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by Tombenefits

news and thoughts from the world of welfare rights
18 May 2017 at 16:43

MTBs & tax credits to top up income

A look at the main means tested benefits and tax credits that can top up a low - or temporarily reduced - income . Who might claim which one?

Welcome to the second in a mini-series of blogs around means tested benefits and tax credits. While most - but by no means all - will eventually be replaced by a new Universal Credit, the benefits below are still with us for some time yet.

In Part One - available here - we looked at what means testing means , and why we have a mixture of means tested and non-means tested benefits in the system.

Here in Part Two, I will take you on a "Cooks Tour" of the main means tested benefits and tax credits that help top up a low income, highlighting their relevance to people affected by cancer and signposting to blogs where you can find out more.

Next time, I will look at those means tested benefits that help with specific costs.

I will also look at how receiving some of these benefits can passport you through the means test for others; the very similar sums involved means you don’t have to go through having your savings and income assessed all over again.

So what “means tested” - or “income related” benefits are there out there?

Rather than just go through them in alphabetical order, I will group them into those which - along with tax credits - act to top up your general income, which I cover this time.

And next time I will look at those to help with specific costs such as rent, mortgage interest, council tax and health costs.

Help to top a low income comes in two forms:

 - the older means tested benefits (going back to 1988) that are all variations on what was then  just Income Support

  - and the newer fangled tax credits (from 2004) which are run by HMRC

I pick up the numbering from last time


3.  Means tests benefits to top-up your income

When the current means tested system was reformed in 1988, all the benefits in this section all came under Income Support (IS), so you may be more likely to have heard of that name.

When they were all together within IS, you didn’t have to know which one to claim nor need to swap between them if your reason for claiming changed.

However, separating them means they can link up more closely with their non-means tested benefits so that you can claim both on one form. So theres pros and cons both ways and in a "back to the future", many of these are merging back again int Universal Credit, but thats for another min-series :-)

3.1 Income-based Jobseekers Allowance (Ib-JSA)

What was once known as Income Support (if unemployed) was the first one to be separated off - back in 1996 - and joined up with its non-means tested sibling the new Contribution-based JSA (Cb-JSA) (formerly known as Unemployment Benefit) . Ib-JSA then is the means tested top up or alternative to Cb-JSA, that helps if you don't have enough National Insurance contributions for Cb-JSA or the claim has timed out or you don’t have much other money coming in and need a top up

JSA is the one for people of “working age” who are not excused the need to “sign on” as available for and actively seeking work. Many people affected by cancer are so excused either on health grounds or because of caring responsibilities, so JSA may not apply. However, as you move into recovery, there may come a point where even if not firing on full cylinders, you might feel ready to return to work or start looking for work. In either case you might need some allowances or adjustments but your late effects have eased off when you might no longer meet the threshold for ESA below.

Now you can start exploring a return to work or looking for work - and even trying out a little bit of paid work while on ESA, so don’t jump into JSA too early. Although allowances can be made for a level of health problems or caring responsibilities, its all down to discretion and set against a default fairly heavy requirement and trigger happy sanctions regime. So start your job seeking from ESA :-)

3.2 Pension Credit (PC)

The next one to separate off was Income Support (if over 60) to become Pension Credit in 2003. The was to focus resources on the poorest 20% of pensioners, to effectively abolish absolute poverty in old age: a new focussed service, much shorter claim forms, and more generous amounts and no savings limit all helped connect the cash with those entitled.

The then 60 year age bar applied to men and women alike though drawn from women’s Retirement Pension age. The PC age is going up alongside it, so is now something like 63 1/2.

That means single men have an awkward age i between when as well as buying motorbikes and guitars, they could either claim PC or claim one of the working age alternatives i this section. A tad eccentric if you do as PC tends to involve much less hassle, but if you must, an extra amount - the pensioner premium will boost your benefit up to something like PC levels.

The same applies to mixed age couples where one is undrer PC age and one over. Its a joint claim, but either the older partner can lead on a PC claim or the younger on one of the others, wit a pensioner premium to help with the £128 gap in the rates.

But you’d be well advised to think seriously about switching to PC while you still can. At some point after September 2018 that choice goes and the younger partner will have to claim “working age” UC . And that has no pensioner element to close the gap.

Otherwise PC will carry on after Universal Credit has taken over the “working age” world. So if you are on PC at that time - even if under new rules you would not be allowed to claim UC - you stay on PC.

It is then a lot simpler, easier to access and more generous than the other means tested benefits but is still significantly under claimed. Only some 60% of people entitled to PC claim it and the main reason is that many people simply don’t realise that they might be entitled.

For more details see the separate series of Benefit Blogs on Pension Credit that you can acces from the page here.

3.3 Income-related Employment and Support Allowance

This started replacing Income Support (if too unwell to work) from 2008. As with JSA (above) the aim in the separation from Income Support was to make Ir-ESA join up much more closely with it’s non-means tested equivalent Contributory ESA ( which replaced the former Incapacity Benefit and Severe Disablement Allowance)

Contributory ESA can be paid regardless of most other income and savings and regardless of what any partner is up to :-) Income-related ESA is there as a safety net so will be a joint claim with a partner and take into account your joint income and savings. So some people get Income-related ESA instead of Contributory because they don’t have enough NI contributions or entitlement has timed out, others as a top up to Contributory ESA as Income-related ESA includes some extra amounts.

Some will get neither - not enough NI history for C-ESA and a partner working stopping Ir ESA.

You might claim ESA from the start of becoming unwell or from immediately after you stop getting Statutory Sick Pay (SSP) from an employer. It does not matter if you are still getting some sick pay from work once SSP drops out you can claim ESA. Any ongoing work sick pay is ignored for C-ESA, but may affect Ir-RESA .

The test of your sickness are exactly the same whether you receive C-ESA or Ir-ESA so see the ESA blogs for more details about that, available on the page here.

3.4 Income Support

There are still a number of reasons why people need to claim, which don’t fit into the three offshoots above, so Income Support (IS) remains for them. The two biggest groups claiming IS are lone parents with young children and carers needing either a top up to Carers Allowance or where the person you help and support is still waiting to hear about their “disability benefit” .

Another smaller but important group for people affected by cancer are those who are too unwell to work but still getting Statutory Sick Pay (SSP) from an employer. If you are left on a low income you might well qualify for a top up but it would be from Income Support rather than Ir-ESA until the SSP drops out.

Income Support is a bit easier to claim a similar long form :-( but no medical assessments and much lighter work requirements if any.

For details of benefits for carers see the Benefits and Carers blogs from the page here 


4 Tax Credits to top up your income

These also top up income, but work in a different way using a “ light touch” means test, based around the information that HMRC already hold in relation to your income tax affairs. It does make for a rather different feel from the benefits above where you are assessed on how your income is this week.

Tax credits look at your income over the whole tax year, so don’t react as swiftly as the means tested benefits, but are much more flexible than the old fixed 6 monthly awards they replaced.

4.1 Working Tax Credit (WTC)

The real advantages of a link with income tax comes when you are in work. HMRC can pick up your income from your PAYE if an employee or your tax returns if self employed.

WTC replaces the old benefits for families on low earnings and support for disabled workers. It replaced family benefits such as Family Income Supplement (FIS) and Family Credit (FC) or Disabled Worker Allowance (DWA) with a single in work benefit. It also opened up help to people without children or disabilities.

Linking it into the tax system meant things got easier once you adjusted: the old benefits involved a big form every 6 months with a fixed award for the next 6 months for better or worse. WTC is a much shorter form with a 2 page renewal, for a benefit that can be adjusted at the end of each tax year.

You might need help with low earnings either because you have a low hourly rate or because you aren’t able to put in the hours. If you were getting WTC before becoming ill you can carry on qualifying as a “worker” for the first 6 months of being off.

If WTC wasn’t relevant for you before it may become so if you are easing yourself back into work on a part time or lower rate basis in recovery or if you are taking time out as a carer.

4.2 Child Tax Credit (CTC)

CTC brought together the help for children whether you are in work claiming WTC or on one of the “out of work” means tested benefits above. Given that most people on tax credits do have children, the aim was for CTC to act as a familiar “bridge from welfare into work” . It also - like Pension Credit - aimed to make significant inroads into child poverty by being much more generous in the amounts paid.

It manages to bridge the two very different worlds by simply allowing anyone on a means tested benefit to tick a box and so be passported to the maximum Child Tax Credit amounts. So to those parents, it feels just like a weekly benefit replacing - and considerably increasing - the amounts for children previously allowed for in the means tested benefits.

In fact anyone with an income below £16,105 will qualify for maximum CTC so it made a real difference to those who were getting by on slightly higher incomes, perhaps as pensioners or on non-means tested benefits with savings, a redundancy payment or other low income.

If you are claiming WTC then you claim CTC on the same form and the amount of CTC will be linked to your income for income tax purposes.

Despite heavy cuts, the tax credit system still offers real support whether in low income from work or in amounts for children


And so...

I hope the thumbnail sketches of the different means tested benefits and tax credits above helps make sense of the different "top ups" available.

Income-related ESA may be most relevant to people with a cancer diagnosis and Income Support for carers. Or if over PC age, then Pension Credit may the one for both of you.

If you are working through treatments, easing into work in recovery or taking a cut in earnings as a carer then Working Tax Credit can help. And whether in or out of work, under or over pension age Child Tax Credit is where amounts for children and young people come in.

Next time, I will look at others help available with specific costs : paying the rent, help with mortgage interest, the council tax or health costs.

And how receipt of one of the benefits in this blog can passport you through to that more specific benefit. So if ask me toabout say help with fares to hospital, I may well also suggest one of the benefits in this blog :-) 

And after that ...and to see how they work in common scenarions , I will lead you on a gentle toe in the water as regards how the -eek sums work. You can already see how that works for Pension Credit in the blog here.

If you have any general queries, comments or experiences to share please join the conversation here

If you would like to check out that you are not missing out on these - or any other benefit - in a private space, please just message me.

So next time I will finish off my cooks tour by looking at the means tested benefits that help with specific bills and costs. 

Until then, never knowingly underclaim :-)

Best wishes,


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