e-mail Paul Lewis on paul@paullewis.co.uk
Millions of people over 65 will be entitled to more money from this month. More than half of all pensioners will be entitled. So if you are over 65 you may be able to get bigger reductions in your council tax, more money off your rent, and more cash each week added on to your pension. All you have to do is ask for it. And younger people should read on too – there are some changes for people aged 60 or more and there are several ways to cut your council tax or boost your income that millions of people do not know about – or claim.
Council Tax
The rises in council tax in April – up by nearly 13% on average in England –
have shocked many Saga readers. Rosalind emailed to say "I am having to look
more closely at money particularly as council tax is currently 20% of our state
pension income and no doubt will be higher next year!"
But there are ways to cut your tax and the amount you can get goes up this month – as long as you (or your partner) are aged 65 or more.
From this month you should get all your council tax paid if your weekly income is no more than £116.90 if you are single or £175 if you are married or live with someone as a couple. In that case your income is added together and only the older partner has to be over 65. If you are a carer or disabled you can get all your council tax paid with higher incomes – add £25 onto these amounts if you are a carer or £43 if you are severely disabled. If you are aged 60-64 the amounts are lower - £102.10 single and £155.80 for a couple.
Even if your income is much higher than these amounts you may get some help with council tax. The average council tax for a band D home is around £1080 a year. A single person could get money off that with a weekly income up to £194 a week. For a couple it goes up to £278 a week. If you are aged 60-64 then these amounts are a bit lower – take £14 off the single amount and £19 of the amount for a couple. If your council tax is higher than the average then you may get more off. But beware – if your home is valuable enough to be in band F, G or H then you will only get a rebate on the amount due on a band E home. People under 60 need much lower incomes to get help. For single people deduct £62 and for couples deduct £90 from all these amounts.
All these reductions apply to home owners or tenants and are called ‘council tax benefit’.
Whatever your age or income, remember that if you live alone you should pay less council tax anyway. Everyone gets a 25% cut if they are the only adult in the house. And if you are disabled you may be able to get around 17% off by getting your home moved down one council tax band. Council tax benefit is worked out after these cuts.
You can get these reductions whether you are a home owner or a tenant. So why not apply now? More than a million people over 60 are entitled to get cuts in their council tax but do not ask for it. What a waste!
To apply for any reduction in your council tax contact the local council that sends you your bill. That will be a borough, district, city, or unitary council. In Northern Ireland similar rules apply to your rates – apply through the Rates Collection Agency or the Housing Executive.
Rent
If you pay rent and your income is low enough to get your council tax
reduced you can probably get money off your rent too. The rules are very similar
and bigger reductions are being given to people aged 65 or more from October.
The income levels to get all your rent paid are the same as those for council
tax. And you can get some of it paid on a much higher income, depending on how
much your rent is. For example, if it is £50 a week then you can get some
reduction on an income up to £193 if you are single and £250 if you are a
couple. These are the rates from October for people aged 65 or more. Deduct £14
(single) or £19 (couple) if you are 60 to 64. And deduct £62 if you are under 60
and single – and £90 for a couple where you are both under 60 years old. If you
rent is higher than £50 a week then you will get a reduction even if your income
is higher than these amounts. But there is a rule which limits the rent that can
be counted and if you live in a property where the rent is above average for the
area then you may get a smaller reduction. You apply as you do for council tax
benefit.
Pension credit
The other big change from October 6th is the new Pension Credit.
One pensioner in every two will be able to get a boost to their income from
pension credit. There is £2 billion waiting to be picked up – an average of £400
each. So it is well worth having. I gave quite a detailed explanation of pension
credit in my column in March. But the change is so important it is worth a quick reminder
this month, especially as more details have emerged over the last few months.
The Department for Work and Pensions is determined to get as many people as possible to claim this new money. The Secretary of State Andrew Smith and the new Pensions Minister Malcolm Wicks have both said publicly that they want everyone who is entitled to get the new money. The Department is even using different words - ‘entitlement’ instead of ‘benefit’ and ‘apply for’ instead of ‘claim’ - in a bid to overcome the understandable reluctance many of us have about asking for extra money. This new money is not a hand-out you claim – it is an entitlement you apply for.
However, the accounts for the DWP show that what Ministers expect is rather different. The Chancellor originally said that half of all pensioners will be entitled to pension credit. If so that would be around 5.3 million people. But when it came to draw up estimates of the amount of money the DWP would spend on Pension Credit the bean counters assumed that fewer than three million households – around 3.7 million people – will actually be receiving pension credit by April 2006. That means only about 7 out of 10 will in fact get the money they are entitled to.
If they are right, more than one and half million individuals could be left with less money than they should have. My mission is to prove them wrong! So if you even think you just might get a few pence from pension credit, please apply. I would much rather my taxes were spent on that than some of the Government’s other projects.
Here are the figures. If you are aged 60 or more and your income is less than £102.10 if you are single or £155.80 if you are a couple, then pension credit should make your income up to those amounts. And if you are aged 65 or more and your income is up to £139.08 a week (single) or £203.80 a week (couple) then you could still get some help from pension credit. If you are a carer add £25 to those figures. If you are severely disabled add £43.
Savings
People with savings will not be penalised as they used to be. There used to
be a rule that you could not get any extra money if your savings were more than
£16,000. That rule is scrapped for pension credit from 6 October. Savings up to
£6000 are ignored completely and if you have more than that then you will only
be penalised at half the rate you used to be. In theory you can have more than
£35,000 in the bank and still get some pension credit.
These new rules on savings also apply to most people who apply for a cut in council tax or rent. However, the £16,000 limit may still apply if your income is more than £102.10 (single) or £155.80 (couple).
Apply
You apply for pension credit on a free phone line 0800 99 1234 (0808 100 6165 in Northern Ireland). The person at the other
end will fill in the form for you and post it to you to be signed. All you have
to do is check it – of course – sign it, and send it back with any supporting
documents about your income or savings they may ask for. As long as you apply by
October 2004, your pension credit will be backdated to October 2003. Pension
Credit cannot be paid outside the UK.
It really is that simple. Of course we do not know how well it will all work. The computer system that is being used is very old – the previous Secretary of State Alistair Darling described it last year as ‘decrepit’. Paying new amounts of money correctly to up to five million people is a big challenge. But one thing is certain – if you do not apply you will not get what you are entitled to. My taxes will be wasted even more. And worst of all, the accountants in the DWP will be proved right! So call now. Find out more from www.thepensionservice.gov.uk/pensioncredit
October 2003
e-mail Paul Lewis on paul@paullewis.co.uk