Eligibility for Pension Credit has changed recently. If you are in a couple, one of whom is above pension age and the second of whom is a younger partner then you may be affected.
Previously, Pension Credit was available to someone who had reached pension age and who met the income criteria even if their partner was below pension age. From 15th May both partners need to be above pension age before a claim can be made so that same person would be ineligible to claim Pension Credit. Instead they would need to claim Universal Credit which would almost certainly result in a loss of income.
The income criteria for claiming Pension Credit is quite complex. Essentially, however, you may be eligible if your total weekly income is less than £200. If you think that you may be eligible then you should call the Pension Credit claim line on 0800 99 1234. You should have details of your income and savings, as well as your bank details. It is better to check your eligibility with them than to miss the opportunity to claim.
“But surely if the rules changed on 15th May then I am too late?”, I can hear you ask. The answer is “No” provided that you act quickly enough. A claim for Pension Credit can be backdated 3 months. Therefore, provided you met all of the criteria on 15th May then you have until 15th August to make a claim. If you do so then ensure that you make it very clear that you are making a claim for Pension Credit rather than Universal Credit.
Talking of pension eligibility, a quick reminder to younger couples with a child that they should avoid losing pensions in the future. For several years now someone earning more than £50,000 would be subject to a High Income Child Benefit Charge if they or their partner claims and receives child benefit. To avoid this charge, and the resultant requirement to register for self-assessment, the government allows you to elect not to receive it.
Some couples, however, are shortcutting this process by not claiming the benefit in the first place, which is not the same. In order to receive a full state pension then you need to have a certain number of eligible NI contributions. If you claim the benefit and then elect not to receive it then the non-working partner will still receive notional NI contributions that will maintain their future pension eligibility. If you do not claim then that partner will not receive those notional contributions and may therefore only receive a lower pension in the future.
WatkinsonBlack have considerable experience in all areas of taxation and businesss services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.