Will the new Universal Credit be Taxed/Mean's Tested?

frothy-coffee_2

Hi,
Currently IB is both taxed and means tested but DLA isn't.

What will happen when they're replaced?

BigAunty

More means testing - the capital limits that come with benefits like housing benefit, income support and other income based benefits will apply to UC.

This is because tax credits are going to be scrapped which second home owners with equity in the non-occupied property and which households with substantial savings can still receive.

There is transitional protection planned.

IB is being replaced by ESA - those who get moved onto ESA get it on a contributions basis for a year and then it switches to income based so if they have a partner in employment, they will invariably lose it.

DLA is being replaced by PIP, not sure how this operates. You can find out on the Disability and Dosh forum.

The DLA and IB changes are independent of UC - it was announced back in 2007 that IB would be canned.

frothy-coffee_2

Hello,

Thankyou for that I I get confused with this new system.

I was wondering if you can advise specifically for my circumstances...

I'm single and in receipt of both IB and DLA (My IB is reduced somewhat as I receive a small private pension).

I then pay a small amount of tax on my total 'taxable' income (IB + Private Pension).

I also have some savings which mainly comprise of my pension lump sum (which I saved) when I got retired early on health grounds.

Would you have any idea if Iain Duncan Smith's benefit overhaul will affect my circumstances?

rogerblack

On several grounds.
I am assuming you are not very close to state pension age.
DLA will be reassessed in the next several years, and go onto PIP.
This will not be taxable, and may lead to increased allowances for UC.

IB will be reassessed, and if you are placed in the work-related group, you will have only one year of contribution based benefit before either moving to income based ESA, or universal credit, depending on when it happens.
If this happens, your savings (if over 16k) will entirely eliminate your entitlement to benefit.

If you are placed in the support group, as I understand it, then much of this does not apply, as transitional protection will protect you from the worst parts.

If you give more details - savings amounts, and details of your condition, it may be possible to say of you're unlikely to qualify foe the support group.

frothy-coffee_2

Thankyou for that much appreciated.

My savings total £22,000 approx.

About 7 years ago I lost the use of my legs and was retired from my job (electrician) on health grounds.

My social worker at the time sorted out the IB and DLA as I was totally ignorant of the benefit system.

I can use my legs a bit more now but can only weight bear for about a minute. I can manage to walk a few yards with crutches but then end up laid up and in pain for the ext few days. So I use my NHS wheelchair 95% of the time.

That's it apart from the private pension I get that I've already mentioned. Oh yeah! And I'm 47 years old for my sins :-)

rogerblack

Clearly, I haven't gone into your circumstances in detail.
But if your 'only' disability is lack of well functioning legs, and you can use a wheelchair, you are unlikely to get an award of ESA, or UC on conversion, and will be expected to seek work.

As you have savings exceeding the income-related capital limit, you will not be paid JSA/UC at all until your savings fall considerably.

Similarly, for PIP, 'just' not having legs, if you can use a wheelchair will not generally lead to any award.

The above is my understanding, though I need to reread the PIP descriptors again.

frothy-coffee_2

Mmmm thankyou I appreciate that.

Regarding savings I am living in currently living in rented accomodation (I done own a property). I want to move out and buy my own place as I get a lot of noise from the upstairs flat. Using my savings as a deposit on a house wouldn't be considered as some form of 'avoidance' would it?

EDIT:
When they do these new medical assessments do they take into account pain and practicalities? For me because of the trouble with my legs I can't sit for much longer than an hour in a wheelchair. Then I have to slide out of it, and flop onto the floor to stretch my legs out. At home I don't sit on furniture or even the sofa, I drag the sofa cushions onto the floor and lie on them. Just wondering???

BigAunty

Deprivation of capital is about deliberately getting rid of capital to put yourself in a better position to claim benefits so it covers things like benefit claimants giving away their capital (savings, investments and property) or going on a luxury spending spree way above a previous standard of living, for example.

Therefore I don't see an issue in quite a basic step like buying a property, an everyday common expense - equity in a property that is the sole owner occupied one isn't treated as capital unlike how it would if it was a second buy to let property, for example.

But how will you get a mortgage for the balance if you are on benefits?

frothy-coffee_2

Thankyou for that, much appreciated.

Regarding a mortgage you're right I wouldn't qualify for one. But my parents said they'd help with the shortfall, and I only need a small place as it's just me and the cat. I used to have my own place but had to get rid of it as I couldn't manage the stairs. But there was no equity left after I'd cleared the mortgage :-(

BigAunty

If you are in England,another thing to look out for is council tax changes from next april. Local councils will be setting their own discount schemes (and they get less budget so there will be less discounts). The national way of administering a discount will be scrapped (though I understand that it won't affect the single person discount and maybe some other types).

Check on your local council website to see how they plan to give out discounts. Some groups that previously got full exemptions will no longer be entitled. It differs from place to place.

BigAunty

frothy-coffee wrote: »

...

EDIT:
When they do these new medical assessments do they take into account pain and practicalities? For me because of the trouble with my legs I can't sit for much longer than an hour in a wheelchair. Then I have to slide out of it, and flop onto the floor to stretch my legs out. At home I don't sit on furniture or even the sofa, I drag the sofa cushions onto the floor and lie on them. Just wondering???

Here is some basic info on ESA and how it is assessed. See if you can find the descriptors, how they assess different aspects of capability and how points are awarded to understand how your discomfort and need to stretch fits in with them.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Illorinjured/DG_172012

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Illorinjured/DG_171894