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Benefits and Tax: Top ten important changes in 2008
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April 2008
These tips are available to download as a PDF below.
1 Income tax
The 10% tax band will be abolished from 6th April. The 22% tax band is reduced to 20%. You will not have to pay income tax until you earn at least £5,435 in one tax year. Previously this figure was £5,225.
2 Tax credits
Tax credits are going to be calculated slightly differently from April. Your tax credits will reduce by 39 pence for every pound you earn over £6,420. Previously the figure was 37 pence for every pound you earn over £5,220. You can now earn £6,420 in a tax year (£123 per week) and still be entitled to the maximum tax credits possible.
3 Moving into work
From 7th April, if you have been on Income Support and/or Jobseeker's Allowance for 12 months and move into work of at least 16 hours per week and you expect the work to last for at least 5 weeks, you are entitled to the In Work Credit. You will receive £40 per week (£60 per week in London) for 52 weeks. Previously, the In Work Credit was only available in certain areas.
4 Housing benefit
From 7th April, Local Housing Allowance will be rolled out nationally. This means that if you claim Housing Benefit after this date it will be dealt with under new rules if you are renting in the private sector. Payments will have set limits based on the area you live in and your family size and will be paid directly to you.
5 Employment
From 1st October, the national minimum wage will increase to £5.73 an hour for workers aged 22 years or over, £4.77 for workers aged 18 to 21 years, £3.53 an hour for 17 year olds and 16 year olds (only after the summer they leave school). It is currently £5.52, £4.60 and £3.40 an hour.
6 Income Support
Lone parents with a youngest child aged 12 or over will no longer be entitled to Income Support solely on the grounds of being a lone parent. Currently, you could claim Income Support until your youngest child turns 16. All new claimants will fall under these new rules from November. If you have an existing claim you will fall under these rules from your first Work Focused Interview after November.
7 Sickness Benefit
From 27th October Employment and Support Allowance will be introduced. This is what you will claim if you are unable to work due to sickness or disability. It will replace Incapacity Benefit, Severe Disablement Allowance and Income Support on the grounds of incapacity or disability for new customers.
8 Child support
The Child Maintenance Bill is currently going through Parliament. The Child Support Agency will be replaced by the Child Maintenance and Enforcement Commission (C-MEC) later in this year; the way in which maintenance is calculated, however, will not change until 2010.
9 Income Support and the Child Support Agency
From July (date not yet confirmed), if you make a new claim for Income Support you will not be required to use the Child Support Agency (CSA). You can come to your own arrangements about child maintenance although must still tell Jobcentre Plus what these are, as Income Support will still be reduced by any payments over £10 per week.
From that same date, if you are already on Income Support, Jobcentre Plus will no longer be able to reduce benefit as a sanction for not using the CSA and from October 2008 you will be given the option of using the CSA. A new Child Maintenance Options Service set up by the CSA will be available to help you make your own arrangements if you want to.
10 Child Maintenance Disregard
By the end of 2008, the Child Maintenance Disregard will increase from £10 per week to £20 per week for those on Income Support and will be ignored completely for Housing Benefit.
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