The benefits system has been criticised for being too complicated and not accessible enough for those entitled to make a claim - there are over 50 different benefits and other payments that people can claim.
Here, we will provide a short guide to some well-known (and some less well-known) benefits for people on a low income, working-age people and parents and families.
On a low income
A charity, the Joseph Rowntree Foundation, published research in July 2011. It found:
- In 2012, a single person needs to earn at least £16,400 a year (before tax) to afford a minimum acceptable standard of living.
- Two parents need to earn at least £18,400 each to support themselves and two children.
To find out if you're definitely entitled to any benefits, you will need to contact the relevant department.
If you're on a low income, you may be able to get more well-known benefits like Housing Benefit and Council Tax Benefit. Those on a low income who work 16 hours or less could claim Income Support, which can be of particular help to lone parents or young people who aren't in full time-study, for example.
- Less well-known benefits include Crisis Loans and Budgeting Loans - which are loans for people on low incomes that must be paid back, but without interest.
- Crisis Loans are generally given out in emergencies that involve things like living expenses or needing urgent rent money in advance.
- Budgeting Loans can be between £100 and £1,500 and are granted for to help people afford things like travelling expenses, clothing or expenses incurred when looking for work.
Other less talked-about benefits for people on low incomes include the:
- Energy Efficiency Grants to make heating or insulation improvements in the home.
- Cold Weather Payments which are paid automatically to recipients of certain benefits for every 7-day period of temperatures below 0 degrees Celsius between 1 November and 31 March.
- 'Christmas Bonus'- a tax-free payment of £10 paid out in December for those on certain benefits who qualify for it.
Most benefits and services for people of working age are managed through Jobcentre Plus offices.
If you're looking for work, you may be able to claim Jobseekers' Allowance as well as Housing Benefit to help you pay your rent, Support for Mortgage Interest (SMI) and Council Tax Benefit.
Some help isn't as well publicised, such as the one-off Job Grant (of up to £250) when returning to work of 16 hours or more a week. Also, unemployed people on benefits could get help meeting the cost of their Travel to an Interview.
If you are unable to work because of illness or disability, you could be entitled to the Employment and Support Allowance, which replaced Incapacity Benefit, although it aims to get people into work. This is being replaced by the Universal Credit in October 2013 (see bottom of the page).
The government is planning changes to certain benefits and wants to see a system where people are 'always better off in work than on benefits'. There are already a number of benefits that could help people who return to work, such as continued support with Housing Benefit, Council Tax Benefit and Mortgage Interest for up to four weeks after you start work.
Also, parents bringing up children alone and returning to work for 16 hours or more per week could be entitled to In Work Credit for up to 52 weeks - tax-free payments of £40 per week (£60 in London).
The Return to Work Credit is a similar weekly payment of £40 for people who return to work who have a health condition or disability, or had one while they were out of work.
Parents and families
Jobcentre Plus manages benefits and services for people bringing up children (including children with special needs) and parents on low incomes (including help with health costs).
HM Revenue & Customs deals with Child Benefit, Guardian's Allowance and tax credits.
Tax Credits are payments from the government, generally for people who are on a low income or have children. If you have one child and earn up to £26,000, or if you have two children and earn up to £32,200, you could qualify for Tax Credits. In some cases, extra credits can be paid to help with childcare costs for parents who work and to parents or guardians of children with disabilities.
There have been positive developments in legislation for parents in the workplace in recent years, including new flexible working rights. One example: parents can take parental leave from work.
Pregnant women who have been in work (with the same employer) for at least 26 weeks (by the 15th week before the baby is due) may be entitled to Statutory Maternity Pay (SMP) which is:
- 90% of their average gross weekly earnings for six weeks (with no upper limit) and
- either the standard rate of £135.45 or 90% of their average gross weekly earnings (whichever amount is lower) for the next 33 weeks.
Those who don't qualify for SMP from an employer could be entitled to Maternity Allowance (MA) if they're pregnant or have a new baby. Men who will soon be fathers (or jointly responsible for bringing up a child) may also be entitled to Ordinary Paternity Leave and Ordinary Statutory Paternity Pay.
Some less well-known benefits for parents include:
- Statutory Adoption Pay, which is £135.35 or 90% of the adoptive parent's average weekly earnings (whichever is less) for 39 weeks.
- Widowed Parent's Allowance, which is up to £105.95 a week and can be paid to a parent of at least one child (for whom they receive Child Benefit) whose partner has died.
- School uniform allowances - discretionary payments made by local councils to help parents pay for their child's school uniform.
Child Trust Funds are long-term tax-free savings accounts. Only children born after 1 September 2002 and before 2 January 2011 are eligible for them.
And new mums might qualify for Sure Start Maternity Grants - one-off payments that can help with the cost of a baby and maternity items.
Changes to the benefits system?
Please be aware that the government is changing the way benefits are paid to people on low incomes, or looking for work. The idea is to make it so that people are financially better off working than claiming benefits.
The Universal Credit will replace:
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance (formerly Incapacity Benefit)
- Income Support
- Child Tax Credits
- Working Tax Credits
- Housing Benefit
The Universal Credit will be trialled in the North-East in April 2013 and is planned to be rolled out nationwide in October 2013.
Universal Credit payments will be monthly instead of weekly or fortnightly. Lord Freud, Minister for Welfare Reform, recommended that budgeting accounts are made available to people on low incomes to help them manage their money.
Andy Burrows, the Head of Post Offices at Consumer Focus, believes that 'jam-jar' banking could help benefit recipients manage their money well with the transition. He commented: "Our research shows significant need for budgeting bank accounts, often referred to as 'jam-jar accounts', to help people manage what will be a major change in how benefits are paid."
What is a jam-jar account?
'Jam -jar' accounts help people manage their money with effective budgeting - basically putting the part of their money that is needed for bills and essential expenses into a separate account, leaving money available for you spend as you wish.
The thinkmoney Personal Account is an example of a 'jam-jar' account. As thinkmoney is not a bank, your money is not invested or lent out – it is an alternative to a high street bank account. It separates your money into two accounts, one for the bills you’ve told us about and one for money that's yours to spend as you wish (your Salaries Account and your Card Account). You can receive payments such as, benefits, a salary, tax credits, or pension into the thinkmoney Personal Account and the account comes with a dedicated team of Money Managers who are there to help you manage your monthly finances.