Unit 1 Topic 5 - State benefits and HMRC tax credits Flashcards

1
Q

Which benefits did Universal Credit replace from 2013?

A
  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Working Tax Credit and Child Tax Credit
  • Housing Benefit
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2
Q

Which benefits remain outside of Universal Credit?

A
  • Carers Allowance
  • Contribution-based Jobseeker’s Allowance and Contribution-based Employment and Support Allowance
  • Disability Living Allowance/Personal Independence Payment
  • Child Benefit
  • Statutory Sick Pay
  • Statutory Maternity Pay
  • Attendance Allowance
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3
Q

Outline features of Working Tax Credit.

A
  • Designed to top up earnings of employed or self employed on low incomes.

Extra for:
- Working households in which someone has a disability

  • Costs of qualifying childcare.
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4
Q

Outline features of Income Support

A
  • Tax free benefit to help people whose income is below level or work less than 16 hours per week.
  • Eligibility not dependent on NICs.
  • Means tested on both income and savings.

Range of people who can claim:
- between 16 and qualifying age for state Pension Credit

  • pregnant or singe parent with child aged under five
  • unable to work because they are sick or disabled
  • caring for a disable or elderly person
  • unemployed
  • only able to work part time
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5
Q

Outline features of Jobseeker’s Allowance.

A

Contribution based
- Benefit for people who are unemployed or working less than 16 hours a week.

  • Eligible only if they have paid sufficient Class 1 NICs.
  • Paid at a fixed rate for a maximum of six months.
  • Payments are made gross but taxable.
  • Claimants usually credited with NICs for every week they receive JSA.

Income based
- Being replaced by universal credit.

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6
Q

Outline features of Support for Mortgage Interest Loan

A
  • Those in receipt of Income Support, Jobseeker’s Allowance, Universal Credit or Pension Credit can apply.
  • SMI will pay interest on mortgage of up to £200,000 (£100,000 if made with pension credit).
  • SMi loan is subject on interest.
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7
Q

Outline features of Statutory Maternity Pay.

A
  • Benefit paid by employer to women who become pregnant provided that:
  • average weekly earnings are above a certain threshold
  • working for their employer continuously for 26 week prior to their ‘qualifying week’ which is 15th week before their baby is due.
  • SMP payable for 39 weks. Earliest is 11 weeks before the baby is due, latest when baby is born.

Two rates
- 90 percent of employee’s average weekly earnings

  • After that at flat standard rate
  • SMP is taxable and NICs are due.
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8
Q

Outline features of Maternity Allowance.

A
  • For people who can’t claim SMP.
  • Paid by department for Work and Pensions.
  • Not available to all. Certain criteria.
  • Paid at a lower rate than SMP.
  • No tax or NICs on amount paid.
  • Payable for 39 weeks.
  • Earliest it can begin is 11 weeks before baby is due and latest is when baby is born.
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9
Q

Outline features of Child Benefit

A
  • Tax free benefit available to parents.
  • Does not depend on having paid NICs nor is it affected by receipt of other benefits.
  • Available for each child under 16, continuing up to 19 if child is in full time education or approved training programme.
  • Higher rate for eldest and lower rate for the rest.
  • Child benefit is means tested. Either individual has over £50,000 tax charge applied at 1% for every £100 over £50,000. (ie £60,000 would be 100%).
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10
Q

Outline features of Child Tax Credit

A
  • People bringing up children on low income.
  • Child under 16 or under 20 in education or training.
  • Does not have to be working, no income threshold.
  • If all children born before 6 April 2017 extra ‘family element’ is payable.
  • If individual lives in an area where Universal Credit can be claimed they will apply for Universal Credit instead.
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11
Q

Outline features of Statutory Sick Pay.

A
  • Paid by employers to employees who are off sick for four days or longer provided their average weekly earnings are above the level at which NICs are payable.
  • Paid for max 28 weeks.
  • Subject to tax and NI deductions
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12
Q

Outline features of Employment and Support Allowance.

A
  • For people who are ill or disabled.
  • Contribution based
  • Eligible for Universal Credit, depends on NICs.
  • Not means tested and taxable.
  • Income based
    no NICs,
    means tested, not taxable.
  • Work capability assessment carried out.
  • Income based ESA in process of being replaced by Universal Credit but people can still claim contribution based ESA if they have enough NI contributions.
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13
Q

Outline Attendance Allowance.

A
  • Benefit for people over 65 who need help with personal care due to sickness or disability.
  • Not means tested and does not depend on having paid NICs.
  • Two rates: people who need help during day or day and night.
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14
Q

Outline Disability Living Allowance and Personal Independence Payment.

A
  • DLA is a tax- free benefit for people help with personal care.
  • Being replaced by PIP for people aged 16-64.

Two components:
- Care component for daily tasts

  • Mobility component: difficulty in walking etc.
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15
Q

Outline Carer’s Allowance.

A
  • For people caring for a sick person.
  • Does not depend on having paid NICs. Taxable.
  • Affects other benefits of claimant as well as the other person.
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16
Q

Outline Basic State Pension

A
  • Paid the employed and self employed people who have made sufficient NI contributions. At least 30 years.
  • Those not enough NICs may receive Category B based on spouse or civil partner.
17
Q

Outline Additional State Pension

A
  • For those who reach state pension age before 6 April 2016.

- Only available to employed people who paid Class 1 NICs.

18
Q

Outline Pension Credit

A

Two elements:
- Guarantee Credit - tops up and individual’s weekly income to a specified minimum amount.

  • Savings Credit - additional payment for people aged 65 and over who have saved money towards retirement.
  • Not taxable.
19
Q

Outline Single tier state pension.

A
  • For people who reach statement retirement age on or after 6 April 2016.
  • No additional earnings-related element.
  • Determined by a person’s NICs record.
  • For max pension must have been credited with 35 years NICs. Not eligible under 10 years.
  • Carers are credited with NICs.
20
Q

What is the Triple Lock Guarantee?

A

Both basic state pension and single-tier state pension increase by the minimum of:

  • Earnings (measured by Average Weekly Earnings Index)
  • Prices (CPI)
  • 2.5%