A look at the main means tested benefits and tax credits that can top up a low - or temporarily reduced - income. Many of these will be replaced by Universal Credit eventually, but remain very important for the many people with cancer who still receive these “legacy benefits”. And in certain circumstances new claims can still be made usefully being topped up by Who might claim which one?
Welcome to the second in a mini-series of blogs around means tested benefits and tax credits. While all the ones in this blog – except Pension Credit – are due to merge into Universal Credit, the process will not be complete until December 2023 at the latest estimate. They will remain relevant to people already receiving them and they can still change and adapt to certain changes of circumstances . But there are also circumstances when you can still start an entirely new claim for one of these benefits -see more below
- In Part One - see the links below - we looked at what means testing means , and why we have a mixture of means tested and non-means tested benefits in the system.
- Here in Part Two, I will take you on a "Cooks Tour" of the main means tested benefits and tax credits that help top up a low income, highlighting their relevance to people affected by cancer and signposting to blogs where you can find out more.
Next time, I will look at those means tested benefits that help with specific costs such as rent, council tax and health costs
I will also look at how receiving some of these benefits can “passport” you through the means test for others; the very similar sums involved means you don’t have to go through having your savings and income assessed all over again.
Help to top a low income comes in two forms:
- the older means tested benefits (going back to 1988) that are all variations on what was once just Income Support; and
- the newer-fangled tax credits (from 2004) which are run by HMRC, designed to fit in more with the income tax rules and ways of doing things
I pick up the numbering from last time
- Can I still claim these benefits?
Before going further an important impact of the gradual roll out of Universal Credit (UC) is that it can close off the “working age” benefits and tax credits below if you would have been entitled to make an entirely new claim. It also means that certain changes in circumstances – those that would have required a new claim – may mean that you need to switch from your current legacy benefit to Universal Credit instead.
However, there is a lot of misunderstanding and confusion amongst staff in the various benefits agencies so do get independent advice or check the Universal Credit blogs before you claim UC. Once you do claim UC, you cannot switch back
This does not include Pension Credit which remains open to new claims in all areas and will continue to do so. However, there will be some important knock on effects because of the changes for the younger folk. If you are one of a mixed age couple – where one of you is below PC age and the other is above – or a twinkle in your eye means that you soon might be – then you do need to claim Pension Credit while you still can. At a date still to be confirmed, such couples lose the option to claim PC; the younger partner would need to claim UC for the couple instead – with significant losses – until they too came of age.
For the other benefits – the working age ones – then the idea of the UC roll-out is that in most cases the ability to make a new claim stops as your area “transitions” to “Full Service” Universal Credit. If you are reading this blog before the end of December 2018, then you need to check if your area has yet transitioned or not – see the links. The aim though is that all areas will have transitioned to Universal Credit by 2019
So, what does transition day mean:
- In most cases you will no longer be able to claim one of the legacy benefits, but there are important exceptions – see below
- If you are already receiving a “legacy benefit” you will continue to receive it until either you are “invited” to claim UC instead as part of a “managed migration” process (not due to kick off in earnest until late 2020) or there are certain but by no means all changes in circumstances
3.1 When can you still claim one of the “legacy benefits”?
If your area is yet to transition to “full service” Universal Credit, then you can make new claims for “legacy benefits” as before. If your area has transitioned – as all are due to have done by the end of December 2018 – then in general you can’t make a new claim for legacy benefits.
But there are important exceptions:
- If you have more than 2 children, then you cannot claim UC until 1st February 2019 – you claim Child Tax Credits and any other legacy benefit
- From a date in Autumn 2018 – still to be confirmed – you will not be able to claim UC if you receive an amount called a “severe disability premium” within any of your legacy benefits. We will see what that is later in the series, but it can apply to many people with a cancer diagnosis
- People already getting parts of certain compound benefits – ESA, JSA and tax credits – can still apply for the other part of that benefit – even if that part would be one of the “legacy benefits” – see under those benefits below
3.2 What changes would mean an early switch to Universal Credit? And does that matter?
It matters because if you get less under the Universal Credit sums than you were under the old “legacy benefits”, the Government are not offering any transitional protection to cushion the blow. However, if you don’t switch until you are made that “offer you can’t refuse” – from late 2020 on – you will get a transitional addition that makes up the difference.
So, switching too early, could be expensive. There is mistaken message around in too many Jobcentre Plus, Housing Benefit and tax offices, that any change in circumstances causes a shift to UC. This is not so. The basic rule is that it is only if your change would require a new claim under the legacy system that it might require a switch to UC. And that follows naturally from the fact that, in most cases, you cannot make a new claim for a legacy benefit
So, if you come under one of the exceptions that would apply to an entirely new claim then that also stops you needing to switch from a legacy benefit. But even if you don’t beware of changes that might look like needing a new claim but don’t: moving home within the same local authority area might be a total change in Housing Benefit but is not a new claim. Nor is adding Income-related ESA to an existing Contributory ESA or one tax credit to the other. For a useful table of changes and benefits and consequences see the link
- Which means tested benefits and tax credits are there?
When the current means tested system was reformed in 1988, all the benefits in this section all came under Income Support (IS), so if you are new to the benefits world you may then have heard that name.
When they were all together within IS, you didn’t have to know which one to claim nor need to swap between them if your reason for claiming changed.
However, separating them out has advantages too: it means they can link up more closely with their non-means tested equivalents, so that you can claim both on one form. So, there are pros and cons both ways and in a sort of "back to the future" reform these are merging back again into Universal Credit, but that’s worth its own mini-series …
One more recent advantage of JSA, ESA and tax credits each being common claims, is that you are not making a new claim if you want to add one part to an existing claim for the other, even if you are adding on an otherwise closed off “legacy benefit”.
A further key distinction is between the one of these that is there for people of "pension age" and the range of others that are paid for for people of "working age, depending on their reason for not earning.
Support once you are over "pension age"
4.1 Pension Credit (PC)
This was formerly known as Income Support (if aged over 60) , but separated off to become Pension Credit in 2003. The aim of the change was to focus considerably more resources on the poorest 20% of pensioners, to effectively abolish absolute poverty in old age. PC offered a new more focused service, much shorter claim forms, and more generous amounts with no savings limit to all help connect the cash with those entitled.
The original 60-year age bar applied to men and women alike though it was based on the then women’s Retirement Pension age. The PC age is going up alongside that, so at the time of writing is approaching equalisation at 65 with men’s Retirement Pension Age. This will be hit at November 2018. There then follow a couple of years when this new common age of 65 for State Retirement Pension and Pension Credit will rise to 66 where it will stay for a few years.
That means single men had an awkward age in between when as well as buying motorbikes and guitars to offset midlife crises, they could either claim PC or claim one of the working age alternatives in this section. On the whole, it is better to go with Pension Credit as it involves much less hassle and a more generous treatment of any savings. If you choose to stick with a working age “legacy benefit” then at least a pensioner premium boosted your pension up to PC levels. This does not apply though to Universal Credit which has no pensioner element within it
The issue is fading with the rise in ages for single men as that awkward age disappears. But it remains very relevant for "mixed age" couples i.e. where one is below and one is above Pension Credit age. It is a joint claim and at the time of writing there is a free choice between either the older partner leading on a joint PC claim or the younger partner on a joint “working age” age claim, Now if you choose the “working age” option, then the legacy benefits will add a pensioner premium into the sums to help close the £134 gap (at 2018/19 rates).
But crucially, there is no such pensioner amount within Universal Credit, so in most areas where you can no longer start a claim for a “working age legacy benefit”, you do not want to claim UC. Rather, you want the older partner to claim PC, while you still can.
At some point, the choice will be removed and the younger partner will have to claim UC with a loss of £134 a week , So if you are in a mixed age couple, or thinking of becoming a couple it is important firstly to check that you can claim PC – some 40% of people entitled to PC don’t claim their entitlement – and to make that claim while you still can. The potential losses can be greater when long term health problems such as cancer are involved – a couple could be up to £250 worse off if either forced to claim or stuck on UC.
But for anyone over 64 ¾, Pension Credit is a lot simpler, easier to access and more generous than the other means tested benefit, but is still significantly under-claimed. Yet, only some 60% of people entitled to PC claim it and the main reason is that many people simply don’t realise that they might be entitled.
For more details see the separate series of Benefit Blogs on Pension Credit see the links below
Support in "working age"
There is a wider range for those below the changing Pension Credit age, depending on your reason for not earning, although the plan is to move people over to Universal Credit (UC) instead by December 2023. It will be difficult to make new claims for the benefits below but you can still have amounts changed and adapted within any existing claims.
4.1 Income-based Jobseekers Allowance (Ib-JSA)
What was once known as Income Support (if unemployed) was the first one to be separated off from Income Support - back in 1996 - and joined up with its non-means tested sibling the new Contribution-based JSA (Cb-JSA) that was formerly known as Unemployment Benefit.
Income-based JSA (Ib-JSA) then, is the means tested top up or alternative to Cb-JSA, that helps if you don't have enough National Insurance contributions for Cb-JSA, that claim has timed out or you don’t have much other money coming in and qualify for some of the additional amounts available within Ib-JSA.
JSA – in both its forms – is the benefit for people of “working age” who are not excused the need to “sign on” as available for and actively seeking work. Many people affected by cancer are so excused either on health grounds or because of caring responsibilities, so JSA may not apply. However, as you move into recovery, there may come a point where even if not firing on full cylinders, you might feel ready to return to work or start looking for work. In either case, you might need some allowances made within the usual JSA requirements, but JSA could apply if any remaining health limitations no longer meet the threshold for ESA on grounds (of sickness) but your late effects have eased off when you might no longer meet the threshold for ESA below.
Now you can start exploring a return to work or looking for work - and even trying out a little bit of paid work while on ESA, so don’t jump into JSA too early. Although allowances can be made for a level of health problems or caring responsibilities, it’s all down to discretion and set against a default fairly heavy requirement and trigger-happy sanctions regime. So, start your job seeking from the more secure and less driven safety of ESA
4.3 Income-related Employment and Support Allowance
This started replacing Income Support (if too unwell to work) from 2008. As with JSA (above) the aim in the separation from Income Support was to make Income-related ESA join up much more closely with its non-means tested equivalent Contributory ESA (which replaced the former Incapacity Benefit and Severe Disablement Allowance)
Contributory ESA can be paid regardless of most other income and savings and regardless of what any partner is up to – financially speaking … Income-related ESA is there as a safety net so will be a joint claim with a partner and will consider your joint income and savings. So, some people get Income-related ESA instead of Contributory ESA, because they don’t have enough NI contributions or entitlement has timed out, while others get it as a top up to Contributory ESA, because Income-related ESA includes some extra amounts.
Some will get neither - from not enough NI history for C-ESA, that entitlement having timed out or other income or savings preventing entitlement to a partner working stopping Ir-SA. It can still be worth keeping the claim going though for several other reasons
You might claim ESA from the start of becoming unwell or from immediately after you stop getting Statutory Sick Pay (SSP) from an employer. It does not matter if you are still getting some sick pay from work; once SSP drops out you can claim ESA. Any ongoing work sick pay is ignored for C-ESA, but may affect Ir-ESA.
The test of your sickness are exactly the same whether you receive C-ESA or Ir-ESA, so see the ESA blogs for more details about that, available on the page here.
4.4 Income Support (IS)
Despite losing big groups of its former customers, there are still some important groups who still claim the original Income Support (IS). Amongst people affected by cancer, the main groups are:
- carers – either while awaiting the disability benefits to be sorted out for the person they care for to be sorted out or as a top up to Carer’s Allowance
- those with a cancer diagnosis who need a top up while still receiving Statutory Sick Pay (SSP) from work. Any income top-up will be via Income Support until SSP drops out after 28 weeks being off sick
Income Support also covers lone parents with a young child and various smaller miscellaneous situations where someone doesn’t fit into any of the above.
Income Support is a bit easier to claim – if it is still open to you to do so. It involves a similar long form as the others, but there is no health assessments and much lighter work requirements if any.
For details of benefits for carers see the Benefits and Carers blogs and for more details on Statutory Sick Pay and the switch over to ESA at 28 weeks see the Benefits when off sick series
5 Tax Credits
These also top up income, but work in a different way using a “light-touch” means test, based around the information that HMRC already hold in relation to your income tax affairs. It does make for a rather different feel from the more traditional means tested benefits above, where you are assessed on how your income is this week.
Tax credits look at your income over the whole tax year, so don’t react as swiftly as the means tested benefits, but are much more flexible than the old fixed 6 monthly awards they replaced.
Despite heavy cuts, the tax credit system still offers real support whether in low income from work or in amounts for children.
There are, then, two different parts to a common tax credit claim, which means that if you are receiving either Working or Child Tax Credits, but are now entitled to the other you can still have that added to your claim even if you live in a “Full Service” Universal Credit area. It is not a new claim – which in most cases is prevented – so you do not need to claim Universal Credit instead.
5.1 Working Tax Credit (WTC)
The real advantages of a link with income tax comes when you are in work. HMRC can pick up your income from your PAYE if an employee or your tax returns if you are self-employed.
WTC replaces the old benefits for families on low earnings - e.g. Family Income Supplement (FIS) and Family Credit (FC) - and support for workers with disabilities – which includes the late effects of cancer - e.g. Disabled Worker’s Allowance (DWA). WTC then, replaces both types of support with a single “in work” benefit and also opened up help to people without children or disabilities.
Linking it into the tax system meant things got easier once you adjusted: the old benefits involved a big form every 6 months with a fixed award for the next 6 months, regardless of whether your income rose or fell during that time. WTC is a much shorter form with a 2-page renewal, for a benefit that can be adjusted at the end of each tax year.
You might need help with low earnings either because you have a low hourly rate or because you aren’t able to put in many hours, so it can be really useful in recovery when easing gently back into work. Any Personal Independence Payment (PIP) you claimed while undergoing treatment can carry on with you into work and also helps trigger an extra disability element within the WTC sums. It also means you only need to be doing 16 hours a week rather than other minimums such as 24 or 30 hours
If you were getting WTC before becoming ill you can carry on qualifying as a “worker” for the first 6 months of being temporarily off sick, and if you are in a position to resume working after that, can retain your WTC e.g. as a disabled worker doing 16 hours a week.
If WTC wasn’t relevant for you before it may become so after, if you are easing yourself back into work on a part time or lower rate basis in recovery or if you are taking time out as a carer.
5.2 Child Tax Credit (CTC)
Child Tax Credits (CTC) brings together all the help for the costs of children and young people – apart from Child Benefit - and so it separates out the previous child amounts within predecessors to Working Tax Credit and merges them with those that were previously part of the “out of work” means tested benefits above.
The aim was for CTC to act as a single benefit for families to act as a “bridge from welfare into work” and – as with Pension Credit – to be far more generous and make significant inroads on child poverty. This included substantial increases in provision for children and young people with “disabilities” - which includes children and young people with a cancer diagnosis. And finally, in making this separate more generous payment paid separately to the person with main care of the children, the then Government was drawing on an evidence base that this ensured the money reached the children most effectively. In extreme cases, CTC was a lifeline for those escaping an abusive relationship.
CTC manages to bridge the two very different worlds of the tax credits and means tested benefits. Anyone who is on a means tested benefit just ticks a box on the tax credit claim form and automatically receives maximum CTC. So, to those parents, it feels just like a weekly benefit replacing - and considerably increasing - the amounts for children previously allowed for within the means tested benefits.
In fact, anyone with an income below £16,105 will also qualify for maximum CTC, so it made a real difference to those who were getting by on slightly higher incomes, perhaps as pensioners, workers on low earnings or on non-means tested benefits only (because of e.g. savings or a redundancy payment).
If you are claiming WTC, then the reduction in your tax credits as income rises is linked. Because any reduction to CTC only starts once any WTC has been eroded, it means that the CTC amount for children will not start to be affected until at least £16,105. However, where extra elements apply – e.g. a WTC disability element – the point at which CTC starts to taper off could be at much higher earnings.
And so...
I hope the thumbnail sketches of the different means tested benefits and tax credits above helps make sense of the different "top ups" available.
Income-related ESA may be most relevant to people with a cancer diagnosis and Income Support for carers. Or if over PC age, then Pension Credit may the one for both of you. If you are working through treatments, easing into work in recovery or taking a cut in earnings as a carer then Working Tax Credit can help. And whether in or out of work, under or over pension age, then Child Tax Credit is where amounts for children and young people come in.
Next time, I will look at others help available with specific costs: paying the rent, help with mortgage interest, the council tax or health costs. And how receipt of one of the benefits in this blog can passport you through to that more specific benefit.
So, if you do wander into a Maggie’s Centre asking for help that might be available with say the not inconsiderable travel costs to regional cancer centres, don’t be surprised if one of my Benefits Adviser colleagues starts broadening the discussion to explore checking one of the benefits in this blog or Universal Credit
And after that ...and to see how they work in common scenarios for people affected by cancer - I will lead take you through the common way in which entitlement builds up. There will be sums but I will try to keep them simple. You can already see how that works for Pension Credit in the blog in the links
If you have any general queries, comments or experiences to share please post in the forums join
If you would like to check out that you are not missing out on these - or any other benefit - in a private space, please pop into your local Maggie’s Centre – find your nearest centre hear – or look at some of the other options in the links below
Further reading and useful links:
External links:
- DWP- How to claim Pension Credit - here
- HMRC - How to claim Tax Credits - here
- DWP - information on Job Seeker's Allowance (JSA) - here
- DWP - information on Employment and Support Allowance - here
- DWP Information and claiming Inccome Support - here
Other parts in this series:
- Means Tested Benefits (1): What are they and why means test? - here
- Means Tested Benefits (3) : Benefits to help with specific costs - here
- Means Tested Benefits (4) - How much might you get? How the Sums work- here
Other related blogs
- Benefits in Pension Age (4): Extra help from disability benefits and Pension Credit - here
- Benefits in Pension Age (5): Pension Credit made real : simple sums and common examples - here
- Universal Credit - here
- Benefits and Cancer: an overview - starting here
- Find out more about.... Benefits and Cancer
- Find out more about befits for... Difficulties with day to day living and getting around
Getting individual benefits advice and support near you
There may be a number of other places where you can get face to face advice, help with forms or challenging adverse decisions in your area. The local provision varies considerably but some good places to start looking include:
- visit your local Maggie's Centre and talk with one of our benefits advisors. Find your local centre here
- see if there is a Macmillan advice service nearer you - here
- find your local Citizens Advice office / bureau: in England & Wales - here. In Scotland -here
- Age UK - for older people - here