moving from incapacity benefit to retirement pensi

brodev · 7 September 2004 at 2:01PM

I have been in receipt of incapacity benefit since it was called invalidity benefit. when the name changed there was also a change in the tax position as previously IB was not taxable income but itwas now. As I had been on IB for some time I qualified for transitional relief and my IB continued to be non taxable. Part of my claim was for a dependant relative namely my wife. recently my wife turned 60 and immediately my IB was totally stopped without informing me. When I discovered, through lack of funds in my bank account, I contacted IB and was told that it was because of my wife turning 60 and that she had to claim her OAP immediately. Nothing galvanises me into action as the lack of cash and this was done post haste. I then discovered that my wife's OAP weas less than the amount I received for her and that the difference would be made up on my IB. But I have lost the tax free aspect of her pension. On further investigation I have discovered that she can defer her OAP and that if she does, I can continue to claim for her and get the money tax free. The difference is about £10 per week in our pockets. I put this here as a warning for anyone else approaching a similar position

Fran · 10 September 2004 at 2:26AM

brodev,

People who read the Pensions Board might be interested in this, perhaps you could post a copy of this post there?

brodev · 10 September 2004 at 7:38PM

Fran , if I knew how to move it I would, but I don't so I can't. You have my full permission to move it if you can.

;D >:(

8) ??? ::) :P :-[ :-X :-/ :-*

Ted_Hutchinson · 11 September 2004 at 1:12AM

A guide to State Pensions
A guide to Incapacity Benefit (IB1 Apr 2004)

I am interested in how you have managed to defer your wife's pension and continue to claim the full amount tax free.

Both the guides I have linked to above seem to me to saying that Incapacity Benefit is not claimable after retirement age with the exception of short-term IB which is paid at a lower rate and a rate which doesn't exceed the penion payment, so the only advantage would be the tax which would apply only to the first 28 weeks.

For the benefit of other readers who may not find the DWP technical guides exciting bedtime reading I'll quote the relevant sections of the guides relating to the taxability of Incapacity Benefit (those whose claims can be linked (through the 8 or 52 week protection rules) back to the relevant date should check that they aren't paying tax on it, some mistakes were made and the amount which will be refunded by the Inland Revenue plus interest is definitely worth claiming)

If you claimed benefit before 13 April 1995
If you were getting Sickness Benefit or Invalidity Benefit on 12 April 1995, you were automatically transferred onto Incapacity Benefit.
These claims are known as "transitionally protected".
If you were receiving Invalidity Benefit on 12 April 1995, the following provisions apply:
Invalidity Benefit became long-term Incapacity Benefit
benefit is not taxable
all components payable prior to 13 April 1995 remain payable
people under state pension age receiving Additional Pension will continue to receive Additional Pension, but it is frozen at 1994 rates.
Transitional protection will not apply to any further claim if your entitlement to Incapacity Benefit stops for more than 8 weeks, unless there is a link to Disabled Persons Tax Credit, or a training course, or you are entitled to a 52 week link to Incapacity Benefit.
If an adult dependant increase stops for a continuous period of more than 8 weeks starting on or after 16 February 1995, transitional protection for adult dependant increase will cease to apply.
For more information about transitional protection, contact your local Jobcentre, Jobcentre Plus or social security office. For an explanation, see page 36.

And from the Retirement guide
Incapacity Benefit
If you are getting long-term Incapacity Benefit, this will stop when you reach State Pension age. You can go on getting short-term Incapacity Benefit after State Pension age for up to 52 weeks of incapacity provided your incapacity began before State Pension age.
Incapacity Benefit is taxable from the 29th week.
If you are over State Pension age and qualify for short term Incapacity Benefit, including any increases for an adult dependant, the amount of your Incapacity Benefit is based on your entitlement to basic State Pension. The maximum rates of basic State Pension payable over State Pension age are shown in leaflet Social Security Benefit Rates (GL23). If you are entitled to less than a full basic State Pension, your Incapacity Benefit will be correspondingly reduced.
You will also get any additional State Pension and Graduated Retirement Benefit to which you may be entitled.

brodev · 11 September 2004 at 5:38AM

I believe Ted that as I am the one claiming IB and I have transitional protection and as I have not reached retirement age then I can continue to claim for a dependant adult. All I know is that both the IB people and the OAP people said that I can.

Ted_Hutchinson · 11 September 2004 at 11:55AM

That makes sense.

But the day will come when you reach retirement age and then both you and your dependent will be transferred to Taxable State Pensions.

Still it's best to make the most of your transitional protection while you can and it's a useful reminder to others on Long-term IB that this protection was built in to the 13 April 1995 changes and that many people got put onto taxable IB without them realising they didn't need to be paying tax on this money. The DWP will provide the necessary evidence and the Inland Revenue are can be very efficient when it comes to paying back and making the necessary adjustments.

Fran · 11 September 2004 at 3:25PM

brodev,

I have put a link from the Pensions board to this board.

If you go to help at the top of the page, you can find out how to do various things to do with posts etc. I was thinking a copy would be useful rather than moving it away from here, so to copy it you could have clicked on quote or modify on your post, highlighted all the text, right click and copy, then gone to Pensions Board & started a new thread, pasted your post into the new thread. That sounds complicated! The link I have done will also do the job.

Milarky · 11 September 2004 at 4:05PM

I take it that brodev's wife, although 60 does not qualify for a pension in her own right - just a dependant's addition? If she [or a partner in her position] did become separately entitled to a full [single person's] pension in place of a previously paid addition, would she be required to draw this [presumably larger] amount and leave the IB/ICB revipient's claim, or continue to have a 'choice' of the kind highlighted above?

(Just a hypothetical query....)

[I can't see an advantage in not doing so, however, where the uplift between an 'untaxed' addition and a 'taxable' pension would result a net gain in income]

brodev · 11 September 2004 at 5:05PM

My wife does qualify for a pension on her own right but not a full pension. The amount was actually about £3 less than I got for her. This difference would have been made up on in my IB. But, as this post is about, I would have lost the tax free break on her pension if she had taken it, and the way it was presented to us was that she did not have the option of not taking it and for me to continue to claim for her.

Milarky · 11 September 2004 at 7:43PM

Thanks for that, brodev

- Sorry that I didn't make query clearer.

iris · 30 September 2004 at 5:30PM

I have claimed IB for the lst 11 years and have also claimed for my husband. Next year I reach retirement age i.e. 60. However I am not entitled to a full state pension (I paid reduced NI contributions) and my husband does not reach retirement age i.e. 65 until 2006. Is there anything that I can do? I would really like to continue getting IB until my husband reaches 65 and is entitled to a full State Pension.

moving from incapacity benefit to retirement pensi

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