understanding UK benefits

Depending on your personal circumstances, you may be entitled to receive benefits to help with financial pressures. Let's get stuck into some of the main UK benefits and the criteria you'll need to meet to receive them.

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the main UK benefits 

Universal Credit (UC) 

Universal Credit is a means-tested benefit supporting people of working age on a low income, those who are unable to work due to ill health/disability or are unemployed. It has replaced the following means-tested benefits: Income Based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit and Housing Benefit. If you already receive one of these benefits and your circumstances change, it's recommended you seek advice prior to claiming Universal Credit.  

To claim Universal Credit, you must

• live in the UK
• be under State Pension age
• have £16,000 or less in money, savings and investments
• be aged 18 or over (if you are 16 to 17, please seek advice as there are some exceptions)

Universal Credit can be applied for online through the  Government website.

Additional elements can be included within universal credit if you rent a property, have children, have childcare costs, care for someone, have a child who has a disability/health issue or if you have limited capability for work related activity.

New Style Jobseeker's Allowance (JSA) 

If you're unemployed or work less than 16 hours a week, you may be eligible for New Style Jobseekers Allowance.   

This is a contribution-based benefit so you can receive the payment if you've paid enough Class 1 National Insurance contributions in the two full tax years before the calendar year of your claim. National Insurance credits if you have been sick from work or caring for someone may also count for the relevant tax year period. The benefit is paid for up to 182 days.

The main difference between Universal Credit and New Style JSA is that your savings and investments aren't taken into consideration for New Style JSA. If you have a partner their income and capital is disregarded. You can claim New Style JSA and Universal Credit in addition to this, (if you need help with your rent, for example), providing you meet the criteria for both.

If you're aged 25 and over, the weekly rate for 2024/25 is £90.50 and if you're aged 18 to 24, the rate is £71.70.

New Style Employment and Support Allowance/Contribution-Based Employment and Support Allowance (ESA) 

ESA is a benefit for people under State Pension age who have limited capability to work due to an illness or disability and aren't already receiving statutory sick pay.  

Similarly to New Style Job Seeker's Allowance, it's a contribution- based benefit as you must have paid enough Class 1 or 2 National Insurance Contributions during the last two full tax years prior to the year you claim. 

New Style ESA doesn't take into consideration your partner’s income and savings, and the majority of income is disregarded although pension payments may be taken into consideration.

As with New Style JSA, the weekly amount for 2024/25 is £90.50 if you're 25 and over and £71.70, if you're aged 18 to 24. You can also apply for New Style ESA and Universal Credit simultaneously, providing you meet both criteria.

Pension Credit 

Pension Credit  is a means-tested benefit for people who are on low income and have reached State Pension age. This benefit tops up your weekly income to the following basic amounts for 2024/25:

• single person: £218.15
• couple: £332.95

Additional payments are paid if you're severely disabled, or are a carer for someone who is, have the main responsibility for a child, if the child is disabled, and service charges and ground rent for your property in which you reside.

You may also be eligible for other means-tested benefits such as Housing Benefit, Support with Mortgage Interest, and Council Tax Support. 

Housing Benefit 

Housing Benefit is provided through your local council and is a means-tested benefit to help people on low income pay rent.  

A claim for Housing Benefit can be made if:  

• both you and your partner have reached State Pension age  
• you or your partner have been receiving Pension Credit prior to 15 May 2019  
• you live in supported, sheltered or temporary accommodation  

If you don't fall into one of these categories and require assistance with your rent, you should claim Universal Credit.

Discretionary Housing Payment 

Discretionary Housing Payment is available to claim through your local council and can be provided to assist with rent shortfalls if you're already in receipt of Housing Benefit or Universal Credit where a housing element is included for rental costs.

Assistance can also be applied for to help with the costs of starting a tenancy such as a rental deposit or rent in advance if you need to move. To apply for this benefit, visit your local council website.

Support with Mortgage Interest (SMI)  

To qualify for a Support for Mortgage Interest (SMI) loan, you need to receive one of the following:  

• income support  
• income-based Jobseeker’s Allowance (JSA)  
• income-related Employment and Support Allowance (ESA)  
• Universal Credit  
• Pension Credit  

You can start getting a loan:  

• from the date you start receiving Pension Credit  
• after you’ve received Universal Credit payments for three consecutive months  
• after you’ve claimed any other qualifying benefit for 39 consecutive weeks  

Support with Mortgage Interest is provided as a loan and the repayment depends on your circumstances when the house is sold, or ownership is transferred. Therefore, you'll have to pay interest on this payment.

Council Tax support  

This benefit is provided by your local council and is a means-tested benefit to help people on a low income with their Council Tax bill.  The support you receive depends on your local council’s rules, although they are broadly similar across the country. Council Tax support is:  

• means-tested and takes into consideration your income and capital
• available to people who live in rental properties or are homeowners

For further details, visit your local council’s website.  

Disabled Band Reduction Scheme for Council Tax 

Your Council Tax bill can be reduced if you or somebody in your home is ‘substantially and permanently disabled’ and you have: 

• a room (other than a bathroom, kitchen, or toilet) that is used to meet your needs e.g. for dialysis, treatment or storing of equipment  
• a second bathroom or kitchen used to meet your needs
• enough space in your home to use a wheelchair indoors  

If any of these apply, the bill for your home will be reduced to the next lowest band. If you are already in a band A property, you'll have your bill reduced by 17%. Contact your local council for further details and an application form.

Severe Mental Impairment for Council Tax  

People who are severely mentally impaired are not included in the calculation of Council Tax liability. To qualify for this benefit:  

• somebody within your household needs to be diagnosed as having a “severe mental impairment" that appears to be permanent. This could be dementia, severe learning difficulties or another condition that causes a "severe impairment of intelligence and social functioning." You'll need a certificate from your doctor to confirm the diagnosis.

You also need to receive one of these benefits:   

• Personal Independence Payment (standard or enhanced daily living component), Attendance Allowance (any rate) or Disability Living Allowance (care component paid at the middle or higher rate)  

If you meet the criteria and live with one other person who isn’t severely mentally impaired, you'll receive a 25% discount on your Council Tax. If everyone in the house has a severe mental impairment, an exemption for the whole property is applied and you won’t have to pay Council Tax.  

If you're considered severely mentally impaired but live with two or more adults who aren't severely mentally impaired, you won't receive a Council Tax discount. To apply for this benefit, contact your local council.

Carer Disregard for Council Tax  

If you're a live in carer for someone other than your husband, wife, civil partner or your child if they're under 18, you're classed as being disregarded as an occupant of the property for the purpose of council tax.

You must care for the person for at least 35 hours a week and they must receive one of the following benefits:  

• any rate of Attendance Allowance  
• the middle or highest rate of Disability Living Allowance (care component)  
• any rate of the Personal Independence Payment (daily living element)  
• an increase in his or her Disablement Pension  
• an increase in Constant Attendance Allowance  

The carer does not have to receive Carer’s Allowance to be disregarded and your income and savings will not affect whether you get the discount.

Care workers living at a property may also be disregarded for Council Tax purposes.

To be classed as a care worker, you need to:  

• provide support or care to another person at the same address  
• be employed to provide support or care to that person, and have been introduced to him or her by a charity or local authority  
• earn no more than £44 a week  
• work for at least 24 hours a week  
• live where the care is provided or in premises that have been provided to enable a better standard of care to be carried out  

Attendance Allowance  

Attendance Allowance  is for people who've reached state pension age and are:  

• physically or mentally disabled and need assistance with personal care needs  
• need supervision or support to keep them safe 

This benefit is available to people who live on their own or with others and is not dependent on whether the assistance that is needed is being provided. It's also a non-means-tested benefit so income and capital is ignored and that of a partners. 

If you receive this benefit, it's worth checking what other means-tested benefits or disability discounts you may be eligible for.

The weekly rates for Attendance Allowance in 2024/25 are:  

• lower rate (for help in the day or night) £72.65 
• higher rate (for help in the day and night) £108.55

Personal Independence Payment (PIP)

PIP is a benefit for people aged between 16 and state retirement age who have additional care needs due to illness or disability. If you're in receipt of PIP before you reach state retirement age, your claim will continue past State Pension age if your additional care needs remain. 

PIP is a non-means-tested benefit, so your income and savings aren't taken into consideration. There are two parts to PIP - a daily living and mobility component. The daily living element is for the extra help you need with everyday tasks such as preparing meals, washing, dressing, and managing money whilst the mobility element considers how far you can walk and any difficulties you may have with making journeys. 

If you're awarded this benefit, you should check to see if you're eligible for other means-tested-benefits or disability discounts.  

The weekly rates for the Personal Independence Payment in 2024/25 are:  

daily living  

• standard - £72.65
• enhanced - £108.55

mobility   

• standard - £28.70 
• enhanced - £75.75 

For people living in Scotland a new disability benefit called Adult Disability Payment has been introduced which replaces Personal Independence Payment in this area.The benefit is administered by Social Security Scotland.

Disability Living Allowance (DLA)  

Disability Living Allowance (DLA) is a benefit for children under 16 who have additional care or mobility needs due to illness or disability. There are additional age rules in relation to the mobility element of DLA.  

DLA has two components - the personal care component and mobility component. It is non-means tested so income isn't taken into consideration.  

The weekly rates for 2024/25 are:  

care  

• low rate - £28.70
• middle rate - £72.65
• high rate - £108.55

mobility  

• lower rate rate - £28.70
• higher rate rate - £75.75

For people living in Scotland a new disability benefit called Child Disability Payment is being introduced which will replace Disability Living Allowance for children in this area. It is administered by Social Security Scotland.

Carer's Allowance  

Carer’s Allowance is paid to people who provide more than 35 hours of informal care for those in receipt of the following benefits:  

• Personal Independence Payments for daily living
• Disability Living Allowance -  care component middle or higher rate  
• Attendance Allowance  

You must also: 

• be aged 16 or over  
• spend at least 35 hours a week caring for someone  
• not be in full-time education  
• not  be studying for 21 hours a week or more  
• earn £151.00 or less a week after tax, National Insurance and expenses  

The weekly rate for this benefit in 2024/25 is £81.90 a week. Before claiming Carer’s Allowance, make sure you seek professional advice as it can impact on the benefit entitlement of the person you're caring for. Receiving this payment may also mean you're entitled to receive other means-tested benefits. Being in receipt of Carers Allowance will also mean you will get national insurance credits. You do not have to live with the person who you care for.

Child Benefit

Child Benefit is paid if you are responsible for bringing up a child who is under 16, or if they are under 20 and they are in approved education or training.
 
If you or your partner have income of over £60,000 you will be subject to the High income Child Benefit tax charge. The Child Benefit you receive will be reduced by 1% of the Child Benefit you receive for each £200 of income you have over £60,000 a year. This means that an income of £70,000 would incur a charge of 50% of your Child Benefit. If you earn over £60,000 you will have to register for self-assessment to repay the charge.

If you or your partner earn over £80,000 the charge will be equal to the full amount of Child Benefit and you will have to repay the full amount of the Child Benefit you receive. However, you may still wish to continue to make claims for your children as for each week that you are entitled to Child Benefit (even if you don't receive a payment) you could qualify for National Insurance credits which can help to protect your future entitlement to State Pension.

Try the child benefit tax calculator to find out about your situation.

The benefit is usually paid every four weeks and you will receive national insurance credits if your child is under 12 which count towards your state pension.

• £25.60 per week eldest or only child.
• £16.95 for additional children per week.

The benefits system is complicated and legislation is often changing.  Information is correct at the time of update (April 2024) so if you're unsure about anything, we recommend seeking expert advice in relation to your personal situation.

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how we can help   

We support the wellbeing ICAEW members, ACA students, ICAEW staff members and their spouses, partners and children up to the age of 25. If you think you may be entitled to receive benefit support but aren't sure about eligibility, we can help. Contact our team of advisors to discuss further.

The benefits system is complicated and legislationis often changing, so if you're unsure about anything, we recommend seeking expert advice in relation to your personal situation.