP is paid by employers to employees who are off work owning to sickness or disability for **four consecutive days or more*** *the employer pays and reclaims from DWP* * Paid for a maximum of **28 weeks** * Payable for earnings above the LEL * **Not means tested** * Subject to **tax and NICs** * £109 per week (April 2024) Those who are sick longer than **28 weeks** may be able to claime short-term **ESA**

Question 31

Incapacity Benefit (IB)

Answer 31

* **Replaced by ESA** * Phased out in October 2010 * Some may be in recepit of this benefit * Not means tested * Depends on Class 1 and 3 NICs paid, however. * For those who cannot get SSP or self-employed

Question 32

Benefits cap - When was it introduced and how much is it?

Answer 32

* April 2013 Depends on where you live: 1.Greater London: £23,000 per year for couples or single parents. £15,410 per year for single adults without children. 2.Outside Greater London: £20,000 per year for couples or single parents. £13,400 per year for single adults without children. The cap mainly applies to benefits like Universal Credit, Housing Benefit, and Child Benefit. Exemptions apply, such as being in receipt of **disability benefits** etc

Question 33

Personal Independence Payment (PIP) - Conditions, Eligibility, Rates, Tax?

Answer 33

*The purpose is to help people with the additional costs arising from illness or disability* **Rates** Depends on the level of disability * Daily living component * Mobility component **Notes** * Not means tested * Not taxable, NICs not due

Question 34

Employment and Support Allowance (ESA)

Answer 34

* Came into force in Oct 2008 - took over from Incapacity Benefit * Most people claiming ESA are expected to take appropriate steps to help them to prepare for work, including attending a series of work-focused interviews with a personal adviser * **TAXABLE benefit**

Question 35

Universal Credit - Conditions, Eligibility, Rates, Tax?

Answer 35

*benefits and tax credits for those people who are looking for work or are in work but on a low income * **Eligibility** * Must be actively looking for work **Rates** * Paid per household, not per individual * There are also additional payments for claimants who have: — responsibilities as a carer; — children/disabled children; — housing costs; — childcare costs; — limited capability for work. **Notes** * Means tested * Non Taxable, No NICs due Universal Credit replaces the following benefits: * Income Support; * Income-based JSA; * Income-related ESA; * Housing Benefit; * Child Tax Credit; * Working Tax Credit.

Question 36

Bereavement Support Payment and Bereavement Payment

Answer 36

* Spouse or civil partner opassed away post April 2017 * Eligibility remains subject to the deceased having paid sufficient Class 1, 2 or 3 NICs. * If they passed away as a result of their work, they are classified as paying sufficient * Claims must be made with 3 months of death to receive full amount * Can be made up to 21 months after death, but payments will be less The full payment comprises a **tax-free lump sum** and a **tax-free income payment** for a period of up to **18 months.** **If children under 20 in education** * Lump sum = £3500 * Monthly payment = £350 **If no children under 20** * Lump sum = £2500 * Monthly payment = £100 **Bereavement Payment - replaced by BSP in 2017** * Was a lump sum payment of £2000

Question 37

Inheriting SERPS and S2P

Answer 37

**SERPS** On death before 6 October 2002, the survivor inherited 100 per cent of the SERPS entitlement of the deceased. On or after 6 October 2002 * 100% if reached the deceased reached state pension age before October 2002 After 6 October 2002 * and the deceased had not yet reached SPA, then entitlement to the deceased’s SERPS is determined with reference to the age the deceased would have reached SPA. **If the deceased reached, or would have reached, SPA on or after 6 October 2010, then their spouse/civil partner can inherit 50 per cent of the deceased’s SERPS.** **S2P** A widow(er)/civil partner can inherit a maximum of 50 per cent of their spouse’s/civil partner’s S2P.

Question 38

Support for Mortgage Interest (SMI) - Who can get it and what are the main features?

Answer 38

*A loan paid to those experiencing difficulties repaying their mortgage and are in receipt of:* * Income Support * Income-based JSA * ESA (if income-related) * Universal Credit * Pension Credit. **The main features of SMI** * Payment is made directly to the lender to ensure that the money is used for the purpose intended. * Payments are calculated using a standard rate of interest (as opposed to being based on the actual interest rate paid by the borrower). * Although there are restrictions on payments for interest on loans for major repairs and improvements, interest on loans taken out to finance work to maintain a property’s fitness for occupation may be allowed. * Life insurance policy premiums, buildings and contents insurance premiums, and certain arrears are not covered by the scheme.

Question 39

What are the main state benefits that are taxable?

Answer 39

* JSA * ESA * Bereavement allowance * Widowed Parent's allowance * Incapacity benefit * Pension credit (savings credit) * SSP * SMP * SPP * SAP

Question 40

What are the main state benefits that are non-taxable?

Answer 40

* Disability living allowance (DLA) * PIP * Attendance allowance * Child benefit * Maternity allowance * ESA (contribution-based) * IIDB (industrial injuries disablement benefit) * Pension credit (guarantee credit)

Question 41

Attendance allowance - what is it? Is it means tested? is it taxable?

Answer 41

*Tax free benefit for those who have reached state pension age or over who need help with personal care as a **result of sickness or disability*** **Not means tested** and ** Not dependant on NICS** Two rates of pay depending on if assistance is needed day or night, or both.

Question 42

What state benefits are available to windowers? | Eligiblity? Is the benefit taxable? is it means tested?

Answer 42

**Bereavement Support Payment** * For widows, under state pension age, spouse died before april 2017. * Two rates - depending on children or not * Paid over 18 months * No tax * Not means tested *Bereavement support allowance, Widowed Parent’s Allowance, and Widowed parents allowance are not longer open to new applicants*