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Tax changes
Personal allowance
The standard personal allowance – the amount of income you can receive before you pay tax – for the year 2013/14 will be £9,440.
Until this year, there was a higher personal allowance for people aged 65 and over but last year the Chancellor said that this would no longer be available to people reaching 65 after 5 April 2013.
If you are 65 or over and you’ve been getting a higher allowance because of your age, this will now be frozen at the level it was last year - £10,500 for people aged 65 to 74 and £10,660 for people aged 75 and over. Eventually there will be just one personal allowance for everyone.
Inheritance tax
The inheritance tax threshold is the maximum amount your estate can be worth before you need to pay inheritance tax. Your estate means everything you own, including money, property, possessions and investments.
The threshold had previously been frozen at £325,000 until 2015/16 but in February 2013 the Government announced that it plans to freeze it for a further three years. This is being introduced as part of the plan to fund a cap on long-term care costs. In most cases, when a spouse or a civil partner dies, any unused part of their nil-rate band can be passed on to the surviving partner.
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Pensions
State Pension and Pension Credit rates
As previously announced, the basic State Pension will go up by £2.70 to £110.15 in April this year. At the same time, the standard rate of Pension Credit, which gives pensioners a guaranteed minimum income level, will increase to £145.40 a week for single people and £222.05 for couples.
Single tier pension
The much-talked about new single tier pension has been brought forward and will affect people reaching State Pension age from 2016. The new pension will be worth up to £144 a week (in today’s money), and replace the basic state pension and additional pension (also known as SERPs or a second state pension). If you have built up larger amounts, there will be arrangements to protect this while the new system comes in.
You will qualify for the full amount if you have 35 qualifying years of National Insurance contributions, or credits which are given for reasons such as caring or disability.
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Pension age
The current State Pension age for men is 65. State Pension age for women is gradually increasing from 60 to 65. From December 2018, State Pension age for both men and women will start to increase to reach 66 in October 2020. Use the Gov.uk State Pension calculator to find out your State Pension Age.
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Social care costs
The Chancellor confirmed that a new cap of £72,000 on social care costs will be brought forward to 2016. The upper threshold limit for the means test on residential care will be raised from £23,000 to £118,000 in 2016.
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Fuel duty
The fuel duty increase planned for September has been cancelled. This was due to go up by 1.89 pence per litre.
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Welfare reform
There are big changes to the welfare system, which could affect which benefits you get. Changes start to come in from April 2013. For more information, see Changes to the benefits system
Changes to the benefit system
The Welfare Reform Act 2012 is bringing major changes to the benefits system, particularly for people of working age. It is mainly aimed at reforming the benefits system for people of working age, but some of the changes will affect older people too.
Here are some of the main changes:
Universal Credit will be introduced: Universal Credit will replace certain benefits for people of working age, including:
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Working Tax Credit and Child Tax Credit
- Housing Benefit
Universal Credit will be introduced from October 2013. If you are in later life, you may be affected if:
- your partner is under Pension Credit age, and you are over Pension Credit age. You will no longer be able to claim Pension Credit – your partner will have to claim Universal Credit instead. But if you are already claiming Pension Credit when the change comes in you won't be affected (unless or until there is a break in your Pension Credit claim for some reason).
- you have dependent children living with you. Child Tax Credit will be abolished, and financial help for children will be provided on Universal Credit or Pension Credit.
- you are working in a low-paid job and over Pension Credit age. You will no longer be able to claim Working Tax Credit.
By ‘Pension Credit age’, we mean the age at which you are eligible to claim it. You don’t actually have to be claiming it. This age is gradually increasing at the same pace as women’s State Pension age.
Pension Credit is changing
- Because Housing Benefit is being abolished, Pension Credit will change. It will include a new housing credit to help towards rent. It is expected that this will come in for new claimants in October 2014 while if you are already receiving Housing Benefit you will be transferred to the new Pension Credit system between 2014 and 2017.
- Because Child Tax Credit is being abolished, Pension Credit will include additional amounts if you have dependent children.
- There may be a new savings limit for Pension Credit. There is currently no savings limit. If one is introduced, it will be over £16,000.
- It will be easier for carers to claim the extra amount for carers in Pension Credit.
Personal Independence Payment will be introduced, and DLA for adults will be phased out
A new benefit called Personal Independence Payment (PIP) will replace Disability Living Allowance (DLA) for people of working age who are disabled.
‘Working age’ means below 65, but this age will rise as State Pension age rises. When someone receiving PIP reaches 65, they will be able to keep claiming it as long as they still meet the criteria for it.
PIP will have two components called mobility and daily living component. Each of these components will have 2 rates of payment, depending on the level of disability of the claimant.
PIP will start to apply to some new claimants from April 2013, and to all from June 2013. If you currently get DLA you may be reassessed for PIP. If you are under 65, reassessments will start from autumn 2013. The government has not yet decided whether to reassess people who are over 65 and getting DLA when PIP is introduced.
Council Tax Benefit will be replaced with a new localised scheme
Council Tax Benefit will be abolished and replaced with local support in 2013-14. Local authorities in England will receive funding to help people pay Council Tax. Scotland and Wales will come up with their own local schemes.
The Government has said current and future pensioners in England should receive the same level of support under the new scheme as at present. Support for people of working age is likely to be reduced.
Employment and Support Allowance will change
You can claim Employment and Support Allowance (ESA) if you’re unable to work because of illness or disability. Contributory ESA used to be payable indefinitely, but now it is only paid indefinitely to people with severe medical conditions (in the ‘support group’). Everyone else can only claim it for a year.
Help with social housing rents is changing
If you’re under Pension Credit age and you rent a house in the social housing sector, you will get less help with your rent after April 2013 if you are considered to have more bedrooms than required. As explained above, under Universal Credit you will be treated as ‘working age’ if you are a pensioner but have a younger partner so some pensioners may be affected by this in the future.
New benefits cap
If you are under Pension Credit age, or you have a partner who is under Pension Credit age, there will be a limit on the total amount of benefits you can receive. It will be linked to the average earnings of a working household. It will be around £350 a week for single adults, and £500 a week for couples and lone parents.
The cap will not apply to you if you receive Disability Living Allowance, Working Tax Credit, ESA support component or war widow’s pension. The cap will start to be introduced from April 2013 through reductions in Housing Benefit.
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Appealing against a benefits decision
If you think a decision made about your benefits is wrong, you can ask the office that made the decision to explain or reconsider it. If you're still unhappy, you can appeal it. Challenging a benefit decision might sound daunting, but don't be put off - the process may be easier than you think.
It's important to act quickly, because there are deadlines for submitting appeals. You usually have to appeal within a month of receiving the letter notifying you of the benefit decision.
A late appeal may be accepted if there is a good reason for doing so - perhaps because there is a lot of money at stake, you have a particularly strong case, or there is a good reason why it was late, such as illness of bereavement.
Start by contacting the office that made the decision and sending any evidence that will support your case. If they decide they can't change their decision, or they make a new decision but you're still unhappy with it, you can appeal.
Information on how to appeal is usually included in the benefit letter. You will have to fill in a form and send it to the office dealing with your claim.
You can't appeal a decision about budgeting loans, community care grants or crisis loans from the Social Fund. However, you can apply to the Independent Review Service for a review.
Age Scotland's benefits calculator may help you work out whether the benefit decision was right or not.
Download our factsheet to find out more about what happens when a benefit application is submitted, how to challenge a decision that might be wrong, and how to make a complaint.
As usual I have included both Age Scotland and Age UK advice in the newsletter, some of which may differ, so please check when you call that you have the right place for your information.
I also included advice about some changes that may not affect you personally as a pensioner, but may affect someone in your family or someone you know.
**In any case do check that after the benefits change over you are still receiving the correct benefits due to you.**
Contact Age Scotland Helpline: 0845 125 9732
Write to them: Causewayside House, 160 Causewayside’ Edinburgh, EH9 1PR
Contact Age UK Advice: 0800 169 6565
Mae Stewart
(apologies to Age Scotland and Age UK for any mis-quotes)
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