Are you struggling to pay your household bill and worried about managing less money due to changes in the UK Benefit System?
If Yes, then It becomes essential to review your monthly financial statements to understand your income and expenditure and to check if there is any disposable income left.
Your local council has given Discretionary Housing Payments to help people who are now struggling to pay their rent in the short term as per the UK Benefit System.
There have been various changes to the UK benefit system. Most known benefits are being replaced while others might have different rules for claiming them.
Changes to the UK Benefit System
You may have heard that some welfare benefits have been changing in the last few years. Find out on this page how these changes might affect you.
The introduction of Universal Credit
Universal Credit (UC)
Universal Credit is a new, simpler, single monthly payment for people looking for work or living with a low income.
It replaces some of the benefits and tax credits you may have received in the past and will continue to receive in the future.
Your entitlement towards UK benefits is dependent on where you live and your personal circumstances.
As a UK benefit receiver, you will eventually be transferred to Universal Credit if you already claim any of the following:
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance (ESA)
- Working Tax Credit
- Child Tax Credit
- Housing Allowance
Changes to Pension Credit
What is Pension Credit?
Pension credit is a benefit that some can apply for to top up their income once they have reached state pension age. There are two elements to it:
- Guarantee credit: If your weekly income is less than 163 for a single pensioner, or your joint weekly income is less than 248.80 as a couple, then your income will be topped up to this level.
- Savings credit: This is mostly available for those who reached state pension age before 6 April 2016, and have some savings for retirement. You could be eligible for up to 13.40 extra per week for a single person or 14.99 per week for a couple.
- Pensioners who live together as a couple will only be able to make a new claim for pension credit when both partners are over the state pension age, under new rules set to come into effect on May 2019 – a change that could cost some 7,000 per year. If you will be affected and are eligible to claim, do it ASAP to avoid missing out.
- Pension credit gives a guaranteed minimum income to those over the state pension age, which is now 65 for both men and women.
- Right now, someone over 65 living in a couple can claim pension credit regardless of their partner’s age. However, from 15 May 2019, those couples will only be able to begin claiming if BOTH partners are over 65.
- If you have already claimed pension credit and your partner has not reached the state pension age, you will not be affected by the change and will carry on receiving it for as long as you are eligible.
- However, if you do not already claim, are over 65 or will be before 14 May, have a younger partner and meet the income criteria, make sure you apply as soon as possible. The official deadline is 14 May 2019 (though in practice you have until 13 August 2019 to apply as you can backdate a claim by up to three months).
- It has estimated over 50,000 pensioners with younger partners could claim currently but do not – so if you are eligible, apply as soon as possible. After May 2019, those in a couple where one partner has not reached the qualifying age will need to apply for Universal Credit instead.
Changes to Bereavement Benefits
Bereavement Support Payment has replaced the old system of bereavement benefits for bereavements from 6 April 2017.
His government is making major changes in the bereavement benefits people can receive if their spouse or civil partner dies.
The Bereavement Payment, Widowed Parent’s Allowance and Bereavement Allowance will all be scrapped in favor of a new system called the Bereavement Support Payment.
You may be entitled to Bereavement Support Payment if:
- Your husband, wife or civil partner died on or after 6 April 2017
- The deceased person paid National Insurance contributions or died because of an accident at work or a disease caused by work
- When they died, the surviving partner was under State Pension age.
Under the current system, when a spouse or civil partner dies the surviving partner is entitled to a 2,000 tax-free sum called the Bereavement Payment.
On top of this, the surviving partner may be eligible for Widowed Parent’s Allowance or Bereavement Allowance.
Widowed Parent’s Allowance is paid if you are widowed under state pension age and have at least one dependent child.
It’s a taxable benefit of up to 112.55 a week, which is paid until the youngest child no longer qualifies for child benefit (so a maximum of 20 years), the widowed parent moves in with a new partner or reaches state pension age.
Those between 45 and state pension age without children qualify for the Bereavement Allowance, which is a taxable benefit of up to 112.55 a week paid for 52 weeks.
These payments are linked to the National Insurance record of the deceased partner and rise in line with inflation.
Under the new Bereavement Support Payment system, there will be a tax-free lump sum of 2,500 for those with no children or 3,500 if those with children.
This will be followed by a monthly tax-free payment of 100 if you do not have children and 350 if you do. This will last for 18 months, is paid regardless of your age or if you find a new collaborator and is not linked to inflation.
Cohabiting couples, including those with children will continue to be ineligible for any bereavement benefits under the new UK benefit system.
Personal Independence Payment is replacing Disability Living Allowance
Personal Independence Payment (PIP) has replaced Disability Living Allowance (DLA) for new claimants.
Here is how you could be affected if you currently get DLA:
- If you were under 65 on 8 April 2013, you’ll be reassessed for PIP at some point in the future
- If you were over 65 on 8 April 2013, you will continue to receive it for as long as you are eligible.
- If you do not currently claim DLA, then you may be able to claim Personal Independence Payment (PIP) or Attendance Allowance instead.
- If you already claim DLA and want to know whether you will continue to claim or will be transferred to PIP, you can call the Government’s Disability Living Allowance helpline.
Changes to Support for Mortgage Interest
Support for Mortgage Interest (SMI) pays towards the interest on a mortgage or other eligible home improvement loans.
From 6 April 2019, SMI loans were introduced. This means that if you claim SMI, you will need to make sure that you pay interest on your mortgage or home improvement loans, either yourself or using the loan. The loan is voluntary and you have the choice to accept it or not.
Housing benefit reductions and the bedroom tax?
Housing Benefit is reduced if you are considered to have more bedrooms than you need in your home. This has been called the ‘bedroom tax’.
This could affect you if the following applies to you:
- you’re under State Pension age and,
- you rent a property from your local authority or a housing association and,
- You have more bedrooms than you need.
- You are a pensioner with a younger partner, and claim Universal Credit. All 18 to 21-year-olds will be able to claim support for housing costs as part of Universal Credit.
If you are renting from a local authority, housing association or registered social property owner, your Housing Benefit might be cut.
This is often referred to as the Bedroom Tax, the under-occupation penalty, or the removal of the spare room subsidy.
Your Housing Benefit might be cut by:
- 14% if you are considered to have one spare bedroom
- 25% if you have two spare bedrooms or more.
How the benefit cap could affect you
There is a cap on the amount of benefits you can claim if you are not working. The cap is 23,000 in London and 20,000 elsewhere.
You may be affected if you’re under State Pension age, or if you’re over this age and live with a spouse or partner below that age and:
- you or your partner claims Income Support, income-based Jobseeker’s Allowance or income-related Employment and Support Allowance (ESA)
- You or your partner claims Universal Credit.
The cap will not apply if you receive any of the following:
- Attendance Allowance
- Disability Living Allowance
- Personal Independence Payment
- Working Tax Credit
- ESA support component
- War widow’s pension
Budgeting Loans and Budgeting Advances
If you need to borrow money for an emergency expense while you are claiming certain benefits, you can ask for help from the DWP to help with the cost.
If you are getting certain benefits, you might be able to claim a Budgeting Loan.
Budgeting Advances are replacing Budgeting Loans for people on Universal Credit.
If you are claiming Universal Credit, you will need to ask for a Budgeting Advance.
The full list of benefit and pension rates for Tory ministers have been released in 2019.
UK Benefit System and State Pension Rate Changes in Full
Here is how rates are due to change – stated weekly unless otherwise shown.
Attendance allowance: 87.65 (up from 85.60)
Bereavement support payment: 2,500 or 3,500 lump sum (frozen)
Benefit cap: 23,000 a year in London / 20,000 outside (frozen)
Carers’ allowance: 66.15 (up from 64.60)
Disability Living Allowance: 148.85 maximum (up from 145.35)
Employment and Support Allowance: 73.10 basics for over -25s (frozen)
ESA component for ‘work-related activity’ group: 29.05 (frozen)
ESA component for ‘support’ group: 38.55 (up from 37.65)
ESA severe disability premium: 65.85 (up from 64.30)
Housing benefit: 73.10 for single people over 25; 114.85 for couples over 18 (frozen)
Jobseekers’ allowance: 73.10 for over-25s, 57.90 under-25s (frozen)
Maternity allowance: 148.68 (up from 145.18)
Statutory maternity/paternity leave pay: 118 (up from 116)
PIP daily living enhanced: 87.65 (up from 85.60)
PIP daily living standard: 58.70 (up from 57.30)
PIP mobility enhanced 61.20 (up from 59.75)
PIP mobility standard: 23.20 (up from 22.65)
New State Pension: 168.60 (up from 164.35)
Old State Pension: 129.20 (up from 125.95)
Pension credit: 167.25 minimum guarantee for a single person (up from 163)
This was all from our side about Changes to the UK Benefit System and how you can claim benefits from it. We tried to cover all the important tips and advice that we could into this blog and hope this will help you in your debt management.
Rajnish Tyagi is an experienced and Cert DR qualified debt advisor at Acme Credit Consultants Ltd. He specializes in offering suitable debt solutions to clients.
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