Housing Benefit. Net or Gross pension used?

OhWow

I've been contacted by an older family friend who claims Housing Benefit. She pays income tax on her private pension.

Her council have told her that they use her gross private pension income for her benefit calculation and not her net income; they ignore the taxes she pays as they count her taxes paid as her income. Saying the government have always calculated Housing Benefit on gross income only. Is this correct?

Robbie64

For state, occupational and private pensions, it is gross income that is used.

NedS

Same with UC - means-tested benefits use the full gross amounts for all unearned income (e.g, pensions etc)

This often leads to overpayments of means-tested benefits as claimants often only report or declare their net incomes, and/or the benefits officer is not aware it is the full gross amounts that should be taken into account.

Brie

https://forums.moneysavingexpert.com/discussion/comment/82139825#Comment_82139825

sorry for the hijack - would a redundancy payment be considered unearned income for a UC application?

kaMelo

https://forums.moneysavingexpert.com/discussion/comment/82139910#Comment_82139910

I'm pretty sure redundancy payments are either earned income or capital, depending upon what the payment consists of. PILON is earned income, anything above that is classed as capital for UC purposes.

HillStreetBlues

i agree, PILON is your wages in advance (even if you don't actually work), redundancy is compensation.

OhWow

NedS

This often leads to overpayments of means-tested benefits as claimants often only report or declare their net incomes, and/or the benefits officer is not aware it is the full gross amounts that should be taken into account.

Hmmm. It looks like it's been continual benefit officers' mistakes. She sends her pension wage slips at least twice a year: when there are annual pension increases and then again when there is a further tax deduction on the pension, due to the state pension rise. Last year when selected for a benefits check, she filled the form in correctly, stating the gross amount when asked and sending all the proof asked for.

Because of the way they calculated it from her pension salary slips, she assumed it was net.

Thanks for your help everyone.

OhWow

Just found out that she gets some Council Tax reduction too, based on the Housing Benefit officers' calculations.

Newcad

My council uses nett pension income after tax.

When I reached SPA earlier this year they initially worked out my HB and CTR based on my full State Pension and full (small) works pension. It was noted on the letter at the time that they would review both in 3 months at which time my new tax position would be known.

However when a month, later I informed them of the Tax that I now had pay had reduced the woks pension that I was actually paid, then they increased both HB and CTR accordingly.

HillStreetBlues

Although it is calculated gross I believe the income tax amount should be disregarded in the calculation.

Pension Age HB

33(12)

 In the case of any income taken into account for the purpose of calculating a person's income, there shall be disregarded any amount payable by way of tax.

The amount of income tax paid should be deducted from the gross income.

OhWow

Thank you Newcad and HillStreetBlues for taking the time to post and confirm it is net income (gross minus tax) for the benefit calculation. Thank you for the link and quote too Hill Street Blues. Sorry, I missed your replies.

She has now confirmed that although she thought she was speaking to a Benefits Adviser at her Council, it seems it was one of the staff who answer the phones and is not benefit trained.

Thanks everyone.