April benefit changes: How will I be affected?

April benefit changes: How will I be affected?

Linda Gyamfi, Welfare Benefits Specialist at national charity Turn2us explains more about the changes and what support might be available if you're affected.

Freeze on working-age benefits

As announced in last year's Summer Budget, April will see the start of a four-year freeze to working-age benefits and tax credits.

Pensioner, disability and carer benefits are excluded from the freeze

Benefit rates are generally increased by a small amount at the start of every tax year to take in to account the rise in living costs. From April, there will be no increase in rates to Jobseeker's Allowance, Employment and Support Allowance, Income Support, Housing Benefit, Universal Credit, Child Tax Credit, Working Tax Credit and Child Benefit for people aged 16-65.

Pensioner, disability, carer and maternity benefits are excluded from the freeze.

The government has made a strong commitment to continue to protect benefits specifically for pensioners including Pension Credit. The triple lock on the State Pension will be maintained - this means the basic state pension increases every year by whichever is highest – earnings, prices or 2.5 per cent; and other benefits for pensioners including the Winter Fuel Allowance and free TV licenses for over 75s are also protected.

Tax credit changes

Despite the government's U-turn on tax credit cuts last November, there will still be a reduction in the tax credit 'income rise disregard' – the amount a claimant's income can increase in-year without seeing a reduction in tax credit entitlement The disregard will reduce from £5,000 to £2,500.

According to the Treasury, it's estimated that 800,000 people will see their tax credit entitlement reduced by an average of £200-£300 per year as a result.

The free Turn2us Benefits Calculator shows you entitlement for tax credits based on your previous year's income. It also provides a 'Final Tax Credit Award' estimate based on current income from this year if there's been a significant change to income from the previous year. This highlights whether an overpayment or underpayment is likely and notifies you to contact HMRC for a reassessment.

It's very important that you notify HMRC about income and other changes you experience during the year which could affect the amount of tax credits you get (you must tell them of any changes within one month). Otherwise you may be overpaid and have to pay it back.

Universal Credit Work Allowance

The Universal Credit Work Allowance – the amount you can earn without your benefit being affected – will also be reduced. It will come down to £192 per month for those with housing costs, and £ 397 per month for those without, and will be removed altogether for non-disabled claimants without children, meaning the benefit will be reduced as soon as they start earning.

Housing Benefit backdating period reduced

Claims for Housing Benefit can be backdated if you can show that there was 'good cause' - a strong reason for not claiming the benefit earlier if you met the qualifying conditions.

From April, Housing Benefit backdating will be reduced so that new claims for working age claimants will be backdated for a maximum of one month (currently you can normally backdate your Housing Benefit claim for up to six months if you show good cause). This change will not affect you if you are of pension credit age and are not claiming working age benefits.

You can minimise the need to have to make a Housing Benefit backdating request by ensuring you submit a Housing Benefit claim form promptly and report any changes in circumstances to your local authority housing benefit office.

Claim period for Housing Benefit and Pension Credit during absence abroad

If you are getting Housing Benefit and Pension Credit, you are able to continue to receive payments for a period while you are temporarily absent from the UK. From May 2016 this will change – you will only be able to receive payment for the first four weeks of an absence abroad. This is reduced from the current 13-week period for most cases.

Support for Mortgage Interest waiting period increased

If you are a homeowner who is receiving Income Support, Income-based Jobseeker's Allowance, Income-related Employment and Support Allowance or guaranteed Pension Credit you can claim Support for Mortgage Interest (SMI) costs to help meet your mortgage interest costs.

After making a claim for SMI, a waiting period has to be met before payments are made. From April, the waiting period will change from 13 weeks to 39 weeks. If you are already in a waiting period on or before March 31, 2016, the current waiting period will still apply.

The capital limit for SMI will be maintained at the higher level of £200,000.

New state pension and changes to Pension Credit

For those reaching pension age from April 6, 2016, a new flat-rate 'single tie'’ state pension is being introduced to replace the basic State Pension and State Second Pension. This affects all women born on or after April 6, 1953 and all men born on or after April 6, 1951.

The full rate will be £155.65 per week which is more than the basic means-tested support currently available (the guarantee part of Pension Credit).

To qualify you will need 35 qualifying years of National Insurance Contributions (NICs) or credits. If you qualify you will not be eligible for savings credit part of Pension Credit.

For those reaching state pension age before April 6, the saving part of Pension Credit can still be applied for, depending on personal circumstances, regardless of when they apply.

However, for couples the Savings Credit will not be available where one member of the couple reaches pension age before April 6 and the other on or after this date, unless one of the couple was already getting Savings Credit immediately before April 6, 2016 and has been entitled to it at all times since April 6, 2016.

If you don't qualify for the full pension, you can get a smaller amount based on how many qualifying years you have. You will usually need 10 qualifying years to get any new state pension.

If you are already over State Pension age when this is introduced you will continue to receive your State Retirement Pension under the current system and can continue to get the savings credit part of Pension Credit if you are entitled to it.

From April 6, households on Pension Credit will now need to report all changes in their circumstances that will affect their benefit as they happen. Pensioners aged 75 and over who have an indefinite assessed income period in place will not be affected by the change unless the assessed income period would end under current rules.

The new National Living Wage

The new National Living Wage (NLW) came into effect on April 1, 2016. All workers aged 25 and over will be entitled to earn a minimum of £7.20 an hour – an increase of 50p above the current National Minimum Wage (NMW) rate.

Over a million workers are set to directly benefit from the increase and many will see their pay packets rise by up to £900 a year. Rules on the NLW will be strictly enforced as failure to pay a worker what they are legally entitled to is a criminal offence and could result in an employer being named and fined by HM Revenue and Customs (HMRC).

Workers under the age of 25 will be entitled to the NMW which is currently £6.70. From  October 1, the rate will rise to at least £6.95 an hour, £5.55 an hour for 18-20 year olds, £4 for under-18s and £3.40 for apprentices.

Find support

Other welfare changes are taking place in April and beyond. Turn2us features a Benefits Changes Timetable so you can stay up to date on the changes and how they could affect you.

You can use the Turn2us Benefits Calculator to make sure you’re claiming your full welfare entitlements. For example if you do not qualify for the new state pension, you may be entitled to some Pension Credit and other benefits (and you may qualify even if you are getting the full state pension in some circumstances) so it’s always important to check.

If you're struggling and think you might see a reduction in income, you can also see if you’re eligible for a charity grant or other support through the Turn2us Grants Search

Finally, if you are worried about any of the changes and like to speak to someone, you can use the Turn2us Find an Adviser tool to locate face-to-face advice in your local area.

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