Lots of people are in debt because they don't receive all the money they are entitled to. Before you work out your personal budget, see if you can increase your income.
The rules covering tax can be complicated and difficult to understand. Contact us if you are not sure about your situation or have any questions.
Check with your local tax office to make sure that you have the right tax code. Some employees can claim tax relief on work-related expenses. You can get a higher tax allowance if you are registered blind or were widowed before 2 April 2000.
If you are over 65, you can also get a higher tax allowance due to your age or because you are part of a married couple.
Some maintenance payments also qualify. Check with your tax office.
Remember backdated tax allowances
You can still ask for tax allowances to be backdated for up to six years, even if your ongoing entitlement has stopped. If you think this might apply to you, check with your tax office.
Minimum wage
Check that you are being paid the national minimum wage. From October 2008 this is £5.73 an hour if you are aged 22 and over, £4.77 if you are aged 18 to 21 and £3.53 an hour if you are aged 16 to 17. For information, or to complain if you think you are being paid too little, ring the Government's National Minimum Wage Helpline on 0845 6000 678.
Benefits and tax credits
There is a range of different types of benefits which you might be entitled to. This will depend on your circumstances.
Some benefits are based on the National Insurance contributions you have paid. These include contribution-based Jobseeker's Allowance, Incapacity Benefit (Employment and Support Allowance from October 2008), pensions and maternity benefits.
Other benefits are means-tested. This means the amount of help you get depends on how much money you already have coming into your home. There are also limits on how much savings you are allowed to have and still claim. These benefits 'top up' any income you already have. You do not need to have paid National Insurance contributions to claim them.
Income-based Jobseeker's Allowance. This is for people working less than 16 hours a week who are signing on for work.
Income Support. This is for people who do not have to sign on for work (for example, because they are caring for someone). You may be able to get help towards your housing costs if you have a mortgage.
Income-related Employment and Support Allowance. In October 2008, this replaced Incapacity Benefit and Income Support for people who may be unable to work due to illness or disability.
Pension Credit. You can claim if you are 60 or over. The amount you are entitled to depends on your income. There is an extra payment, called 'savings credit', if you or your partner are 65 or over. This rewards you for having moderate savings. The amount you get will depend on how much money you
have saved.
Working Tax Credit. If you are on a low income, this can be paid on top of your wages. There are several ways in which you can qualify. These ways are shown below.
- If you or your partner are employed or self-employed for more than 16 hours a week and are bringing up one or more children.
- If you qualify by this route, the credit can also help with childcare costs in certain circumstances.
- If you or your partner are employed or self-employed for more than 16 hours a week and have a disability that creates a disadvantage in getting a job.
- If you or your partner are: over 25 and are employed or self-employed for 30 hours or more a week; or over 50 and employed or self-employed for 16 hours
or more, and have received Income Support, Jobseeker's Allowance or Incapacity Benefit within the last six months.
Working Tax Credit will usually be paid into your bank account, and is dealt with by HM Revenue & Customs. For information, ring the Tax Credit helpline on 0845 300 3900.
Child Tax Credit. This is paid to people with responsibility for children (under 16 or under 20 if in full-time education or training). It can be paid whether you are in or out of work. The amount you will get depends on your income. For information, ring the Tax Credit helpline on 0845 300 3900.
Education Maintenance Allowance. If you have children aged 16 or over who are staying on at school or college they may qualify for up to £30 a week, depending on your household income. For information, ring the helpline on 0800 121 8989.
Housing Benefit. You may be able to get help with your rent.
Council Tax Benefit. You may be able to get help towards your Council Tax bill.
Other benefits. Some benefits are not means-tested, nor do you have to have paid any National Insurance contributions in order to claim them. These include Child Benefit if you have dependent children. There are also benefits for people with disabilities such as Disability Living Allowance, Attendance Allowance, and Carer's Allowance for their carers. Whether you can claim any of these benefits will depend on the nature of your illness or disability and the effect it has on you.
Extra advice - questions about benefits
Working out which benefits you can claim can be complicated. For more information on benefits, contact your local Department for Work and Pensions office, the Jobcentre Plus helpline on 0800 0 55 66 88, a local advice centre.
Other income
- If you have grown-up children or other relatives living in your home, make sure they are paying enough towards the household expenses.
- If you have children from a former relationship, you may want to claim maintenance or see whether the maintenance you are getting can be increased.
- Is there a possibility of renting out a room in your home? Before you do this, there are various things to consider. You will need to check to see how this will affect any benefits you are claiming. Also check your tax position. Ask your tax office about the 'rent-a room' scheme which allows you to receive rental income up to a certain limit which is tax-free. You will usually also need your landlord or mortgage lender's permission to do this as your tenancy or mortgage agreement may not allow you to rent rooms out.
- Check whether your mortgage or any other loans are covered by payment protection insurance. This may apply if you have been made redundant or are off work due to illness. If you are turned down by the company when you claim on your policy, you may be able to complain to the Financial Ombudsman Service.
Be careful, your insurance company will usually pay the lender direct but if payments are made to you, this should not be treated as part of your income when you claim benefits.
- You may be able to work as a childminder and still claim Income Support. Some of your earnings are ignored and you are not treated as working full time. The rules are different if you are on Jobseeker's Allowance. Check with the Department for Work and Pensions.
- Check with your local council to see if you can have a home improvement grant. There may be grants available depending on your income and what repairs need doing in your home.
- If you are on Income Support, Jobseeker's Allowance, Employment and Support Allowance or Pension Credit you may qualify for a grant, called a 'Community Care Grant' or a loan called a 'budgeting loan' from the Social Fund. Payments are discretionary and there are guidelines on the type of items allowed and who will qualify for help.
- The Social Fund also deals with maternity grants and funeral expenses payments for people on qualifying benefits.
- If you are pregnant or have a child under four, you may qualify for help with milk, fruit and vegetables and vitamins under the Healthy Start scheme. Contact the Healthy Start Issuing Unit on 0845 607 6823.
- Don't forget to apply for your Child Trust Fund voucher to put away as savings for your child if they were born on or after 1 September 2002.
- Other ways of increasing your income include local exchange trading schemes (LETS), which allow people in a community to swap skills. For example, one member of the scheme may be a hairdresser and need a lock replaced on their front door. A local unemployed joiner may need a haircut at the same time. It is worth checking if a LETS operates in your area.
- If you have no income or there is an emergency or disaster, you can apply for a crisis loan from the Social Fund. You do not have to be on benefits to apply but you can only get help with certain items. There are special rules if your Jobseeker's Allowance has been suspended.
- There is a range of grants available for insulation, draught-proofing, central heating and providing energy advice. You may be able to apply for a Home Energy Efficiency Scheme (HEES) grant depending upon the benefits you receive and your age. In England the schemes include a Warm Front Grant and, in Wales, a HEES in Wales grant. For information on HEES grants call these Freephone numbers: 0800 316 2805 for England and 0800 316 2815 for Wales.
- If you are over 60, you will usually be entitled to a lump sum each year called the winter fuel payment. Ring the winter fuel helpline on 0845 915 1515.
If you have any questions on the above information, you can contact National Debtline free on 0808 808 4000.
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