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Benefits Update May 2015

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State benefits
On 18 March, Chancellor George Osborne delivered Parliaments final Budget. Here
are the main points in summary:

- From April 2016, new tax rules will allow people who are already receiving income
from an annuity to sell that income to a third party, subject to agreement from their
annuity provider. The proceeds of the sale would be taxed at their marginal rate.
The Government will consult on how best to remove the barriers to a secondary
market in annuities and to ensure consumers can make an informed decision.

- The pension pot Lifetime Allowance will be reduced from 1.25 million to 1 million
from 2016, and it will be index-linked from 2018.

- Beer duty is cut by 1p, cider by 2p, whisky by 2p and wine duty is frozen. Tobacco
and gaming taxes are unchanged.

- Petrol duty has been frozen, with Septembers planned increase scrapped.

- The tax-free personal allowance will rise from 10,600 in 2015/16 to 10,800 in
2016/17 and to 11,000 from April 2017. In addition, the threshold at which
people start paying higher rate (40%) tax is to rise by more than inflation, taking it
to 43,300 by April 2017.

- The new Transferable Tax Allowance for married couples will be introduced at
1,100 (it was originally announced as being 1,000). To find out more and register
your interest, visit www.gov.uk/marriage-allowance.

- A new personal savings allowance (for the interest people earn on their savings) is
to be introduced from April 2016. Basic rate (20%) taxpayers with an income of up
to 42,700 per year will be eligible for a 1,000 savings allowance and higher rate
(40%) taxpayers with an annual income of between 42,701 and 150,000 will be
entitled to a savings allowance of 500.

- Annual paper tax returns are to be abolished, with a target effective date of 2020.
The use of real-time data by HMRC means that companies can supply data
throughout the year, and choose a point in the year at which to pay their tax, and
will be able to spread the cost by paying in instalments.

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 - The annual savings limit for ISAs is being increased to 15,240. In addition, ISAs
are being reformed to allow people to take out their money and replace it in the
same tax year without affecting their annual tax-free allowance.

Following the introduction of the new pension freedoms last month, the Department
for Work and Pensions (DWP) has produced a factsheet outlining the way in which
the new flexibilities on pension pots could affect State benefits.

From 6 April, those aged 55 or over who have a defined contribution, or DC

pension pot can choose to receive their entire pot as a lump sum, or as a series of
lump sums, which means that their income and/or capital would rise, potentially
having a knock-on effect on certain means-tested benefits. The affected benefits are:

- Employment and Support Allowance (ESA) (income-related)

- Housing Benefit
- Income Support
- Jobseekers Allowance (income-based)
- Pension Credit
- Universal Credit

How the pension pot is treated for the purposes of State benefit depends on whether
the claimant has reached the qualifying age for Pension Credit. The qualifying age is
gradually increasing in line with the State Pension Age, so this is different for each
individual. To find out your Pension Credit age, visit:
www.gov.uk/calculate-state-pension.

It is important to remember that it is the responsibility of the person claiming benefit

to report any change of circumstances, including a change in income or savings, to
the DWP (and your Local Authority where relevant for example, in the case of
Housing Benefit). Overpayments of benefit caused as a result of failure to report a
change can be reclaimed, and further action could be taken in the event of failure to
notify the DWP.

To view the factsheet, visit www.gov.uk/government/publications/pension-

flexibilities-and-dwp-benefits.

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 The earnings threshold for Carers Allowance was raised to 110 in April, increasing
the maximum amount carers can earn whilst claiming the allowance.

It is worth noting that, although this threshold is in place, the earnings used in the
calculation for entitlement are net of tax and National Insurance. In addition, a
percentage of certain other costs can be deducted from the weekly earnings, such
as pension contributions and care for the disabled person or a child under 16
whilst the carer is working. To find out about Carers Allowance, visit
www.gov.uk/carers-allowance.

In 2014, the government changed the rules regarding annexes on family homes in
England, and more than 2,400 properties have claimed a Council Tax discount as a
result. Previously, both the main house and the annexe attracted a full Council Tax bill
in some cases, both bills went to the main household, whereas in others the annexe
received its own bill in the post. From the date of the change, the annexe may be
viewed as eligible for a 50% discount provided the following criteria are met:

- The annexe is a distinct area (you can check this with your Local Authority).
- The annexe is in use either a close relative is living in it, or the owner of the
main home is using it.
- The relative(s) living in the annexe must not be dependent on the main owner of
the house.

If you think you may be eligible for the discount, you should contact your Local
Authority. If you are successful, you can also ask to reclaim the amount of Council Tax
overpaid since the annexe scheme began on 1 April 2014.

Please note that the scheme only applies in England; Council Tax is a devolved matter
in Scotland, Wales and Northern Ireland, so those countries apply their own Council
Tax rules.

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 People who have been receiving income-based Jobseekers Allowance (JSA) for over
a year must now complete an Annual Verification to confirm their circumstances.

The new check, which began at the end of April, will see an automatic letter issued to
anyone who has been in receipt of income-based JSA for 12 months. On receipt of
the letter, the claimant must respond within 28 days, verifying or updating their claim,
and signing a declaration to state that the information provided is accurate.

As part of the governments recent measures to tighten controls on JSA claims from
European Economic Area (EEA) nationals residing in the UK, the DWP will be
conducting a Genuine Prospect of Work (GPoW) assessment for those with income-
based JSA claims which began before 1 January 2014. The interviews will take place
from this month onwards, and will require claimants to provide compelling evidence
that they have a genuine prospect of work. If they fail to provide such evidence, they
may lose their right to reside in the UK and consequently their JSA payments will
stop. In this case, the claimant will have the chance to provide the Decision Maker
with evidence of an alternative right to reside, which would then be considered. The
assessments will ensure that all EEA nationals claiming income-based JSA are treated
in the same way, regardless of the date of their claim.

The government has agreed an additional 74 million of funding for Upper Tier
authorities after concluding a consultation which raised concerns about the ability of
authorities to help the most vulnerable amongst their communities.

In addition, the Independent Living Fund (ILF) will close completely on June 30 this
year. Having closed to new applicants in 2010, the ILF will be removed, and those in
England who have existing ILF care packages will have to transfer to local
arrangements. Both Wales and Scotland have their own arrangements, with Scotland
proposing the Scottish Independent Living Fund (SILF), beginning in July this year,
and Wales pledging 8.38 million for its own Discretionary Assistance Fund.

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 The future of the benefit cap has been called into question following a Supreme Court
judgment in March. Despite ruling against the appeal on the cap, which came from
two single mothers who had fled violent husbands, the judges were all in agreement
that the cap has a disproportionate affect on lone parents. This judgment will make it
harder for any future government to lower the cap.

Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) came into
effect in April, providing new parents with greater flexibility over childcare. The two
new policies allow parents to share the care of their baby or adopted child, putting in
place legal rights to allow fathers to take up some of the recognised leave and pay
rights previously only afforded to mothers.

Eligibility for SPL and ShPP needs to be met on an individual basis, i.e. each
parent must qualify separately. For more information on these new policies, visit
www.gov.uk/shared-parental-leave-and-pay/overview.

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General
An advice service aimed at providing free-of-charge guidance for people requiring
information on their retirement options was launched in March.

Pension Wise is a government service created to enhance understanding of the new

flexibilities that became available this year in defined contribution, or DC pensions.
In addition to the information found on the website at www.pensionwise.gov.uk,
those with DC pensions can book a free appointment to discuss their situation
either over the phone (assisted by The Pensions Advisory Service, or TPAS) or
face-to-face (assisted by The Citizens Advice Bureau, or CAB). All guidance
given is free and impartial.

The Bank of England is to introduce protection for temporary high deposit values of
up to 1 million from 3 July, in a bid to protect those who hold a significant amount of
money in an account following circumstances such as the sale of a property or
receipt of a large sum of inheritance.

The protection will be offered for up to six months, starting from either the date the
money is deposited or the date the funds become available to the account holder,
whichever is latest. This measure is in addition to the 85,000 of protection currently
offered through the Bank of Englands Financial Services Compensation Scheme
(FSCS), and the 85,000 limit will still apply to standard balances (i.e. those which are
in place for longer than six months).

The proposals to improve the current seven-day recovery period for funds under the
85,000 rule will see accounts automatically transferred to a new institution if one
fails. This is expected to start from December next year, but will not apply to the
temporary high balance protection scheme, which will still be subject to a seven-day
recovery period.

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 Free complaints service resolver has announced its recent partnership with
independent consumer money service MoneySavingExpert. The move brings together
two sets of resources to create a tool which provides consumers with information on
their rights and guides them in making complaints effectively to a number of
companies. Industries covered by the tool include energy, retail, insurance, utilities,
restaurants, travel, finance and public transport, among several others.

The resolver website guides users through the process of making a complaint and
identifies the correct department to contact. It holds template letters to assist users
with written complaints and can also record telephone conversations with the
company in question, allowing users to keep a record of what has been discussed.
If the outcome is not satisfactory, the complaint can be escalated to another
department, or even to the relevant regulatory body. To find out more, visit
www.resolver.co.uk.