From Child and Working Tax Credits to Disability and Housing allowances, the amount of money received by some benefit claimants will be changing as of the beginning of the new tax year on April 6.
If you’re claiming any sort of benefits, here’s a run-down of how the changes could affect you.
Child tax credit
As of April 6, the income limit for Child Tax Credit is going down. Child Tax Credit payments are linked to income. You can usually get the credit as long as your income doesn’t exceed £41,300.
From April 6, this limit will be lower for most people because it will be dependent on your own individual circumstances.
For example, you may not qualify for Child Tax Credit after April 6 if you have one child and your income exceeds around £26,000 or if you have two children and you income is more than around £32,200.
You may still qualify for Child Tax Credit after the start of the new tax year if your income is more than these amounts though. For example, if you are disabled, have more than two children or if you pay for registered childcare, you may still be eligible.
To find out how your own payments may be affected, HMRC recommends checking your award notice for the period of April 5, 2011 to April 5, 2012, which will tell you if you’re eligible for Child or Working Tax Credits, and how much you’re entitled to.
Working Tax Credit
If you’re a couple with at least one child, new working hours’ rules for Working Tax Credit will come into effect on April 6.
Currently, if you’re responsible for at least one child and you’re working at least 16 hours a week, you can claim Working Tax Credit. From April 6, you’ll need to be working 24 hours a week as a couple to qualify.
If you both work, your joint weekly hours must be at least 24, with one of you working at least 16 hours per week. If just one of you works, that person must work at least 24 hours per week.
If you don’t meet either of these criteria, your Working Tax Credit will stop on April 6, save for a few exceptions. For example, you’ll still qualify if one of you is aged 60 or over and works at least 16 hours per week.
If you get Working Tax Credit because of a disability, you’ll still get it after April 6 as long as you work at least 16 hours per week and qualify for the ‘disability element’ of Working Tax Credit.
If one of you is ill, an in-patient in hospital or in prison, you’ll still qualify for Working Tax Credit as long as one of you works at least 16 hours per week and the other is either: receiving benefits due to ill-health, an in-patient in hospital, in prison serving a custodial sentence or being remanded in custody awaiting trial or sentence.
If your annual income for the current tax year is lower than the previous year, you may get extra tax credits for the current year.
As of April 6, if your income goes down it might not affect your payments until the following year.
For example, if your income in the current tax year decreases by £2,500 or less, your payments for the current tax year won’t change (assuming all your other circumstances stay the same.) The Tax Office will use your new income figure to work out what to pay you in the following tax year.
If your income goes down by more than £2,500 in the current tax year, the Tax Office will re-work your tax credits, ignoring the first £2,500 of the reduction. They will consider the full reduction into account when they calculate what to pay you for the next tax year.
At the moment, the Tax Office can backdate payments by up to three months prior to the date they receive your claim form. After April 6 this changes to one month.
If you delay claiming this means you could lose two months’ worth of backdated payments. If you report a change which results in higher payments, the new higher payment can only be backdated by up to one month.
The 50-plus element of Working Tax Credit stops on April 6, so if you’re currently claiming it your payments will go down. Unless you’re working the required number of hours, this could mean your Working Tax Credits could stop all together.
What is the required number of hours?
If you are getting the 50-plus element, you only need to work at least 16 hours per week. If you are claiming the 50-plus element and you’re not working this many hours, your payment will stop as of April 6, unless:
- You’re responsible for at least one child and you or your partner works at least 30 hours per week.
- You’re responsible for at least one child and you’re aged over 60 or claiming the ‘disability element’ of Working Tax Credit
- You’re responsible for at least one child; you’re single and work at least 16 hours per week.
- You’re in a couple and you meet the required changes to working hours for couples (see above.)
Two elements of the Working Tax Credit will have their rate increased from April 6. The Disabled Worker Element will rise from £2,650 to £2,790 and the Severe Disability Element will rise from £1,130 to £1,190.
Local authorities pay housing benefit to residents on low income to help pay their rent, whether they are employed or not. The amount of housing benefit received depends on a resident’s family circumstances, income and their rent costs.
Single people under the age of 25 have their housing benefit capped at the cost of a room in a shared house, this is known as shared room rent. From April, the shared room rent age limit will rise from 25 to 35.
According to the Citizens’ Advice, the changes will see around 88,000 people lose an average of £45 a week in housing benefits.
From April there will also be some changes to disability benefits. This primarily affects out-of-work disability benefits.
Incapacity benefits are to be progressively cut over time, saving the Government £6billion by 2014/15. As well as reducing these payments, the criteria for claiming Employment and Support Allowance (ESA) will become tougher, with stricter medical tests governing eligibility.
Anyone claiming incapacity benefits and who has a working partner or savings over £16,000 will lose their benefits completely as of 12 months from April this year. This won’t apply to those most severely disabled in the ‘Support Group’ of ESA, but will apply to people who pass the strict medical test and are put in the ‘Work Related Activity Group’.
Other rate changes
Each year the rates for things like child benefit and carer’s allowance are revised. For the full list of pension and benefit rate changes for the 2012/13 tax year, click here.
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