What are benefits?
Benefits and tax credits are payments given by the government to help assist individuals who are either on a low income, or simply struggling to make ends meet. Essentially, they exist to offer tangible and impactful assistance to those who need it the most and has formed part of the British cultural landscape for decades. However, that being said, in recent years Britain as a welfare state has evolved enormously under various different governments. It can be tricky to navigate what benefits you are entitled to and when. As a broad outline, individuals who may be entitled to benefits include those:
- On a low income
- Have children
- Are pregnant
- Are battling an illness
- Acting as a carer
- Are struggling to pay for heating
Who distributes benefits?
There are three main bodies that distribute benefits depending on your location and needs. These are the:
- Department for Work and Pensions
- HM Revenue and Customs (HMRC)
- Local Authorities and councils
What are the different types of UK benefits?
Not all benefits are judged based on the same criteria, and can broadly be split into two distinct branches.
There are two main types of benefits:
Means-tested benefits are given based on how much money you have saved, earn or as other capital. If the government judges that you have too much income you will not get any means-tested benefits although you do receive them regardless of whether you have paid enough national insurance.
Non-means tested benefits don’t take into account income or savings, but rather are given to replace earnings if, for example, you lose your job. However, whilst they don’t take into account your savings they do take into account your national insurance contributions. Non-means tested benefits come in three main forms:
- Contributory benefits: These benefits are to replace earnings if, for example, you lose your job are unable to work because of a disability.
- Statutory benefits: These benefits are to replace earnings lost due to maternity/adoption/paternity or sickness and they are paid by your employer.
- Non-contributory benefits: These benefits are designed to aid with the additional costs of having a disability or caring for someone with a disability.
What are the most common types of UK benefits?
There are a number of benefits available right across the UK with these depending on a huge range of socio-economic factors and personal circumstances. It would be impossible to review every benefit available in the UK in this guide. However, what we have endeavoured to do is cherry pick those benefits that are most commonly offered and that are of the most importance to the overwhelming majority of the UK population. For more detail, on benefits, we would recommend taking a look at the dedicated government page here.
Benefits for Working Parents
One of the most common benefits offered by the government, this benefit is available to any individual with a child and is in no way means tested. Of incredible benefit to parents right around the UK, it is available to any parent with a child between the age of 3 and 4 who can get 15 hours a week free of childcare whilst any parent with a child under 16 will also receive payments although these benefits stop after the second child. The government will make payments into the bank account of one parent. If you are eligible for child benefits all you need to do is fill in the Child Benefit Claim Form and send it to the Child Benefit Office with the child’s original birth certificate.
Types of benefits for working parents include:
- Guardian’s Allowance
- Child Benefits
- Tax Credits
- Child Tax Credit
- Working Tax Credit
- Childcare vouchers
Benefits for the Unemployed
Designed for those who have fallen on hard times, unemployment benefits aim to aid those people who have been paying taxes for many years and now need support as they have lost a job due to circumstances beyond their control. This allowance is paid every fortnight into your bank account and the amount you receive depends on your age and savings. To gain jobseekers allowance you must apply online and attend an interview at your local JobCentre Plus Office and you must sign on every two weeks or your benefits will be stopped.
Types of benefits for the unemployed include:
- Jobseeker’s Allowance
- Income Support
- Employment & Support Allowance
- Personal Independence Payment
- Attendance Allowance
Benefits for the Disabled
Benefits for the disabled are aimed at those individuals who have a health condition or disability that makes it difficult for them to work . The amount you receive will depend on your personal circumstances, for example, there are certain benefits aimed solely at those who are minors whilst others exist to help out those who are disabled and over the age of 65.
Types of benefits for disabled individuals will include:
- Carer’s Allowance
- Disability Living Allowance
- Council Tax Reduction
Benefits for heating expenses
Benefits for heating expenses are designed to help those individuals who cannot afford to pay for heating during the cold Winter months and need assistance simply to make it through this tricky time period. There are two
types of payments available for heating expenses: the Cold Weather Payment and the Winter Fuel Payment.
- The Cold Weather Payment is £25 per week and is paid after seven days of sub-zero temperatures.
- These payments are given to individuals on benefits, or if they have a family member under 5 or with a disability.
- The winter fuel payment is between £100 and £300 per month and is paid to those living off a pension.
Types of payments include:
- Winter fuel payments
- Cold weather payments
- The warm home discount scheme
Benefits from local councils
Your local council might offer a council tax reduction which is provided to help those individuals who are struggling to pay their Council Tax bill. They may either be on a low income or unemployed. It is means tested and will take into consideration your income. Where you live will also be taken into consideration and result in varying payouts. Your local council may also offer social services to those who are struggling to care for loved ones as well as disabled facilities grants to those who require extra support.
Housing benefits aim to help those individuals who are on a low incoming and struggling to meet their rental costs. Means-tested, this benefit will take into consideration both your income and capital, and is available to both to those who are unemployed and employed.
Pension credit is a means tested benefit for those individuals who have reached pension age. Pension age in the UK is currently categorised as 60 years old for a woman and 65 years old for a man. Although there are plans to increase this to 66 years old for both genders as well as further incremental increases slated over the next years with the pension age suspected to reach 68 years old by 2028. Currently, pension credits top up your weekly income to £163 a week if you are single and £248.80 a week for a couple.