Topic 5 State Benefits & HMRC Tax Credits Flashcards
What is universal credit?
A means tested benefit for people of working age.
What is the upper age limit for Universal Credit?
At the point where people qualify for Pension Credit.
Which benefits are NOT included within Universal Credit?
- Carer’s allowance
- Contribution-based Job Seekers Allowance
- Disability Living Allowance
- Child Benefit
- Statutory Sick Pay (SSP)
- Statutory Maternity Pay (SMP)
- Maternity Allownace
- Attendance Allowance
What is Working Tax Credit?
WTC is designed to top up the income of those on low-incomes (employed or self-employed).
What is Income Support?
Tax-free benefit Between 16 - Pension age Income below a certain level Working 16 hours or less per week Not dependent on NICs Is means-tested on incomes and savings
What is Job-Seeker’s Allowance?
A benefit for unemployed OR working less than 16 hours per week AND are actively seeking work.
What are the two types of Job Seeker’s Allowance?
Contribution based JSA
Income based JSA
What is the Support for Mortgage Interest Loan? (SMI)
SMI is a loan that must be repaid.
For those in receipt of Income support, JSA, Universal Credit or Pension Credit.
SMI loan is a second charge on the mortgage and subject to interest.
What is Statutory Maternity Pay? (SMP)
SMP is received from employer if:
- they’ve been working for employer for 26 weeks prior to due date
- average weekly earnings are above a certain threshold
How long is SMP payable for?
39 weeks
What is the earliest & latest SMP can begin & end?
11 weeks before due date
The day the baby is born
Is SMP taxable?
Yes and NICs are due on the amount paid.
What is Maternity Allowance?
For those who cannot claim SMP, Maternity Allowance is paid by the DWP (Department for Work & Pensions)
It is paid at a lower rate than SMP
It is NOT taxable
Paid for 39 weeks
What is Child Benefit?
Tax -free benefit
For parents & those responsible for bringing up a child
Not dependent on NICs
Not affected by receipt of other benefits
Available for every child under 16
How long can Child Benefit continue for?
Up to the age of 19 if the child is still in full-time education
How is Child Benefit means- tested?
In the form of an income tax charge if either partner has a net annual income of more than £50,000 (2020/2021)
If both earn more than £50,000, it’s assessed on higher of the two incomes.
What is Child Tax Credit?
Financial assistance for those bringing up a child and who are on low incomes.
What is the upper age limit of the child for Child Tax Credit?
- a child aged under 16
- a child under 20 in eligible training or education
Does the claimant have to be working to claim Child Tax Credit?
No
No set income threshold
Based on personal circumstances
What is Statutory Sick Pay? (SSP)
- SSP is paid to employees by employers who are off sick due to illness or disability for 4 days or longer
- this is dependent on average weekly earnings
What is the maximum SSP can be paid for?
28 weeks
Is SSP subject to tax and NICs?
Yes
What are the two forms of Employment and Support Allowance? (ESA)
Contribution -based ESA (not means-tested/taxable)
Income based ESA (is means-tested/not taxable)
What is Attendance Allowance?
A benefit for over 65s who require help with personal care as a result of sickness or disability.
Explain the Disability Living Allowance (DLA) and the Personal Independence Payment (PIP).
- DLA is a tax-free benefit - currently being replaced by PIP
- 16-64 years
- care component / mobility component
What is the Carer’s Allowance?
The CA is for those caring for a sick or disabled person.
They do not have to be related.
Is taxable.
Does not depend on NICs.
This CAN affect other benefits for the claimant and the person they are caring for.
When is the basic state pension currently paid?
SPA is currently paid at 66 years
What are the two elements of Pension Credit?
Guarantee Credit- tops up weekly income
Savings Credit- additional payment for over 66s who have saved some money towards their retirement
Not taxable
Explain the Single-tier State Pension.
- For those reaching retirement age on or after 6th April 2016
- Made or credited with 35 years’ NICs
- Not eligible if less than 10 years NICs
- Carers are credited with NICs
What is the Triple Lock Guarantee?
The Basic State Pension/ Single Tier Pension increase each year by the higher of:
- earnings
- prices (measured by CPI)
- 2.5%
