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State Protection

State Protection

State Protection

The UK government provides support to people in need, this is done through the welfare system. The UK’s welfare system does receive a lot of criticism, but it is still the envy of other nations. The government uses part of the taxes that are collected to fund the welfare system. The primary purpose of the welfare system is to ensure people have a safety net against the adverse financial consequences of:

1. illness;

2. unemployment;

3. retirement;

4. death

5. not being able to pay the mortgage. 

The amount paid is usually minimal as the welfare system is there to provide support, it is not used to support a comfortable standard of living.

Eligibility

Key Terms

Eligibility Criteria – The criteria/factors required for someone to be able to claim a particular benefit, for example, certain benefits are only paid to individuals that have an ongoing health condition.

Means-Tested Benefit –  Means-tested benefits are for individuals that do not have enough National Insurance Contributions. Means-tested essentially means that the individuals financial and family circumstances are checked to see if they have enough income to live on.

Some benefits have specific additional criteria which affect the benefit an individual will receive and the amount they receive. The three main factors are:

1. Class of National Insurance Contributions (or total paid)
2. Age
3. Income & Savings for means-tested benefits.

Means-Tested Benefit

Thousands of people in the UK rely on means-tested benefits. As discussed previously means-tested benefits are usually dependent on the individual or family’s income and/or savings. If the savings and/or income exceed a certain threshold then one of will happen:

1. the benefit amount is reduced below the maximum available level; or

2. the benefit claim is closed and/or no benefit is payable.

The main means-tested benefits are:

– Universal Credit
– Income-based Jobseekers Allowance (JSA)
– Income-based Employment and Support Allowance (ESA)
– Income Support (IS)
– Pension Credit – Savings Element
– Housing Benefit
– Council Tax Reduction

When a claim is made a calculation is carried out to determine if the claimant is eligible, and how much they are entitled to. When assessing the income the amount taken into account is usually the amount left each week after paying specified outgoings. The eligibility may also be tested on savings.

Note: The information provided is a summary of the benefits system and how it functions. The benefits system is very complex, and it’s not essential to know how the system works in its entirety. In the future, we do recommend to update yourself with the changes as the system is constantly changing its rules and criteria.

Benefits Cap

The benefit cap is a limit on the total amount of benefits individuals can get. It applies to most people aged 16 or over who have not reached State Pension age.

The benefit cap affects:

  • Universal Credit
  • Bereavement Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Jobseeker’s Allowance
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widowed Parent’s Allowance (or Widowed Mother’s Allowance or Widow’s Pension if you started getting it before 9 April 2001)
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