This month sees the start of changes to several welfare benefits.
Linda Gyamfi, Welfare Benefits Specialist at national charity Turn2us explains more about some of these changes, what they mean for families, and where you can find support if you’re affected.
Freeze on working-age benefits
As announced by Chancellor George Osborne in last year’s Summer Budget, there is going to be a four-year freeze to working-age benefits and tax credits.
Benefit rates are generally increased by a small amount at the start of every tax year to take in to account the rise in living costs. From April, there will be no increase in rates to Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Housing Benefit, Universal Credit, Child Tax Credit, Working Tax Credit and Child Benefit. Pensioner, disability, carer and maternity benefits are excluded from the freeze.
Whilst this is not a direct cut, the freeze essentially erodes the value of the benefits, and for those families already on tight household budgets, there is a risk it will add to the pressure of meeting everyday costs.
Anyone affected by the freeze and struggling to make ends meet can use the free Turn2us Benefits Calculator to see if they are entitled to any additional support.
Tax credits income rise disregard
Despite the government’s U-turn on tax credit cuts last November, there will still be a reduction in the tax credit ‘income rise disregard’ – the amount a claimant’s income can increase in-year without seeing a reduction in tax credit entitlement The disregard will reduce from £5000 to £2,500.
This brings the income rise disregard back to the same level as when tax credits were first introduced, and according to the Treasury, it is estimated that 800,000 people will see their tax credit entitlement reduced by an average of £200-£300 per year as a result.
If you’re claiming tax credits, it’s very important that you notify HMRC about income and other changes you experience during the year which could affect the amount of tax credits you get (you must tell them of any changes within one month). Otherwise you may be overpaid and have to pay it back.
The Turn2us Benefits Calculator shows you entitlement for tax credits based on your previous year’s income. It also provides a ‘Final Tax Credit Award’ estimate based on income from this year if there has been a significant change to income from the previous year. This highlights whether an overpayment or underpayment is likely and notifies you to contact HMRC for a reassessment.
Universal Credit Work Allowance
From 11 April 2016, the Universal Credit Work Allowance – the amount you can earn without your benefit being affected – is also being reduced.
For disabled people and people with children the work allowance will be reduced to £192 per month if they have a housing costs element in their claim and £397 per month if there is no housing costs element in the claim.
The work allowance will be abolished altogether for non-disabled claimants without children, resulting in their benefit being reduced as soon as they start earning.
Universal Credit – Childcare Costs element increased
From 11 April 2016, the Childcare Costs element of Universal Credit will increase so that you will be able to claim back up to 85% of your paid out childcare costs up to a monthly limit of £646 for one child or £1108 for two or more children. Previously only 70% of costs were covered for a lower monthly limit.
Family Premium in Housing Benefit Abolished
From 1 May 2016 the ‘family premium’ – the additional amount paid in Housing Benefit if you have responsibility for caring for children, will not be available for new Housing Benefit claims. If you are already receiving the benefit with a child in your claim before or on 30 April 2016 you will continue to get the family premium.
Housing Benefit backdating
Claims for Housing Benefit can be backdated if you can show that there was ‘good cause’ i.e. a strong reason for not claiming the benefit earlier if you met the qualifying conditions.
From this month, Housing Benefit backdating is being reduced so that new claims for working age claimants will be backdated for a maximum of one month (currently you can normally backdate your Housing Benefit claim for up to six months if you show good cause).
You can minimise the need to have to make a Housing Benefit backdating request by ensuring you submit a Housing Benefit claim form promptly and report any changes in circumstances to your local authority housing benefit office.
Support for Mortgage Interest waiting period
If you are a homeowner receiving Income Support, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance or guaranteed Pension Credit you can claim Support for Mortgage Interest (SMI) costs to help meet your mortgage interest costs.
After making a claim for SMI, a waiting period has to be met before payments are made. From 1 April, the waiting period will change from 13 weeks to 39 weeks. If you are already in a waiting period on or before 31 March 2016, the current waiting period will still apply.
The waiting period does not apply if you are getting Pension Credit or if you or your partner are the qualifying age for pension credit in most cases, other more remote exceptions can also apply.
The capital limit for SMI will be maintained at the higher level of £200,000.
Benefit Cap Lowered
From autumn 2016 the government plans to lower the Benefit Cap which restricts the amount in certain benefits that a working age household can receive.
Any household receiving more than the cap has their Housing Benefit reduced to bring them back within the limit. The current cap for families is £26,000 (£18,200 for single claimants with no dependent children).
The benefit cap from autumn 2016 will be lowered for families to £23,000 in London (£15,410 single claimants with no dependent children) and £20,000 for families in other parts of the UK (£13,400 single claimants with no dependent children).
These planned changes will impact on a greater number of households who will see a significant drop in their income.
There is more information about all of the mentioned benefits on the Turn2us website, which also features a Benefits Changes Timetable so you can stay up to date on the changes happening in April and beyond.
If you think you might see a reduction in income as a result of the changes, you can use the Turn2us Benefits Calculator to make sure you’re claiming your full entitlements. Even if you’ve checked in the past, it’s worth doing so again, especially if you’ve seen a recent change in circumstances.
You can also see if you’re eligible for a charity grant or other support through the Turn2us Grants Search.
Finally, if you are worried about any of the changes and like to speak to someone, you can use the Turn2us Find an Adviser tool to locate face to face advice in your local area.