Pt 2. Serving the Retail Consumer - State Benefits

Question 1

Why may provision of State benefits affect need for private?

Answer 1

• Receipt of State benefits may reduce level of necessary private financial provision for illness, retirement or death.
• Low level of State beenfits frequently emphasise need for private financial provision.

Question 2

Who are the Department fro Work and Pensions (DWP)?

Answer 2

Providers of a wide range of State benefits, they:

• Assess circumstances in which benefit is paid, whether it is contributory or non-contributory.
• Assess whether benefit is means-tested.
• Assess whether benefit paid is taxable or not.
• Assess entitlement to full amount of any particular State benefit may be reduced if claimant is also receiving other State benefits.

Question 3

What is a benefit cap?

Answer 3

This was introduced on total amount of benefit most working-age people (aged 16 to state pension age) can receive in UK.

This means households that do not work should not be able to receive more benefits than average earning of working households.

This is by DWP for Universal Credit claimants, and local authorities for Housing Benefit claimants.

Question 4

What benefits apply to the benefit cap total?

Answer 4

• Bereavement Allowance (if received before 6th April 2017)
• Child Benefit
• Child Tax Credit
• Employment and Support Allowance (ESA), unless they recieve support component.
• Housing Benefit
• Incapacity Benefit
• Income Support
• Jobseeker’s Allowance
• Maternity Allowance
• Severe Disablement Allowance
• Universal Credit, except in certain circumstances.
• Widowed Parents Allowance or one of its predecessors

Question 5

What is the benefit cap for 2022/3?

Answer 5

Outside Greater London:

Couple/parent with children:
* £384.62 pw
* £20,000 pa

Single, no children:
* £257.69 pw
* £13,400 pa

Inside Greater London:

Couple/parent with children:
* £442.31 pw
* £23,000 pa

Single, with no children:
* £296.35
* £15,410

Question 6

Who does the benefit cap not apply to?

Answer 6

• Qualifies for Working Tax Credit
• Receives Universal Credit
• Armed Force Compensation Scheme
• Armed Forces Independence Payment
• Attendance Allowance
• Carer’s Allowance
• Child Disability Payment
• Disability Living Allowance (DLA)
• ESA, if receive support component.
• Guardian’s Allowance
• Industrial Injury Benefits
• Personal Independence Payment (PIP)
• War or War Widow(er)’s Pensions

Question 7

What is universal credit?

Answer 7

• Began in April 2013, aiming to simplify and streamline the benefit system by bringing together a range of benefits and credits into a single system.
• Includes a basic rate ‘standard allowance’, depending on claimants age or making single/joint claim - with extra elements payable due to children, diability or health condition preventing them from working.

Question 8

Which benefits does the government aim to be listed as Universal Credit?

Answer 8

• Child Tax Credit
• Housing Benefit
• Income-based JSA
• Income related ESA
• Income Support
• Working Tax Credit

Question 9

What is the Universal Credits aim?

Answer 9

• Improve claimants incentive to work.
• Ease for claimants to move in or out of work.
• Easier to understand
• Reduce poverty among low incomes
• Cutback on fraud and error
• More cost-effective to run.

Question 10

How does universal credit work?

Answer 10

• Paid monthly to help people budget effectively, and reflect world of work.
• Helps smooth transition into monthly paid work.
• Encourages claimants to take persoanl responsibility for finances
• To budget on monthly basis, saving households money.

Question 11

What is child benefit?

Answer 11

A universal non-means tested benefit for parents to claim for their children, with a tax charge payable if spouse or partner has income over £50,000.

Question 12

What is child tax credit?

Answer 12

This is paid to families with children regardless of whether parents work, integrated within the tax system.

New claims only be made by those already receive working tax credit, replaced by Universal Credit for other new claimants.

Question 13

What is maternity allowance?

Answer 13

This pays standard weekly rate of £156.66 or 90% of average weekly earnings, whichever smaller for those who do not qualify for statutory maternity pay.

For self employed, smaller amount is payable where not enough Class 2 NI’s have been paid.

Question 14

What is statutory adoption pay?

Answer 14

This provide help for adoptive parents to take time off work after adopting a child, paid on same basis as Statutory Maternity Pay.

Question 15

What is statutory maternity pay?

Answer 15

This is paid for first 6 weeks at 90% of average weekly earnings (before tax), with no upper limit, remaining 33 weeks at lower of either standard rate or 90% of average weekly earnings (before tax).

Question 16

Statutory Maternity Pay

Answer 16

This is paid for 1-2 consecutive weeks at standard rate or 90% average weekly earnings (before tax) if this is less.

They have worked for same employer without break for at least 26 weeks, by 15th week before baby is due.

Question 17

What is income support?

Answer 17

No longer made by new claims, low income households covering living costs should apply for Universal Credit.

Question 18

What is JSA?

Answer 18

• New style
• Contribution based
• Income based

New claims no longer made on CB or IB.

But can now claim new style, which works like contibution based (CB).

Question 19

What is statutory redundancy payments?

Answer 19

• Not liable for tax, but many employers make redundancy payments in excess of min. amounts prescribed by Parliament.
• Payment over £30,000, the excess is subject to income tax and employer NI.

Question 20

What is working tax credit?

Answer 20

Administered by HMRC, and replaced by Universal Credit for new claimants, unless already get Child Tax Credit.

Paid to people on low incomes, and may include childcare element to help with 70% of child care costs.

Aged 25-59 must work at least 30 hours per week.

Question 21

What is a support for mortgage interest?

Answer 21

• A paid loan, which needs to be repaid with interest when home is either sold or ownership transferred to someone else.
• Claimants receive help paying interest portion of mortgage or loan repayments on up to £200,000 of mortgage or loan (£100,000 for those with State Pension Credit).
• Payments are made directly to lender after waiting period of 39 weeks after claiming income-related benefit.
• Universal Credit have to wait until received 9 consecutive Universal Credit payments.
• Loan payments limited to 2 years for claimants in receipt of JSA.
• No receipt limit for Income Support, Income Related ESA, Pension Credit or Universal Credit.

Question 22

What is attendance allowance?

Answer 22

A tax free benefit for those reached State pension age, or physically or mentall disabled, and need help with personal car and/or mobility.

Question 23

What is budgeting loan?

Answer 23

An interest free loan for those in receipt of certain benefits who need help with important costs, e.g. clothing, furniture, travel etc.

Question 24

What is carer’s allowance?

Answer 24

A taxable benefit for those who look after someone who is disabled, and do not have to be related or live with person they care for.

Question 25

What is a disability living allowance?

Answer 25

A tax-free benefit for disbaled people, including children who have difficulty walking, who need somebody to look after them.

This allowance ending for those born after 8th April 1948, and are 16 or over.

Question 26

What are the changes involved in Disability Living Allowance changing to Personal Independance Payment?

Answer 26

• DLA will end for everyone of working age, on the day PIP is introduced.
• No current plans to replace DLA for children below 16, and people born before 8th April 1948 already receiving allowance.
• Based on assessment of individual need, focusing on individuals ability to carry a range of activities for everyday life.
• Most will be asked face to face consultantion with trained independent assessor as part of claims process.
• Amount ranges from £24.45 - £156.90 per week in 2022/23.
• No automatic transfer.

Question 27

What is ESA?

Answer 27

The successors of incapcity benefit paid to those with illness or disability, but aim to get them some kind of work.

Question 28

What is motability scheme?

Answer 28

This enables disbailed people to lease new car, scooter orpowered wheelchair using gov-funded mobility allowance.

Those receiving mobility component, the enhanced rate of PIP, war pensiors mobility supplement or armed forces independence payment may be eligible to join scheme.

Question 29

What is statutory sick pay?

Answer 29

A standard rate per week, it is paid by employers for up to 28 weeks if somebody is unable to work due to illness.

Question 30

What is a new/basic state pension?

Answer 30

This is available to those who have reached State pension age and made or received sufficient NI contributions or credits.

Question 31

What is additional state pension?

Answer 31

This is taxable earnings related component of State pension made up of one or more of State Graduated Pension, State Earnings Related Pension and State Second Pension.

Paid in addition to Basic State Pension those retring prior to 6th April 2016.

Those retiring after, a deduction is made from new State pensions for any time spent contracted out of these schemes.

Question 32

What is a State Pension Credit?

Answer 32

This guarantees minimum income to those of State pension age by topping up weekly income.

Savings credit of up to £14.48 (single) and £16.20 (couple) per week, not usually available those retiring on or after 6th April 2016.

Question 33

What is Bereavement Support?

Answer 33

First payment of £3,500 (£2,500 if entitled to Child Benefit, or Pregnant Widow) followed by 18 monthly pay of £350 (£100).

Claim needs to be made within 3 months of husband, wife or civil partners death to get full amount.

Question 34

What is cold weather payment?

Answer 34

It is given to help with additional heating costs during winter months, with payments of £25 made for each 7 day period of cold weather between 1 Nov to 31 March.

• Claimed when average weather is freezing (below 0) for consecutive 7 days.

Question 35

What is council tax reduction?

Answer 35

Financial help for those on low incomes to pay for council tax bill.

Question 36

What is funeral expenses payment?

Answer 36

Help for those on low incomes to pay for family funeral, paid back from estate of person who has died.

Question 37

What is Healthcare Travel Costs scheme?

Answer 37

Those on low income, and need NHS treatment at hospital, NHS centre or private clinic, and have been referred by consultant, doctor or dentist can require help for travel costs.

Question 38

What is health costs?

Answer 38

Various options for financial assistance for young, old and those on low incomes paying for health costs ranging from dental work to wigs.

Question 39

What is healthy start scheme?

Answer 39

Help for pregnant women and low-income families, using a card in some UK shops to buy milk, fruit and vegetables, pulses and vitamins.

Benefit added to card every 4 weeks.

Question 40

What is housing benefit?

Answer 40

Aimed at those who struggle to pay rent due to low income, irrespective if they work or not.

New claim can only be made by those reached State pension age or those supported, sheltered or in temporary housing.

Now has been replaced by Universal Credit.

Question 41

What is local housing allowance?

Answer 41

An allowance paid to private tenant on low income who is renting property or room from private landlord.

Question 42

What is winter fuel payment?

Answer 42

Paid to those born on or befor 26 September 1955, with annual payment between £100-£300 depending on receipients situation to help pay for increased heating bills in winter.