Finance

Finance Benefits

What are tax credits and how can I get them?

Working Tax Credit and Child Tax Credit are benefits which are paid by HM Revenue and Customs (HMRC). Most other benefits are dealt with by the Department for Work and Pensions.

Child Tax Credit is available to people responsible for a child or young person, who have income below a certain amount. All households with an annual income of £50,000 or less will qualify for some Child Tax Credit. The amount you get will depend on how many children you have, and whether they have any disabilities. Child Tax Credit is available whether or not you are in work and is paid to the main carer in a household, usually straight into a nominated bank account.

Working Tax Credit is a payment to top up earnings of people working on low incomes, including those that do not have children. Extra amounts are payable if you have a disability, if you work 30 hours or more a week, and where you have childcare costs. Working Tax Credit is paid directly into a nominated bank account. Payments made for childcare costs are paid direct to the main carer.

Tax credits are usually paid for a year, from April to April, but the amount you get may change if your circumstances change during that year, for example, you have another child. If you are a member of a couple who live together, you must make a joint claim. You claim both tax credits on the same form.

Claims can only be backdated three months, so you should claim as soon as you can.

I have just lost my job. What benefits am I entitled to?

The benefits you can get will depend on your individual circumstances.

If you are looking for work, you may be entitled to contribution-based Jobseeker’s Allowance or income-based Jobseeker’s Allowance. If you have children you may be entitled to Child Tax Credit. If you are sick or disabled you may be able to get Incapacity Benefit or Income Support. If you are a lone parent or a carer, you may be entitled to Income Support. You may receive help with rent and Council Tax by applying for Housing Benefit and Council Tax Benefit.

If you own your own home and you receive Income Support, income-based Jobseeker’s Allowance or Pension Credit, you can be entitled to help with your housing costs, although this may not be immediately available.

Some benefits are contribution based which means that the amount and type of benefit you receive depends on how much, and what type of national insurance contributions you paid when you were working. Other benefits are means-tested which means that an assessment will be made of what income, savings or capital you have.

If you are on benefit, tax credits or on a low income, you may be able to get help with other costs, for example, prescription charges.

I am pregnant and on benefits. What help can I get for my baby and myself?

If you have recently stopped work to have a child, and you do not qualify for Statutory Maternity Pay from your employer, you may be entitled to Maternity Allowance. You can make a claim for Maternity Allowance after you have been pregnant for 26 weeks. You will need to provide a maternity certificate called a MAT B1. Your midwife or doctor can give you this certificate. Maternity Allowance is paid for 39 weeks. The earliest it can start is 11 weeks before your baby is born.

If you do not qualify for Statutory Maternity Pay or Maternity Allowance, and you have paid national insurance contributions, you may be entitled to Incapacity Benefit for six weeks before your baby is born and up to 14 days after the birth.

If you do not work, or have not worked enough or earned enough to be entitled to Maternity Allowance, and you haven’t paid enough national insurance to get Incapacity Benefit, you may be able to claim Income Support. You may be entitled to Income Support from 11 weeks before your baby is born and up to 15 weeks afterwards. If you or your partner are receiving Income Support, income-based Jobseeker’s Allowance, Working Tax Credit or Child Tax Credit you may qualify for a maternity grant from the Social Fund. You can make a claim from the eleventh week before your baby is due and up to three months after the baby is born. The grant is currently £500 and is to provide clothes and equipment for a baby. It does not have to be repaid. You will need a health professional to sign the form confirming that you have received health and welfare advice.

You will also be entitled to Child Benefit once your child is born. This is not means tested and is paid in addition to any benefits you are receiving. You may also be able to get Child Tax Credit (or more Child Tax Credit if you already get it) for your baby. If you or your partner work at least 16 hours a week, you may be entitled to Working Tax Credit. You will be treated as working during the first 26 weeks of maternity leave if you worked at least 16 hours a week beforehand. Working Tax Credit can include help with childcare costs if you qualify. If your child is disabled you may also be able to claim Disability Living Allowance. You may be entitled to Disability Living Allowance for your own care or mobility needs.

If you or your partner are receiving Income Support, income-based Jobseeker’s Allowance, or Child Tax Credit you may be entitled to free vitamins and vouchers to help with the cost of milk, fruit or vegetables. You can also get free prescriptions and other health care costs while you are pregnant and for the first year after you have given birth.

I have just left my home and all my belongings to escape my violent partner. Can I get any financial help?

You may be able to get help from the Social Fund in the form of a crisis loan. You do not have to be receiving any benefits to qualify for a crisis loan. A crisis loan is provided to meet expenses in an emergency, or as a consequence of a disaster.

If you are already receiving certain benefits, you may be eligible for a budgeting loan or a community care grant. A crisis loan and budgeting loan are both repayable but only the amount of the loan will have to be repaid. A community care grant does not have to be repaid.

If you were financially dependent on your ex-partner and now have no income, you may also be able to claim benefits in your own right, such as Jobseeker’s Allowance or Income Support. If you work part time, you may be entitled to Working Tax Credit. If you are renting a new home, you may get help with Housing and Council Tax costs if you claim Housing Benefit and Council Tax Benefit. If you are now homeless as a result of leaving a partner, you can seek help with re-housing from your local authority.

There are a number of organisations that can offer counselling and support. For example, Women’s Aid for female victims of domestic violence or Survivors UK Ltd for male victims of domestic violence. There are also organisations that aim to help men who are violent to their partners.

My neighbour has just come out of hospital. He's retired and seems to be finding it difficult to cope. Is there any help available for him?

Depending on how long your neighbour has been ill and the type of help he needs, he may be able to claim Attendance Allowance if he's 65 or over (or Disability Living Allowance if he is under 65). Neither of these benefits is means-tested so any capital he has will not be taken into account if he makes a claim.

Your neighbour may also be eligible to claim Pension Credit. Pension Credit is a means-tested benefit, so capital such as savings is taken into account in the assessment. If he pays rent for his accommodation, he can claim Housing Benefit and Council Tax Benefit.

Your local social work department can make an assessment of your neighbour's needs. It may be able to arrange help in a number of ways, for example, having rails or lifting equipment fitted to the bathroom, or having someone come to visit on a regular basis.

Your neighbour may also be entitled to help with health costs and visits to hospital.

I am on Income Support and would like to go back to work, but I'm worried about being able to make ends meet if I come off benefits. Can I get any extra help towards living expenses?

If you work for 16 or more hours a week, you may be able to claim Working Tax Credit (WTC) to top up your earnings. If you work for less than 16 hours, you may be able to carry on claiming Income Support. If you have children, you may be able to get Child Tax Credit (CTC) if you are not already claiming it, and you may be able to get help with childcare costs included in Working Tax Credit.

Depending on how much you earn, you may still be able to claim some Housing Benefit and Council Tax Benefit on top of your earnings and tax credits. Depending how long you have been on Income Support, you may be able to get your Housing Benefit and Council Tax Benefit paid at the same rate for the first four weeks of work.

If you are getting help with mortgage interest paid with your Income Support, you may be able to get this paid for the first four weeks that you are in work, or increase your hours. This is called the ‘mortgage interest run-on’. You must have been getting Income Support for at least 26 weeks.

You may also be entitled to a Job Grant when you start work. This is a lump sum payment to help with the costs of starting work after being on benefits.

If you were getting Income Support because you were ill or disabled, and you go back to work for at least 16 hours a week, you can get Return to Work Credit. This is a non-taxable payment of £40 a week and it is paid for a maximum of 12 months if you are earning not more than £15,000 a year.

Other help in going into work is available to particular groups of unemployed people, for example, single parents or people aged 50 or over. You should ask at your local Jobcentre Plus office about what help is available to you.

I receive a pension and have heard that I may be entitled to some other benefits. Where can I get more information?

Depending on your income and capital , you may be entitled to Pension Credit as well as your private pension or State Retirement Pension. If you pay rent for your accommodation, you may also be entitled to Housing Benefit. If you have to pay council tax you can also be entitled to Council Tax Benefit. Most pensioners are entitled to Winter Fuel Payments automatically every year and pensioners on Pension Credit can claim Cold Weather Payments if it gets very cold. If you are sick or disabled, you may be entitled to Disability Living Allowance or Attendance Allowance.

As a pensioner you may be entitled to free health costs, for example, free prescriptions. If you are 75 or over you can get a free television licence.

My wife has recently died. I have three children and have had to give up work. Can we get any benefits?

You may be able to get a Bereavement Payment. This will depend on the amount of national insurance contributions your wife paid, whether or not she was entitled to a Retirement Pension when she died and if you are under 65. A Bereavement Payment is a one off, tax free payment of £2,000.

You may also be able to get Widowed Parent’s Allowance. This will depend on the amount of your late wife’s national insurance contributions, whether you are under 65 and whether you have a child or children eligible for Child Benefit.

If you were aged 45 or over but under 65 when your wife died (and she met the national insurance contribution conditions), but you are not getting Widowed Parent's Allowance, and you are still under 65, you may be entitled to Bereavement Allowance. This is a weekly benefit which is paid for 52 weeks after the death of your spouse.

Bereavement benefits are not means-tested. This means that any savings or income you have are not taken into account when you apply.

If you rent your home, you might also be entitled to Housing Benefit or Council Tax Benefit.

You will be entitled to Child Benefit for your children and may also be entitled to Child Tax Credit. If you cannot get bereavement benefits, you may be able to get Income Support as a single parent, or you may be able to get this on top of your bereavement benefits.

If you own your own home and you receive Income Support, you may be entitled to help with your housing costs. However, this help may not be available immediately.

There are organisations that can offer counselling and support for people who have experienced a bereavement.

I've recently had a baby and have heard that the government has set up a trust fund for children. What are they, and how do I claim?

The Child Trust Fund is a savings and investment account for children. The government makes payments to a child through this account and your family and friends can also contribute. When your child is 18, they will have access to the account and will be able to spend the money however they like.

If your child was born on or after 1st September 2002, and you are currently getting Child Benefit, they are eligible for a Child Trust Fund account.

An initial payment of £250 will be paid when an account is set up, followed by another payment of £250 on your child's seventh birthday. If you are getting Child Tax Credit and your income is less than £15,575, your child will get a payment of £500 when they are born and another £500 when they turn seven. You and your family and friends can also contribute up to £1,200 each year to the fund.

You do not have to claim for the scheme as vouchers are issued automatically to people who are getting Child Benefit for a child who qualifies. However, you do have to open a Child Trust Fund account for your child in order to receive payment.

If you have not opened an account one year after receiving the voucher, the government will do this for you, but your child will lose interest on the money.

For more information on Child Trust Funds and Child Benefit, see Benefits for families and children.

Tax

Do I need to send in a tax return? How do I go about this?

If you are working for an employer who is taking PAYE (pay as you earn) tax and national insurance from your regular wages, and you do not have any other income, you do not usually need to complete a tax return form.

You will need to fill in a self-assessment form if you are self-employed, a company director or a partner in a business.

If you are a personal representative or a trustee you will have to complete a tax return for the person or trust you are representing.

By law everyone needs to keep records of their income, gains and expenditures so that they can complete a tax return if they get one. If HM Revenue and Customs (HMRC) suspects you may have income which needs to be taxed under self-assessment, it will send you a tax return to complete. However, it is your responsibility to ask for a tax return if you think you have income which needs to be taxed under self-assessment. The self-assessment form has a main section for everyone and supplementary pages depending on what type of income you have. There is also be a guide to help you complete the tax return.

You, your accountant or your tax advisor can fill in the form, but you should personally check that everything on it is correct. The form can be sent to your tax office by post or you can send it electronically. If you want HMRC to calculate the tax you need to pay, your tax return must be sent by 31 September. If you wish to calculate your own tax then the deadline is 31 January the following year.

Do I still have to pay tax now that I am over 65?

When you are over 65 you still have to pay tax on your income, but your tax free allowance is higher than before you were 65. Your taxable income includes your occupational pension or personal pension if you have one. Some social security benefits are also taxable, for example, your retirement pension. You may also have income in the form of interest from savings or shares, from rental on property that you own or earnings from any work you are doing.

If your only taxable income is basic rate state retirement pension (excluding graduated or additional pension) you will not pay any tax. This is because your tax free allowance will be more than the basic pension. If you are working, either full-time or part-time, your earnings will be taxed under the PAYE system. Any tax due on your other taxable income, for example, state retirement pension, will be deducted from your earnings under the PAYE system.

You may be sent a self-assessment tax return form. If you are not sent a form and you have income which is taxable, it is your responsibility to ask your local tax office to send you a form.

If you have investments you need to check whether the tax is deducted before you get the income. If your income is low, you may be able to claim back tax that has been paid on your investments. Income from some investments is paid gross, that is, without tax having been deducted. The interest on income bonds, for example, is paid in this way. You need to enter this on your tax return form.

If you have a drop in income when you retire, you may be entitled to a tax rebate.

Debt

My debts are getting out of control and I can’t possibly pay them all. What can I do?

If you are worried about your debts, try not to panic but do not ignore your problem. Talk to the people or organisations you owe money to and let them know that you are having problems. Most organisations will be more helpful if you approach them first.

If you have more than one outstanding debt, or have fallen behind in paying your bills, you need to work out which debts are priority debts. A priority debt is one that could have serious results if unpaid. Not paying your rent or mortgage would leave you homeless, or not paying your gas or electricity bill could leave you being cut off and taken to court. When you have decided which are priority debts, work out how much you can realistically afford to pay back.

You will need to think carefully before taking out further loans to pay off existing debts. You may end up paying back a lot more than you borrowed and the interest rates may be extremely high. Some loans can be secured against your home and you could end up losing it if you fail to make repayments. Check your income and see if there are any benefits or tax credits you are entitled to that you are not getting. Look carefully at your spending and see if there is anything you are able to cut down on, again you can work out what are priority expenses and what things are not so necessary. You can also look at ways of reducing your outgoings, for example you could shop around for a cheaper gas or electricity provider, or look at cheaper mortgage or insurance providers.

Another option might be to go bankrupt. For more information about bankruptcy, see Bankruptcy, in Credit and debt fact sheets.

You do not need to pay for debt advice. Your Citizens Advice Bureau gives free, independent and confidential advice. They can help you work out repayments and negotiate with your creditors.

I have been refused credit to buy a new washing machine. What can I do?

If you have been refused credit, you can re-apply to the same company or try somewhere else. If you are still refused credit, it may be that you have a low credit score. This means that the shop selling the washing machine has used a credit reference agency to look at your credit rating. The shop should have told you that they would use this method to decide whether or not you can have a washing machine on credit.

You can ask the shop which credit reference agency it has used. Write to them and ask for a copy of the file they hold on you. You will have to pay a fee for this, but it is usually quite low. If you think your record has incorrect information about you on it, you can ask the credit reference agency to correct it.

I have a county court judgment against me over an unpaid credit card debt and the card issuer has threatened me with bailiffs. What can I do?

The first thing to do is to try and negotiate with the company. Even if you can't pay the debt in full, you could try to agree a set amount to pay weekly or monthly.

If you cannot come to an agreement with the company, they will need to get a warrant of execution from the courts before they can send in the bailiffs to remove property from your home in payment of your debt. If they already have the warrant, you should apply to the court to have it suspended.

If the bailiffs arrive, you do not have to let them in and they cannot generally force their way in. However, they are allowed into your property without your permission if they can enter without breaking in. This is called 'gaining peaceful entry' and includes getting in through an open window, or a closed but unlocked door.

Bailiffs are not allowed to take basic clothing, bedding, furniture or household goods, and any goods they do take will be sold at auction in order to pay off your debt.

The rules about bailiffs are complicated, and it is always sensible to get advice from a specialist adviser.

I am going to live on my own for the first time and am worried about how to manage my budget. What can I do to prevent getting into debt?

Try not to be intimidated by money matters. Keep track of how much money you have coming in and how much you have to put aside for bills, rent and food. You may find it helpful to set up standing orders and direct debits to pay your bills. Arrange for payments to leave your account soon after your pay date. If you can, try and save some money each month as a general savings plan or to cover emergencies when they arise. Make sure you look again at your budget each time there is a change in your income or any other change that might affect your finances.

Always shop around for the cheapest gas, electricity, telephone and insurance deals. There are many to choose from now.

Be careful about buying goods on credit. The interest repayments can be quite high. Also, be careful about interest free credit. It may seem a good deal but if you fail to repay the full amount before the end of the free interest period, you could find yourself paying the full interest, even if you are one day late on your payment. Try to pay at least 10% of your balance every month on your credit cards.

Don’t just run up an overdraft without talking to your bank, you will be charged for unauthorised overdrafts.

Be very careful about taking out any loans. Read and familiarize yourself with the terminology. Most important, know the difference between secured and unsecured lending. If you take out a secured loan, you are using your house as surety and may lose it if you cannot make the loan repayments.

I think someone may be using my credit card details without my knowledge. What can I do about it?

You may be a victim of identity theft. This is a type of fraud which takes place when someone you don't know gets hold of your personal details and uses them to access your account.

If you have been a victim of identity theft and your card is still in your possession, you will not have to pay for anything bought on it without your permission. If your card has been stolen, you will usually not have to pay, unless it can be shown that you have acted fraudulently or without reasonable care, for example by keeping your PIN number written down with your card.

You must act quickly: contact your credit card company straight away, keep a record of all conversations you have with them, and copies of any letters sent or received; and report the matter to the police, and get a crime reference number.

For more information and advice about credit card fraud and identity theft, go to www.cardwatch.org.uk, or to the Home Office website at www.identitytheft.org.uk.

A bank that I do not normally deal with has contacted me to chase an outstanding debt. I think I may be a victim of identity theft. What should I do?

Identity theft is a type of fraud which takes place when someone you don't know gets hold of your personal details and uses them to apply for credit or to open an account in your name.

If you have been a victim of identity theft you will usually not have to pay for any money you have lost, unless it can be shown that you have acted fraudulently or without reasonable care, for example by keeping your PIN number written down with your card. You must act quickly:

• contact the bank straight away, keep a record of all conversations you have with them, and copies of any letters sent or received
• report the matter to the police, and get a crime reference number
• check with the credit reference agencies (details below) whether any applications for credit have been made in your name. If they have, you can ask to have the information removed from your file
• if you suspect that someone has got hold of your details by stealing your mail, or has fraudulently applied to get mail redirected from your address, you should contact the Royal Mail Customer Enquiry Number on: 08457 740740
• contact CIFAS, the UK's Fraud Prevention Service at www.cifas.org.uk. For a small fee they will make sure that anyone applying for credit in your name is automatically double-checked.

The credit reference agencies are:

Experian
Tel: 0870 241 6212
Website: www.experian.co.uk

Equifax
Tel: 08705 143700
Website: www.equifax.co.uk