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Debt Advice Handbook 14th edition

Charities
There are thousands of charities that can provide payments to individuals in need. Some are open to everyone and others are for certain groups only, such as armed service personnel or people with specific disabilities. Many have a committee that considers applications and meets on a cyclical basis. Some of the very large charities receive very many applications a year and may place limits on people from whom they are prepared to accept applications – eg, from social workers only.
It is worthwhile investigating less well-known charities to approach, in addition to the major ones. These are either locally based or specialise in helping particular people. Some charities expect a person to have exhausted other statutory provisions before approaching them. The organisation Turn2us has a website (turn2us.org.uk) with an A–Z of all the charities that can provide financial help and, in many cases, applications for support can be made directly from the website.
The Directory for Social Change publication The Guide to Grants for Individuals in Need provides a list of local and national charities, advises on the most appropriate charity and gives guidance on how to make a successful application. See dsc.org.uk/publications.
Most charitable payments are ignored for means-tested benefits and tax credits if they are made regularly. Most that are made irregularly are treated as capital and so only affect the benefit if they take the client above the capital limit.
Child maintenance
Clients may be able to get child maintenance for their child(ren) if they are not living with their other parent. Child maintenance may be paid voluntarily, following a court order or following an application to the Child Maintenance Service.
Child maintenance is disregarded as income for all means-tested benefits and for tax credits.
Civil compensation for damages
Personal injury claims can be made against an individual or organisation if they have been negligent in causing damage, either by doing something or by failing to do something. Injury caused by negligence can be an issue in road traffic accidents or accidents at work, in the street or other public places. Damages for personal injury can be substantial, but can be reduced by the amount of social security benefit paid as a consequence of the injury.
If the injury occurred at work, the client should contact her/his trade union, if a member. Other clients may need to be referred to a solicitor. More information is available from:
Council tax reduction
If a client needs help paying her/his council tax, s/he may qualify for council tax reduction. Council tax reduction schemes are administered by local authorities. In England and Wales, local authorities may devise their own local schemes which must meet minimum requirements. Most schemes are means tested. See CPAG’s Council Tax Handbook for more information.
Equal pay rules
Equality legislation provides that a woman should not be paid less than a man for work of equal value or for the same work. If a woman is in debt, it is always worth checking whether these rules might help increase her income. If a client is being paid less than others doing similar work because of her/his age, gender, disability, race, religion and belief, or sexual orientation, it could constitute unlawful discrimination. Specialist help is necessary to pursue a claim. For further details, contact the Equality Advisory and Support Service (EASS) on 0808 800 0082, or see equalityadvisoryservice.com.
Food banks
Clients who are without any means to obtain food may be able to be helped by a food bank. Most foodbanks operate on a referral basis. To find a local one, see trusselltrust.org/get-help/find-a-foodbank. Many foodbanks limit the number of times that a client can use them in a set period. Some food banks can also issue ‘fuel bank’ vouchers to top-up gas and electricity prepayment meters.
Free school lunches
Children are entitled to free school lunches if their family receives:
    income support, income-based jobseeker’s allowance, income-related employment and support allowance or universal credit;
    child tax credit (but not if also receiving working tax credit) and their gross annual income is below a threshold;
    the guarantee credit of pension credit.
Also entitled are 16–18-year-olds who receive the above benefits and tax credits in their own right, and asylum seekers in receipt of asylum support.
In addition, in England, free school lunches are provided to all children during the first three years of primary school and, in Wales, free school breakfasts are provided to all children in local authority primary schools.
Guarantee pay
If an employer fails to provide work for an employee (ie, lays her/him off), in most cases, s/he must pay guarantee pay for five days of lay-off in any period of three months. The right to guarantee pay can be enforced through an employment tribunal. Specialist help should be obtained. A client who is dismissed for seeking to enforce this right is entitled to claim unfair dismissal to an employment tribunal, regardless of the length of her/his service.
Guarantee pay is taken into account as earnings for means-tested benefits.
For further details, see the guidance on guarantee pay at gov.uk/lay-offs-short-timeworking/guarantee-pay.
Local welfare assistance schemes
Clients who are in urgent need following an emergency or unforeseen event may qualify for help under a local welfare assistance scheme.
Schemes are administered by local authorities in England or by the Welsh government. They replaced social fund community care grants and crisis loans for living expenses in April 2013 and are intended for people who have no other source of help. Local authorities may offer goods in kind rather than cash payments. Some authorities have decided to close down schemes or restrict eligibility since April 2015, following cuts to funding.
To cover the increased demand for support resulting from the coronavirus pandemic and consequent job losses, the Welsh government has substantially increased funding for its Discretionary Assistance Fund. Until 30 September 2021, individuals facing hardship as a result of the coronavirus pandemic can make up to five applications to the fund instead of the usual limit of three applications in any 12-month period.
National minimum wage
Most employees are entitled to be paid at a rate equivalent to at least the national minimum wage. A client who is entitled to the minimum wage and is being paid less than this can complain to the Acas Helpline or to an employment tribunal. For more information, contact the Helpline on 0300 123 1100 or visit gov.uk/national-minimum-wage.
Notice pay
An employee is entitled to be paid during her/his notice period if s/he works during that period or cannot work because of illness, pregnancy or childbirth, or because s/he is on adoption, parental or paternity leave or holiday, or the employer does not wish her/him to work. An employee who is dismissed without being given the correct notice is entitled to be paid her/his normal wages ’in lieu’ of notice, unless the dismissal is due to gross misconduct. Notice rules are laid down in the law and these depend on length of service. Some employees may be entitled to a longer period of notice under the terms of their contract with the employer. The contract may be written or unwritten.
For further details, see gov.uk/handing-in-your-notice.
Payments for war injury
There are a number of different schemes providing benefits for those disabled, or for the dependants of those killed, in either the First World War or any conflict since 3 September 1939. Some of these schemes only cover members of the armed forces, but there are others that apply to auxiliary personnel, civil defence volunteers, merchant mariners and civilians. Who qualifies and what payments they can receive are complicated. For who may be eligible, see gov.uk/government/organisations/veterans-uk or contact the Veterans helpline on 0808 191 4218.
Private and occupational pensions
Clients who are members of an employer’s (occupational) pension scheme or a private pension plan may be entitled to take benefits from these plans before the normal retirement age if, for example, they become permanently incapable of work. Benefits available from pension schemes should be closely examined and independent financial advice should be sought before making a decision to take benefits early from a private scheme.
Redundancy pay
An employee who has two years’ continuous service and is not in an excluded occupation, and who loses her/his job through redundancy, might be entitled to statutory redundancy pay. If a statutory redundancy payment has not been made or is not for the correct amount, the employee can apply to an employment tribunal. There is a strict three-month time limit from the date of termination for making such an application. A client in need of advice in this situation should be referred to an employment law adviser.
Some clients may be entitled to a larger redundancy payment under the terms of their contract.
For further details about redundancy pay, see gov.uk/redundancy-your-rights.
School clothing grants
Local authorities have a discretionary power to give grants for school uniforms or other clothing needed for school – eg, for sportswear. Policies vary. Some school governing bodies or parents’ associations also provide help with school clothing.
School transport
Local authorities have a duty to provide free transport for a pupil under 16 if s/he attends the ’nearest suitable school’ and lives at least two miles away (if they are aged under eight) or three miles away (if they are eight or older). In addition, children must be given free transport if there is not a safe walking route, irrespective of how far from the school they live.
Social services
Local authority social services departments have statutory duties to provide a range of practical and financial help to families, children, young people, older people, people with disabilities and asylum seekers.
Special funds for sick or disabled people
A range of help is available from local authority social services departments for people with an illness or disability to assist with things like paying for care services in their own home, equipment, holidays, furniture and transport needs.
Student support
For details, see Chapter 17 of this Handbook, and also CPAG’s Student Support and Benefits Handbook.
Tax allowances
The personal allowance is a basic allowance that is available to most people resident in the UK.
Clients may also be entitled to a married couple’s allowance if they are married or in a civil partnership, and either they or their spouse or civil partner was born before 6 April 1935.
Those who are married or in a civil partnership and were born after 5 April 1935 may be entitled to a transferable tax allowance or ‘marriage allowance’. This allows underused personal allowance up to a set limit to be transferred from one to the other partner in the marriage or civil partnership.
A client who is registered blind can claim a blind person’s allowance for the whole tax year. This is in addition to the personal allowance. Any unused allowance can be transferred to her/his spouse or civil partner. If both spouses and civil partners are registered blind, they can claim an allowance each.
A backdated claim can be made for up to four years for any allowances, so check whether the client has not received an allowance to which s/he is entitled.
Tax rebate
A client who is unemployed or is laid off may be entitled to a tax rebate at the end of the tax year. However, this is reduced or may be cancelled out if s/he receives a taxable benefit. In some cases, if HM Revenue and Customs has delayed paying the tax rebate, it must pay interest on it.
Tax reliefs
Tax reliefs are amounts that are deducted from taxable income in recognition of money that is needed to be spent by the taxpayer in working. They can be claimed in addition to a personal allowance and can be backdated for up to six years. Tax reliefs for self-employed people should be calculated by a specialist adviser.
For employed people, it is possible to claim relief on any money that is spent to enable a job to be done, but which is not paid for by the employer. The expenses have to be ‘wholly, exclusively and necessarily’ incurred in order to do the work.
Items for which tax relief can be claimed include:
    membership of professional bodies;
    special clothing for work;
    using heating/lighting or the telephone at home for work;
    buying tools.
Another form of tax relief is the ‘rent-a-room’ scheme. This enables someone to let out a main room in her/his home and not pay tax on the rental income, provided the rent stays below a certain level. Even if the client cannot benefit from this scheme, there are other forms of tax relief that may be applicable if s/he lets out property. Specialist advice should be obtained.
Trade unions
Many trade unions have hardship funds for members or ex-members. Unions may also be involved in various benevolent funds and charities associated with particular industries. If a client has been a member of a union, it is worth enquiring about possible lump-sum payments or, in some cases, ongoing support.
Additional support during the coronavirus outbreak
As a result of the coronavirus outbreak, many businesses are unable to operate or are experiencing dramatic downturns in business, leaving many people at risk of unemployment and/or financial difficulty. To alleviate the impact on business and the economy, the government has introduced a series of measures to support those affected.
Coronavirus job retention scheme
If an employer is unable to retain their workforce because their operations have been affected by the coronavirus pandemic, they can furlough their workers. If you are furloughed, you remain employed by your employer, but you can not carry out any work for that employer. The government scheme provides 80 per cent of your wages, up to £2,500 per month if you are furloughed. Therefore, your wages are likely to be reduced if you are furloughed. This payment will be treated as earned income for benefit purposes. The furlough scheme will continue until the end of September 2021, with employers having to contribute towards the government contribution from 1st July 2021.
Self-employment income support scheme (SEISS)
Self-employed workers whose businesses have been impacted by coronavirus can receive a taxable cash grant of up to 80 per cent of their profits, up to a maximum of £2,500 per month, paid as a grant payment covering three months’ profits. That is calculated by taking the average trading profit of the last three years. SEISS is treated as earned income for benefit purposes. A fourth grant was announced in the 2021 Budget, covering the three-month period from 1 February 2021 to 30 April 2021. A further grant will be available to cover May to September 2021.
Other support
Many people receiving payments under the job retention scheme or SEISS will also be eligible for universal credit or will already be in receipt of universal credit. Work search and work preparation requirements were reintroduced on 1st July 2020 and so a claimant is at risk of being sanctioned if they do not comply with their claimant commitment.
The minimum income floor has been relaxed during the coronavirus outbreak, so people who are self employed and were previously affected by the minimum income floor may find their awards increased, or may find that they are now entitled to universal credit unlike before. The minimum income floor will be gradually reintroduced from August 2021.
Where a person is infected with coronavirus, is isolating due to coronavirus, or is caring for a child or young person who is infected or in isolation, that claimant will be treated as having limited capability for work for the purposes of universal credit and employment and support allowance. Eligibility for statutory sick pay has also been extended to include those who have been advised to self isolate or who are caring for a child or young person who is infected or isolating.
Childcare costs under universal credit will continue if the claimant had some earnings in the previous assessment period, even if the claimant is not currently working or the childcare provider is no longer operating due to coronavirus. If there were no earnings in the previous assessment period, childcare costs can continue if the claimant has an offer of paid work in the following assessment period.
Childcare costs under working tax credits have continued for claimants unable to access their usual childcare provider due to the coronavirus outbreak. However, HMRC have confirmed that this ended on 7th September 2020 and that, from that date, the child must be accessing the childcare for the costs to be met.
Free school meals will continue to be available where children are no longer attending school. That may be by collection or delivery, or through a voucher programme. Check with your child’s school for details of their scheme. Many children who were not previously eligible for free school meals will now be eligible.