BENEFITS EXPERT: Taxing times for pensioners

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Q: Are we entitled to any benefits? Our State Pensions are £209.35 and £69.54 a week and I have two monthly private pensions of £64.85 and £45.52. So we have about £303 a week coming in. We pay £334 a month rent and £75 a month Council Tax. We have £7,000 savings.

Pensioner couple (Ryhope)

A: Your income is too high for you to get Pension Credit, but you appear to be entitled to housing benefit that would reduce your basic rent (ie exclusive of water charges and relevant service charges) to about £160 a month and a Council Tax reduction that would reduce your Council Tax to about £582 a year. You can claim from Sunderland Council.

Q: In the most recent tax year I earned £16,000, but now I have changed to a job that will pay only £13,000 p.a. for 40 hours a week. I also have a private pension of £164 a month. I am 55 with a husband who cannot work because of disability. Will I be able to get Tax Credits?

Hopeful (by Email)

A: Tax Credits are based upon a person’s annual taxable income. In the case of couples it is their combined taxable income that counts.

Taxable income means income before the deduction of Income Tax and National Insurance Contributions. Earnings and private pensions count as taxable income.

If your husband receives Contributory Employment and Support Allowance this is also taxable.

However, disability benefits like Disability Living Allowance (DLA) and Personal Independence Payments (PIP) are tax free.

If your husband receives DLA at the highest rate for care or the higher daily living component of PIP, an extra element for severe disability would be included in your Tax Credit calculation.

In your circumstances you would be entitled to Tax Credits if your annual joint taxable income is less than £18,000.

If your calculation included an additional element for severe disability, you would be entitled with an annual joint taxable income of less than £21,000.

Your award of Tax Credits would initially be based upon your income figure for the year ending April 2015.

If you think your income for the current year will be less than this, you can then ask for your award to be calculated using an estimate of this year’s likely income.

I would suggest you work out your joint taxable incomes for last year and an estimate for the current year to see if, in light of the above, it would be worth claiming Tax Credits.

If you think it is, you can claim by phoning the Tax Credit Helpline on 0345 300 3900.