TENS of thousands of Brits on tax credits will see a major change in the coming months.
HM Revenue and Customs (HMRC) has confirmed that 30,000 households on the benefits will be asked to claim Pension Credit.
GettyA collection of modern British banknotes surrounding the HM Revenue & Customs heading on a UK Government tax form.[/caption]
It comes at the same time that the Department for Work and Pensions (DWP) continues to move those on tax credits over to Universal Credit.
The move, called Managed Migration which began in May last year, sees people moved from legacy benefits like tax credit to Universal Credit or Pension Credit.
Households receive letters which ask them to make a fresh claim for these new style benefits instead.
But both HMRC and the DWP have confirmed that all households who reach State Pension age six months before their tax credits expire, between now and the end of 2024, will be asked to claim Pension Credit instead.
It comes after the DWP said all tax credit households in work will have been contacted about moving to Universal Credit by the end of 2024.
Pension Credit is designed to help people over state pension age (currently 66) and struggling to get by on a low income.
The average Pension Credit award is worth over £3,500 a year, according to the DWP.
It tops up a person’s income to a minimum of £201.05 per week for single pensioners and £306.85 for couples.
But around 850,000 eligible pensioners are already missing out on the cash boost provided by Pension Credit.
We’ve explained everything you need to know about the benefit below.
Who is eligible for Pension Credit?
It is available for people who are over the state pension age, and who live in England, Scotland or Wales.
This is currently rising to 66 for both men and women.
It used to be the case that couples, where one person was over state pension age, could claim, but new rules now mean that both people in a couple must be over retirement age to apply.
This means if you’re single and move in with a partner who is younger than the State Pension age, you will stop being eligible.
But if you’re already receiving Pension Credit under the old system it won’t stop unless your circumstances change.
To qualify, you’ll need to have a weekly income of less than £201.05 for single people or £306.85 for couples.
Your income is worked out taking into account various elements including:
Your state pensionAny other pensions you have saved, for instance, workplace or private pension savingsMost social security benefits, for example, carer’s allowanceAny savings or investments worth over £10,000Earnings from a job
The calculation does not include:
Attendance allowanceChristmas bonusDisability living allowancePersonal independence paymentHousing benefitCouncil tax reduction
If your income is too high to get Pension Credit, you may still get some savings so it’s worth checking.
How much can you get in pension credit?
There are two parts to the benefit and pensioners can be eligible for one or both parts – here are the current rates for the tax year:
Guarantee credit – tops up your weekly income to a guaranteed minimum level. This is £201.05 a week if you’re single and £306.85 a week for married couples.Savings credit – provides extra money if you’ve saved money towards retirement. You can get an extra £15.94 a week for a single person or £17.84 a week for a married couple.
You may also get additional pension credit if you are disabled, have caring responsibilities or have to pay certain housing costs such as mortgage interest payments.
For instance, you can get either £61.88 a week or £72.31 per week for each child or young person you’re responsible for.
If you are disabled or care for someone who is disabled, you may get more.
For example, if you have a severe disability you could get an extra £76.40 a week or if you care for another adult you could get an extra £42.75 a week.
How do I apply?
You can start your application up to four months before you reach state pension age.
Applications for Pension Credit can be made on the government website or by ringing the claim line on 0800 99 1234.
You can get a friend or family member to ring for you, but you’ll need to be with them when they do.
You’ll need the following information about you and your partner if you have one:
National Insurance numberInformation about any income, savings and investments you haveInformation about your income, savings and investments on the date you want to backdate your application to (usually 3 months ago or the date you reached state pension age)
If you claim after you reach pension age, you can backdate your claim for up to three months.
How will I be paid?
Your benefits are usually paid into an account, for instance, a bank account – they’re usually paid every four weeks.
You’ll be asked for your bank, building society or credit union account details when you claim.
But if you have problems opening or managing an account, you might be able to claim a different way.