3. A–Z of benefits and tax credits

CPAG

3. A–Z of benefits and tax credits

Unless otherwise stated, all the benefits referred to in this section are claimed from and paid by the Department for Work and Pensions (DWP). For more information and the current rates, see CPAG’s Welfare Benefits and Tax Credits Handbook.

Attendance allowance

Attendance allowance (AA) is a benefit for clients who are aged 65 or over when they first claim and who have care needs as a result of either a physical or mental disability. They must need:

•frequent help with personal care throughout the day; or

•continual supervision throughout the day to avoid danger to themselves or others; or

•repeated or prolonged attention at night to help with personal care or for another person to be awake for a prolonged period or at frequent intervals to avoid danger to themselves or others.

Clients must satisfy the disability conditions for at least six months. However, people who are terminally ill (ie, who have a progressive disease from which they could reasonably be expected to die within six months) should be awarded the higher rate of AA immediately.

An award of AA always makes a client better off. It is not means tested and does not count as income when calculating means-tested benefits and tax credits. Entitlement to AA may mean a client is entitled to a means-tested benefit, or a higher amount of benefit than is already being paid. In particular, an award of AA means that a client’s carer could claim carer’s allowance (CA – see here) for looking after her/him, or the client could qualify for an extra amount in a means-tested benefit (see here).

AA cannot be backdated. It is not taxable.

Bereavement support payment

Best Start grants and food

Bereavement support payment replaces the ‘old’ bereavement benefits (bereavement payment, widowed parent’s allowance and bereavement allowance) for people whose spouse or civil partner dies on or after 6 April 2017. If the death was before 6 April 2017, clients may be entitled to the ‘old’ bereavement benefits.

In order to qualify, the client’s late spouse or civil partner must either have paid sufficient national insurance (NI) contributions or been an employee and died as a result of an industrial accident or disease. In addition, the client must be under state pension age.

There are two rates of bereavement support payment:

•the standard rate, comprising an initial lump sum and a monthly amount; and

•the higher rate, payable to pregnant women and those with dependent children, comprising an initial lump sum and a monthly amount.

Bereavement support allowance is paid for a maximum of 18 months after the death and must be claimed within 12 months of that date. It is automatically backdated for three months.

The initial lump sum is disregarded as capital for means-tested benefits and the monthly allowance is disregarded as income for means-tested benefits and tax credits.

Best Start grants and food

This section applies to Scotland only. For England and Wales, see Healthy Start vitamins and food and Surestart maternity grants.

The Best Start grant is split into three payments. The Pregnancy and Baby payment provides help with maternity costs if you are on a low income or if you are younger than 18 and are pregnant or have a child. The grant can be claimed if you are more than 24 weeks pregnant, or if you had a baby within the last 6 months. A higher amount is paid for your ﬁrst child, and a smaller grant can be claimed for any subsequent children.

The Early Learning payment is a one-off payment that can be claimed from your child’s second birthday. The claim must be made before the child is three and a half. You must have a low income or be younger than 18 to qualify.

The School Age payment can be claimed when your child is four or ﬁve years old. Speciﬁc claim dates are provided for children born in certain time periods, and you should check Mygov.scot to find out whether you can make a claim.

Best Start foods is a pre-payment card available to claimants who are pregnant or responsible for a child younger than three years old, and who are receiving a qualifying beneﬁt or are younger than 18. The pre-payment card is credited weekly, with a higher amount paid while the child is under one year old.

Carer’s allowance

CA is a benefit for clients who are providing regular and substantial care (35 hours a week or more) for someone who is in receipt of AA, the middle or highest rate of disability living allowance (DLA) care component, either rate of the daily living component of personal independence payment (PIP), armed forces independence payment, or constant attendance allowance for industrial injuries disablement benefit or a war disablement pension. This includes caring for a relative or a member of the family – eg, a partner or child.

Carers can continue to claim CA if they or the person that they are caring for is isolating as a result of, or has been infected with, coronavirus, as long as they are still providing care remotely, such as providing emotional support over the phone.

Clients who claim CA (even if it is not paid because of special rules on ‘overlapping benefits’) may be entitled to an extra amount, called a carer premium, in a means-tested benefit (see here) or a carer element in universal credit (UC – see here).

Note: a claim for CA can mean that the cared-for person receives less in means-tested benefits and so a detailed better-off calculation may be needed. Clients should be referred for specialist advice if required.

CA is not means tested, but clients cannot get it if they have earnings above a set limit. CA is taken into account in full as income for means-tested benefits and tax credits. CA is taxable.

A young carer grant (Scotland only) is available to carers aged 16, 17 or 18 who provide an average of 16 hours’ care per week to a person who is in receipt of AA, the middle or highest rate of DLA care component, or either rate of the daily living component of PIP. The carer will not be eligible for the grant if they were entitled to CA on the date of the claim. The grant is paid once a year and cannot be claimed if another person has claimed a young carer grant for caring for the same person.

Child benefit

Child benefit is a benefit for clients who are responsible for a child under 16 or a qualifying young person. A ‘child’ is someone under 16. A ‘qualifying young person’ is someone aged 16 to 20 who meets certain conditions, such as being enrolled on a course of full-time non-advanced education or on approved training.

To be responsible for a child or qualifying young person, the client must live with the child or contribute to the cost of supporting her/him of at least the child benefit rate.

Child benefit is not means tested, and can be paid in addition to other benefits and tax credits. Child benefit is not taxable, unless a client or her/his partner individually earns more than £50,000 a year. Child benefit is claimed from and paid by HM Revenue and Customs (HMRC).

Child tax credit

Note: child tax credit (CTC) is affected by the introduction of UC (see here).

CTC is paid to clients who are responsible for a child or qualifying young person (see above). A client counts as responsible for a child if s/he normally lives with her/him.

CTC is paid in addition to child benefit and can also be paid with most other benefits. People entitled to income support (IS), income-based jobseeker’s allowance (JSA), income-related employment and support allowance (ESA) or pension credit (PC) automatically get maximum CTC, but it counts as income for housing benefit (HB), except for people who are at least the qualifying age for PC (see here).

CTC is claimed from and paid by HMRC and is means tested. The means test for tax credits is different from that for benefits, and is based on annual income (see here). CTC is not taxable.

Disability living allowance

DLA is a benefit for people who have care and/or mobility needs as a result of a physical or mental disability. Since April 2013, new claims for DLA can only be made for children aged under 16. People aged 16 to 64 who have a disability must claim PIP instead. When a child who gets DLA turns 16, s/he is normally invited to claim PIP. Many adults who already receive DLA will continue to receive it for some time until they are transferred to PIP.

DLA has two components.

To qualify for the ’care component’ the child must need:

•frequent help with personal care throughout the day; or

•continual supervision throughout the day to avoid danger to her/himself or others; or

•frequent or prolonged supervision at night to avoid danger; or

•prolonged or repeated attention at night.

To qualify for the ’mobility component’, the child must:

•be unable or virtually unable to walk; or

•be both blind and deaf; or

•face danger to her/his life or health by walking; or

•be blind or have a severe visual impairment; or

•be born without feet or be a double amputee; or

•have a severe mental impairmant, have severe behavioural problems and be entitled to the highest rate of the care component (see below); or

•need supervision on unfamiliar routes.

DLA care component is paid at three different rates and the mobility component at two different rates. Children can get one or both components if they satisfy the relevant conditions. They can receive the higher rate of the mobility component from age three, the lower rate of the mobility component from age five and the care component from age three months.

The child must satisfy the disability conditions for at least three months before the start of the award and be likely to continue to satisfy them for at least the next six months. However, a child who is terminally ill (ie, who has a progressive disease from which s/he could reasonably be expected to die within six months) should be awarded the higher rate of DLA care component immediately.

An award of DLA for a child will always make a family better off. It is not means tested and does not count as income when calculating means-tested benefits and tax credits. If a client’s child gets DLA, this may mean that the client is entitled to a means-tested benefit, or a higher amount of benefit that is already being paid.

DLA cannot be backdated. It is not taxable.

Employment and support allowance

Note: ESA is affected by the introduction of UC (see here).

ESA is a benefit for clients who cannot work because of an illness or disability. Employees usually claim statutory sick pay (SSP) for the first 28 weeks of illness rather than ESA. Self-employed and unemployed people claim ESA straight away.

There are two types of ESA.

•Contributory ESA is paid if a client satisfies the NI contribution conditions. It is not means tested. It is only paid for 52 weeks, except if the claimant is in the ’support group’ (see below).

•Income-related ESA is means tested and has no NI contribution test. It is possible to receive contributory ESA, topped up with income-related ESA. It can be paid indefinitely.

A basic allowance of ESA is paid during an initial ’assessment phase’ of 13 weeks. The amount of income-related ESA paid could be higher if, for example, it includes premiums (see here) or housing costs (see here). The client’s ability for work is assessed by the DWP under a ’work capability assessment’. A small number of people are treated as having limited capability for work and do not have to undergo this – eg, people who are terminally ill, those receiving or recovering from certain types of chemotherapy and hospital patients.

People who have been infected with coronavirus disease, who are in isolation because of coronavirus or who are caring for someone who is either infected with or in isolation due to coronavirus are also treated as having limited capability for work.

See below for an online tool to help draft a request for a mandatory reconsideration of a work capability assessment decision.

After the initial assessment phase, clients who pass a medical assessment go on to the ’main phase’ of ESA and may be paid an extra amount, called a ’component’ (see here), because of their inability to work. Clients are put into either:

•the ‘work-related activity group’ and must attend work-focused interviews and undertake work-related activity; or

•the ‘support group’ if they have a severe illness or disability.

Clients in the work-related activity group may have their benefit reduced by a sanction if they do not attend a work-focused interview or carry out work-related activity, and some clients receive multiple sanctions for repeated failures. There is a right to appeal this and it is always worth considering whether a sanction could be challenged.

Clients whose income-related ESA has been reduced by a sanction may qualify for hardship payments.

The general rule is that people cannot get ESA if they are working. Clients can do some limited work (called ’permitted work’) while on ESA, but they must notify the DWP and they can lose their ESA entitlement if they earn more than a certain amount. Clients affected by these rules may need specialist advice.

Contributory ESA is not means tested, but it is affected by any income from a pension scheme/plan or an income protection insurance policy, and is subject to the ’overlapping benefit’ rules (see here).

Income-related ESA can be paid in addition to contributory ESA in some circumstances – eg, if a client has a partner. Income-related ESA is a ’passporting’ benefit, which means that it can help the client to get maximum HB, free prescriptions, free school lunches for her/his children and help from the social fund. Extra amounts can be paid depending on the circumstances of the client and her/his partner – eg, premiums for carers or because of a disability (see here).

Contributory ESA is taxable; income-related ESA is not.

Guardian’s allowance

Guardian’s allowance is a benefit paid to a client who is responsible for a child who is effectively an orphan. Clients can be paid it if they are entitled to child benefit for a child whose parents have died, or one has died and the whereabouts of the other is unknown, or one has died and the other has been sentenced to a term of imprisonment of two years or more or is detained in hospital by a court order.

Guardian’s allowance is not means tested, does not count as income for other benefits and tax credits, and can be paid in addition to child benefit. It is claimed from and paid by HMRC.

Health benefits

Clients can qualify for the health benefits listed below if they receive:

•UC and either have no earnings or have earnings below a certain amount;

•IS;

•income-related ESA;

•income-based JSA;

•the guarantee credit of PC;

•CTC and they are not eligible for working tax credit (WTC) (eg, because they do not work enough hours to qualify), CTC and WTC, or WTC that includes a disability or severe disability element and they have income below an income threshold.

Clients may also qualify on the grounds of low income, and should apply directly to the NHS Business Services Authority.

The health benefits are:

•free prescriptions;

•free dental treatment;

•free sight tests;

•vouchers towards the cost of glasses or contact lenses;

•travel costs to and from hospital for treatment or services.

Each health benefit has its own rules on who is entitled – eg, prescriptions are free of charge to women who are pregnant or who have given birth in the last 12 months.

Healthy Start food and vitamins

This section applies to England and Wales only. For Scotland, see Best Start grants and food. The Healthy Start scheme provides vouchers that can be exchanged for healthy food, such as fresh fruit and vegetables, and milk. Those who qualify for vouchers can also get free vitamins. Clients qualify if they:

•are pregnant and have been for more than 10 weeks and are aged under 18;

•are 18 or over, have been pregnant for more than 10 weeks and are entitled to UC and have an income of less than a certain amount, IS, income-based JSA or income-related ESA, or to CTC (but not WTC) and have an annual taxable income below a certain amount;

•are aged 16 or over, have a child under four and get UC, IS, income-based JSA or CTC.

Housing benefit

Note: HB is affected by the introduction of UC (see here).

HB is a means-tested benefit, claimed from and paid by local authorities to tenants to help with the cost of their rent. HB can be paid to people in and out of work.

Clients in private rented accommodation may have their HB restricted if their rent is more than a local housing allowance for their area. This is is based on the number of bedrooms a client is allowed under the rules and the local housing allowance rates set by the rent officer.

Clients in local authority or housing association accommodation may have their HB restricted if they are living in a property that has more bedrooms than they are allowed (known as the ’bedroom tax’) or if their household income from benefits is above a certain amount (known as the ‘benefit cap’). They may also have their amount of HB reduced by the cost of non-eligible charges, such as fuel, water or some service charges.

Clients entitled to IS, income-based JSA, income-related ESA or the guarantee credit of PC are usually entitled to have all their eligible rent met by HB, but they must make a separate claim. Clients not on a means-tested benefit can also qualify for HB if their income is sufficiently low and they have capital below a certain amount (£16,000 for most clients). There is no capital limit for clients on the guarantee credit of PC.

If a non-dependant (eg, a relative or friend) lives with the client, this can reduce the amount of HB paid. The amount of the deduction depends on the non-dependant’s income. It is, therefore, vital that the correct details of the non-dependant’s income are disclosed to ensure the maximum amount of HB entitlement is paid.

Claims for HB can be backdated for a maximum of one month if a client can show a continuous good cause for claiming late. Clients or their partners not in receipt of IS, income-based JSA or income-related ESA who are at least pension age can get HB backdated without needing to show a good cause for up to three months.

Clients whose HB does not cover the whole amount of their rent can apply for a discretionary housing payment to help make up the shortfall. Discretionary housing payments are paid from a cash-limited budget and are not guaranteed.

HB and discretionary housing payments are not taxable.

Income support

Note: IS is affected by the introduction of UC (see here).

IS is a means-tested benefit that provides basic financial support for clients on a low income who are not expected to ’sign on’ as available for work. To qualify, the client must:

•not be in full-time work – ie, s/he must work less than 16 hours a week. If s/he has a partner, the partner must not be in full-time work (less than 24 hours per week);

•not be a full-time student (there are some exceptions);

•pass the means test;

•have capital below £16,000;

•be in a specified group of people who can claim IS (see below).

The main groups of people who can claim IS are:

•lone parents who are responsible for a child under five;

•certain lone parents who are foster parents or who are adopting a child;

•carers – ie, people getting CA or who are ’regularly and substantially’ caring for a disabled person;

•pregnant women during the 11 weeks before and 15 weeks after giving birth;

•people receiving SSP.

IS pays a basic amount for the client and her/his partner, if s/he has one. Some people who have been getting IS since before 2004 may also receive amounts for their children. IS is a ’passporting’ benefit – ie, it can help the client get maximum HB, free prescriptions, free school lunches for her/his children and help from the social fund. Extra amounts can be paid depending on the circumstances of the client and her/his partner – eg, premiums for carers or because of a disability (see here). IS includes an amount for housing costs (see here).

IS is not taxable.

Industrial injuries benefits

The main benefit for industrial injuries is industrial injuries disablement benefit. This is for clients who:

•have a personal injury while working as an employee – eg, from an accident at work; or

•have a prescribed industrial disease contracted during the course of their employment – eg, asbestosis.

Clients must be assessed as having a degree of disablement resulting from a loss of faculty – eg, a reduced ability to walk because of arthritis. Clients can get industrial disablement benefit if they are still in work. It can be paid on top of contributory ESA and other non-means-tested benefits. Industrial injuries benefits are not taxable. They generally count as income for the purposes of calculating means-tested benefits, but are disregarded as income for tax credits.

Jobseeker’s allowance

Note: income-based JSA is affected by the introduction of UC (see here).

JSA provides basic financial support for people who are expected to ’sign on’ as available for work and as actively seeking work. There are two types of JSA.

•Contribution-based JSA is paid for six months to those who have recently paid NI contributions.

•Income-based JSA is means tested with no requirement to have paid NI contributions.

To qualify for income-based JSA, the client must:

•not be in full-time work – ie, s/he must be working less than 16 hours a week. If s/he has a partner, the partner must not be in full-time work (less than 24 hours a week);

•not be a full-time student (there are some exceptions);

•pass the means test;

•have capital below £16,000;

•be available for and actively seeking work.

Income-based JSA pays a basic amount for the client and her/his partner, if s/he has one. Some people who have been getting income-based JSA since before 2004 may also receive amounts for their children. Income-based JSA is a ’passporting’ benefit – ie, it can help the client get maximum HB, free prescriptions, free school lunches for her/his children and help from the social fund. Extra amounts can be paid depending on the client’s circumstances – eg, if s/he is caring for someone or has a disability (see here). Income-based JSA includes an amount for housing costs (see here).

Some couples (eg, those without children) must claim what is known as ’joint-claim JSA’ and both have to be available for work.

Contribution-based JSA pays a basic amount for the client and is only paid for six months. People can get both contribution-based and income-based JSA (or UC if they come under the UC system – see here) at the same time.

Clients may have their JSA reduced by a sanction if they do not comply with certain ’jobseeking conditions’ (eg, attending interviews) and for other things, such as losing a job because of misconduct, giving up work without a good reason or for not participating in specified training or employment schemes. Some clients receive multiple sanctions for repeated failures. There is a right to appeal, and it is always worth considering whether a sanction could be challenged.

Clients can apply for hardship payments if their JSA is not paid because of a sanction and they are considered to be in a vulnerable group – eg, carers, and people who have a disability or children.

JSA is taxable.

Maternity allowance

Maternity allowance (MA) is a benefit for women who are pregnant or who have recently given birth. It is normally claimed by women who do not qualify for statutory maternity pay (SMP) – eg, self-employed women, those not currently in work or those who have not worked for the same employer for long enough to get SMP. To qualify for MA, the client must have been employed or self-employed for at least 26 of the 66 weeks before the week in which the baby is due, and have had average weekly earnings of at least £30 a week in 13 weeks of this ‘test’ period.

MA is not taxable.

Pension credit

PC is a benefit for people on a low income who are at least pension age. The pension age for men and women has been equalised, so the qualifying age for PC is the client’s pension age – which depends on her/his date of birth. Pension age is currently 66 (as of 2020) and will eventually go up to 68.

PC is made up of a guarantee credit and a savings credit.

The guarantee credit is the basic amount paid for the client and her/his partner. It is means tested, but there is no limit on how much capital a client can have.

Extra amounts can be paid depending on the client’s circumstances – eg, if she is caring for someone or has a disability (see here). Amounts for children are not included. PC is a ’passporting’ benefit – ie, it can help the client get maximum HB, free prescriptions, free school lunches for her/his children and help from the social fund. PC includes an amount for housing costs (see here).

The savings credit is an additional amount, paid to clients who have qualifying income (eg, retirement pension) over a certain amount.

However, savings credit is being phased out and is only available for people who reached pension age before 6 April 2016.

PC is not taxable.

Personal independence payment

PIP is a benefit for people of working age who have care and/or mobility needs as a result of a physical or mental disability. It has replaced DLA for new claimants aged 16 or over from 8 April 2013. Clients who get DLA are being gradually transferred to PIP.

PIP has two components – a daily living component and a mobility component. Each component has two rates – a standard rate, and an enhanced rate paid if a client’s ability to carry out certain activities is severely limited by her/his physical or mental condition.

Entitlement to PIP is determined by testing the difficulty a client has performing a specified list of activities. Points are given for each activity and benefit is awarded once a specified number of points is reached. Most clients must have a medical assessment.

See below for an online tool to help draft a request for a mandatory reconsideration of a PIP assessment decision.

To qualify for PIP, a client must usually have met the disability conditions for three months and be expected to meet them for at least a further nine months. However, a client who is terminally ill (ie, who has a progressive disease from which s/he could reasonably be expected to die within six months) should be awarded the enhanced rate of the daily living component immediately.

An award of PIP always makes a household better off. It is not means tested, taxable or based on NI contributions. Entitlement to PIP may mean that a client becomes entitled to a means-tested benefit or to an increased amount of a benefit that is already being paid.

PIP cannot be backdated.

Retirement pension

Clients who reach pension age on or after 6 April 2016 can get the new state pension. Clients who reached pension age before 6 April 2016 may be entitled to an ‘old’ retirement pension, known as category A, category B and category D retirement pensions.

The amount of state pension a client receives depends on her/his NI contribution record. State pension is paid at a basic weekly rate, which can be increased if a client has chosen to defer the pension.

A client must claim state pension on the approved form, or by telephone or online. State pension can be backdated for a maximum of 12 months from the date s/he would have been first entitled. Any claim made after this date can be treated as an application to have the pension deferred. Clients should consider the financial implications before choosing to either have their pension backdated for 12 months or have it deferred.

State pension is not means tested, but is taken into account as income for other benefits and tax credits. It is taxable.

Social fund payments

The following payments are available from the social fund.

•Budgeting loans. These are for specified types of expenses, such as an item of furniture or household equipment. They are discretionary, so a loan is not guaranteed. The client must have been getting a qualifying benefit (see here) for at least 26 weeks. The amount paid is determined by a formula based on the size of the client’s family and the amount of any outstanding budgeting loan debt. Loans are repaid through weekly deductions from benefits, but are interest free. The loan must be repaid within 104 weeks. Note: clients getting UC cannot apply for a budgeting loan and must apply for a budgeting advance of UC instead (see here).

•Sure Start maternity grant. (England and Wales only. For Scotland see Best Start grant and foods). This is a £500 lump sum payable to clients on a low income to help with the costs of a new baby. If the client is already getting a grant for another child under 16, s/he cannot get the grant. The client must be on a qualifying benefit (see below). The grant must be claimed within six months of the baby’s birth (or an adoption or residence or parental order).

•Funeral payment. This is a lump sum to cover the basic costs of a funeral plus some other related expenses. The client must be responsible for the funeral arrangements and be on a qualifying benefit (see below). The payment may be recovered from any money or assets left by the person who died. There are also rules which exclude some people from claiming if someone else, not on benefit, could have paid for the funeral.

•Winter fuel payment. This is a lump-sum payment to help pay fuel bills, although it can be spent on anything the client wants. Clients must be at least pension age to qualify (see here). It is usually paid automatically.

•Cold weather payments are paid to people on a qualifying benefit (see below) during recorded periods of cold weather. Note: there are other qualifying conditions.

Qualifying benefit

A ’qualifying benefit’ for a budgeting loan is:

– IS;

– income-based JSA;

– income-related ESA;

– PC.

A ’qualifying benefit’ for a Sure Start maternity grant, funeral payment and cold weather payment is:

– IS;

– income-based JSA;

– income-related ESA;

– HB (funeral payments only);

– PC;

– CTC of more than just the family element (Sure Start maternity grants and funeral payments only);

– WTC including the disabled worker or severe disability element (Sure Start maternity grants and funeral payments only);

– UC.

In some cases, a client can claim a social fund payment if her/his partner has an award of the qualifying benefit or tax credit.

Statutory adoption pay

Statutory adoption pay (SAP) is paid to clients who are (or have recently been) employees and who take adoption leave.

A client’s average gross weekly earnings must be at least the NI ’lower earnings’ limit. S/he must have worked continuously for her/his employer for 26 weeks by the end of the week in which s/he is notified that s/he has been matched for adoption. SAP can be paid to both women and men.

SAP is claimed from the client’s employer and is paid in the same way as the client’s normal pay. The employer must be given relevant notice and information within a strict time limit. SAP is paid for 39 weeks. It is not means tested, but counts as earnings for means-tested benefits. The first £100 of a client’s weekly SAP is ignored for tax credits; anything above £100 is counted as employment income.

SAP is taxable.

Statutory maternity pay

SMP is paid to clients who are (or have recently been) employees and who take maternity leave.

A client’s average gross weekly earnings must be at least the NI lower earnings limit. She must have worked continuously for her employer for 26 weeks up to and including the 15th week (called the ’qualifying week’) before the week in which her baby is due.

SMP is paid for a maximum of 39 weeks. For the first six weeks, clients get a higher rate equal to 90 per cent of average weekly earnings and a further 33 weeks at the lower rate. These are the minimum amounts of maternity pay; the client’s employer might have a more generous scheme. Clients who do not qualify for SMP may be able to claim MA. Entitlement to SMP does not depend on the client returning to work.

SMP is claimed from the client’s employer and is paid in the same way as her normal pay. The employer must be given relevant notice and information within a strict time limit. SMP is not means tested, but counts as earnings for means-tested benefits. The first £100 of a client’s weekly SMP is ignored for tax credits; anything above £100 is counted as employment income.

SMP is taxable.

Statutory paternity pay

Statutory paternity pay (SPP) is paid to clients who are (or have recently been) employees and are taking paternity leave because their partner has just given birth. Clients can also get SPP if they are adopting a child and their partner is claiming SAP. Clients can get more pay if their partner returns to work and they qualify for statutory shared parental pay (SSPP – see below).

A client’s average gross weekly earnings must be at least the NI lower earnings limit. S/he must have worked continuously for her/his employer for 26 weeks up to and including the 15th week (called the ’qualifying week’) before the week in which the baby is due.

SPP is claimed from the client’s employer and is paid in the same way as normal pay. The employer must be given relevant notice and information within a strict time limit. SPP is paid for a maximum of two consecutive weeks at either a standard rate or 90 per cent of average weekly earnings, whichever is lower.

SPP is not means tested, but counts as earnings for means-tested benefits. The first £100 of a client’s weekly SPP is ignored for tax credits; anything above £100 is counted as employment income.

SPP is taxable.

Statutory shared parental pay

A client can get SSPP if s/he qualifies for either:

•SMP or SAP; or

•SPP and s/he has a partner who qualifies for SMP, MA or SAP.

If a client is eligible and s/he ends (or her/his partner ends) her maternity/adoption leave and pay (or MA) early, s/he can take the remainder of the 39 weeks of pay (up to a maximum of 37 weeks) as SSPP.

The client’s average gross weekly earnings must be at least the NI ’lower earnings limit’. S/he must have worked continuously for her/his employer for 26 weeks up to and including the 15th week (called the ’qualifying week’) before the week in which the baby is due.

SSPP is claimed from the client’s employer and is paid in the same way as normal pay. The employer must be given relevant notice and information within a strict time limit. A mother must take a minimum of two weeks’ maternity leave following the birth (four if she works in a factory). SSPP is paid at either a standard rate or 90 per cent of average weekly earnings, whichever is lower.

SSPP is not means tested, but counts as earnings for means-tested benefits. The first £100 of a client’s weekly SSPP is ignored for tax credits; anything above £100 is counted as employment income.

SSPP is taxable.

Statutory sick pay

SSP is paid to employees who are sick and unable to work for at least four consecutive days. SSP is not paid during the first three days of illness. Clients cannot get ESA while they are entitled to SSP, but can claim IS to top up any SSP if their income and capital are sufficiently low. If a client does not qualify for SSP, s/he may be able to claim ESA or, if s/he comes under the UC system, UC, instead.

Clients must have average earnings of at least the NI lower earnings limit to qualify.

If the client is shielding after receiving a letter from the NHS or their GP, due to being at high risk of severe illness from coronavirus, s/he will be entitled to SSP during the entire time that s/he is shielding. If the client is self-isolating because s/he, or someone s/he lives with, has symptoms of coronavirus, s/he will be entitled to SSP for every day that they were isolating after 13th March 2020. If the client was unable to work due to coronavirus symptoms before this date, then the usual three-day rule applies and s/he will only receive SSP from the fourth day of illness.

SSP is claimed from the client’s employer and is paid in the same way as her/his normal pay. It is paid at a standard rate for a maximum of 28 weeks for each episode of illness. If a client is still off work sick after SSP has expired, s/he may then qualify for ESA (or UC). SSP is not means tested, but it counts as earnings for means-tested benefits and tax credits.

SSP is taxable.

Universal credit

UC is a means-tested benefit for people on a low income who are under pension age. Clients can be either in or out of work.

UC has been gradually introduced from October 2013 and is replacing the following means-tested benefits and tax credits:

•IS;

•income-based JSA;

•income-related ESA;

•HB;

•CTC;

•WTC.

UC has now been introduced nationwide for most new claimants. Current claimants of the means-tested benefits and tax credits listed above do not automatically come under the UC system, but can transfer to UC – eg, by claiming UC after a change of circumstances, or under the government’s official programme. Under the official transfer process due to start in 2020, existing awards of means-tested benefits and tax credits will be brought to an end and claimants will be invited to claim UC instead.

To qualify for UC, the client must:

•meet certain residence rules and not be a ‘person subject to immigration control’;

•not be a student (with some exceptions);

•have a low enough income and have capital below £16,000;

•agree to meet certain work-related requirements, including attending work-focused interviews, and preparing for and looking for work.

UC (including the element for housing costs) is paid monthly in arrears. Clients can apply for an ‘advance’ to tide them over until their first payment. This is called a ‘payment on account’ and it must be repaid. Repayments are deducted from future benefit payments and the rate of repayment is difficult to reduce. It is therefore essential to have details of any repayments when drawing up the client’s budget.

In exceptional circumstances, a client can request that s/he be paid more frequently (eg, every one or two weeks), or that payment be split between two partners or that rent be paid directly to her/his landlord.

Clients who need help with expenses such as buying new furniture or household equipment can apply for a budgeting advance. Budgeting advances must be repaid, usually by deductions from future payments of UC. To qualify, a client must have been getting UC for at least 26 weeks, unless the advance is needed to help her/him get work or stay in work.

Clients may have their UC reduced by a sanction if they do not comply with the work-related requirements they have agreed to in their ‘claimant commitment’, and some clients receive multiple sanctions for repeated failures. There is a right to appeal this, and it is always worth considering whether a sanction could be challenged.

Clients whose benefit has been reduced by a sanction may qualify for a hardship payment if they can demonstrate that their reduced level of income is causing hardship. However, although hardship payments of UC must usually be repaid, following a succesful judicial review challenge brought by the Public Law Project, the DWP now accepts that is does have discretion to waive repayment regardless of whether the client meets the required earnings threshold.1See section 8.1 Benefit overpayment recovery guide, DWP, May 2021

UC is a qualifying benefit for free school lunches (see here), health benefits (see here) and some social fund payments (see here).

It is not taxable.

See below for a range on online tools relating to universal credit.

1 See section 8.1 Benefit overpayment recovery guide, DWP, May 2021 »

Working tax credit

Note: WTC is affected by the introduction of UC (see here).

WTC is paid to a client who is, or whose partner is, in full-time paid work. The client must be:

•a lone parent with a dependent child and working at least 16 hours a week; or

•a member of a couple with a child, one partner who works at least 16 hours a week, and the other disabled, in hospital or in prison, or entitled to CA; or

•a member of a couple with a child. The couple must work 24 hours between them, with one partner working at least 16 hours a week. If only one partner works 24 hours, s/he will qualify; or

•disabled and work at least 16 hours a week; or

•aged 25 or over and work at least 30 hours a week; or

•aged 60 or over and work at least 16 hours a week.

WTC is claimed from and paid by HMRC. It is means tested, and counts as income for the purposes of means-tested benefits. It is claimed and assessed at the same time as CTC.

WTC is not taxable.

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