Topic 5: State Benefits and HMRC Tax Credits Flashcards
Why is it important for a financial adviser to know about state benefits?
Financial advisers need to understand what state benefits a person is entitled to or already claiming in order to give appropriate financial advice. For instance, when working out the level of life assurance cover that a family needs, the income that would be available from state benefits if a family wage earner were to die has to be taken into account.
Once Universal Credit is fully implemented, parents who are eligible for Child Benefit will have to claim Universal Credit instead. True or false?
False. Universal Credit will eventually replace Child Tax Credit, not Child Benefit.
Which of the following is not a feature of Income Support?
a) It is only available to claimants who have made National Insurance contributions.
b) It is available for claimants aged between 16 and the
qualifying age for Pension Credit.
c) Benefits are tax free.
d) Both income and savings are subject to means testing to determine eligibility.
a) Is the correct answer, in that the statement is untrue. Income Support is available to people who have not made National Insurance contributions.
James has been working in IT support for twelve years. His
current job is a fixed term contract and ends next month.
Assuming James has made NI contributions throughout his
working life, what benefit is he likely to be able to claim while
he is unemployed?
a) Working Tax Credit.
b) Income Support.
c) Contribution based Jobseeker’s Allowance.
d) Employment and Support Allowance.
c) Contribution based Jobseeker’s Allowance.
Aliyah has been working for Abbots Transport for 16 weeks.
She is 24 weeks pregnant. Which of the following state benefits
may she be entitled to?
a) Statutory Maternity Pay.
b) Income Support.
c) Child Tax Credit.
d) Maternity Allowance.
d) Maternity Allowance. She is not entitled to Statutory Maternity Pay because she will not have been with her employer for 26 weeks by her qualifying week.
Aliyah has been working for Abbots Transport for 16 weeks.
She is 24 weeks pregnant. When is the earliest that Aliyah can begin claiming benefits?
Eleven weeks before the baby is due.
Malcolm, who is 42 and self employed, has fallen ill and cannot work. Which benefit might he be entitled to?
a) Disability Living Allowance.
b) Statutory Sick Pay.
c) Employment and Support Allowance.
d) Attendance Allowance.
c) Employment and Support Allowance. He cannot claim Statutory Sick Pay because he is not an employee.
Ian retired in July 2020 at the age of 65. He had made NI contributions for 33 years while he was working but he had had a career break of three years to care for his sick partner. Is Ian eligible for a full, new state pension?
a) No, because he was not continuously employed throughout his working life.
b)No, because he retired too early to claim the new state pension.
c) Yes, because he had paid NI contributions for more than
30 years.
d) Yes, because he was credited with NI contributions while he was a carer.
d) Yes. Although 35 years’ NI contributions are needed to be eligible for the full new state pension, Ian would have been credited with NI contributions for the three years that he was a carer.
Lucy earns £52,000 per year and her partner Howard has an
annual salary of £29,000. They have three children, one at
primary school and two at secondary school; their eldest son, Ethan is 18 and studying for three A levels. For how many children are Lucy and Howard able to claim Child Benefit?
a) Two: they cannot claim for Ethan because he is over 16.
b) All three, because Ethan is still in full time education.
c) None, because Lucy earns more than £50,000 a year.
d) None, because their combined household income exceeds
£50,000 per year.
b) All three: they will be able to claim for Ethan up until his 20th birthday
while he remains in full time education.
Lydia is 22 and has just begun a new job on a permanent, full time contract. Her employer will offer her the opportunity to contract out of the state second pension. True or false?
False. The state second pension is available only to those who reached state pension age before 6 April 2016. Lydia’s National Insurance contributions will build entitlement to the new state pension, which has no additional
earnings related element, therefore it is not possible for Lydia to choose to contract out.
