Edward Graham

Claiming working tax credit from previous years

Mark Clement: I am currently unemployed but while I was working I did not claim working tax credits and now find I am owed about �8,000 as I was on a low wage and had to drive almost 250 miles to get to work.

I live in a rented flat which has no heating and have tried to find a scheme to help me get some. The only schemes I can find are for the old or people with kids. I end up going to bed at about 7pm to keep warm as I only have a few convection heaters and they drink lots of electricity.

If you know how to get the working tax credits from previous years please let me know. I have just done my tax return for last year and am owed tax credit from then. I have been told I can claim them for up to three months after they are due.

Edward says: Unfortunately claims for working tax credits (and child tax credits) can only be backdated three months, and you are not entitled to tax credits unless you make a claim.

Although they are called tax credits, they are more like social security benefits than tax allowances, and the time limits for claims, appeals etc are very tight. Many people in Mark's position do not realise that you don't need to have children to get WTC.

You could be eligible if you are 25 and working at least 30 hours per week. Mark should make sure he is claiming whatever benefits he is entitled to now. It looks like he might be entitled to Jobseeker's Allowance and Housing and Council Tax Benefits. If he starts working again he should make the claim as soon as possible.

Carer's Allowance

Norma from Northampton: I recently applied for Carer's Allowance and was informed that I was entitled to �48.65 per week, but this would not be paid to me because I am in receipt of a State Pension of �53.24 per week. This appears to me to be ageist as anyone receiving a State Pension in excess of their entitled allowance will not be eligible to receive it.

This rule prevents anyone over the age of 60 in the case of women and 65 in the case of men from receiving Carers' Allowance, as every person over these ages will receive a State Pension either due to their own or their husband's contributions. It would appear that you have to be under these age limits to receive this benefit even though you are entitled to it.

Edward says: Norma, you have been caught by the 'overlapping benefits rule' which means that a person cannot be paid two 'earnings replacement benefits' at the same time.

Unfortunately you are not entitled to be paid both the Carers Allowance and the Retirement Pension. However, you will have established an 'underlying entitlement' to Carer's Allowance, which can mean you qualify for a higher amount of a means tested benefit.

For example, if you receive Pension Credit you should tell the pension service about your claim for Carer's Allowance and you will probably now be entitled to an additional amount. If you have been refused Pension Credit in the past because your income is too high, you may find that you are now entitled if you make a new claim.

Income Support

Peter Flatley: I am an old age pensioner, 69 years old. I have a government pension and a small company pension. Recently when I went for emergency dental treatment at our local hospital for an abscess I had to pay.

I have also had to pay full price for my spectacles. Both times I was asked if I was on benefits. At what point do the people on company pensions lose out to the people on benefits. I have quoted two instances that I have become aware of are there any more. When is it better to receive benefits than a pension?

It's true to say that if you are receiving the State Pension Credit guarantee you would have not had to pay for either the dental treatment or the spectacles.

However people can still get help with these costs if they do not qualify for means tested benefits if their income is low enough. The rules are complicated and depend upon your individual circumstances.

As a basic rule of thumb, if your income is no higher than the total of what you would get from benefits for yourself and your partner and what you pay in housing costs and council tax, then you may be eligible for some assistance. You need the form HC1, which you can get from a JobCentre or hospital. It's also worth contacting the Pensions Service to check whether or not you are entitled to Pension Credit. Most pensioners will have retired before Pension Credit was introduced in October 2003.

Pension Credit is more generous than the scheme that went before it and there are many people who are entitled to it but don't claim.

Incapacity Benefit and Disability Allowance

Anonymous: I have been suffering from health issues for the past five years, and am currently in receipt of Disability Living Allowance and Incapacity Benefit. Prior to my illness, I was a well paid IT consultant.

I am looking into my options for returning to employment, but the rules around permitted work seem to be a major obstacle. I believe that I am allowed to work up to 16 hours, or earn up to �88.50 a week. If I charged at standard industry rates, this would equate up to 3 hours of work in a week, which is not enough hours to provide a realistic indication of whether or not I am fit to return to work.

The only way around this I can see is to work as a sole-trader/limited company, and not pay myself more that the earnings cap. However I am concerned that the DWP would see this as an attempt to defraud the system.

Edward says: There are a number of rules which allow people on Incapacity Benefit to do a small amount of work whilst claiming, the thinking being that it could be beneficial to the person's health, or be part of a period of rehabilitation.

The permitted work upper limit is what Phil appears to be asking about. The work must be for less than 16 hours per week and any earnings be below the limit of �88.50 pw. The hours you work can be averaged out if there is regular cycle and some weeks you work more than 16 and some you don't. However the earnings limit must be kept within for each actual week.

The DWP will expect you to be paid at least the national minimum wage. Phil setting himself up as a limited company because his earning would be too high may not help.

He would still be caught by the hours rule, and his earnings from the company would be calculated under social security rules which only allow for specific deductions from gross receipts (Part III of the Social Security Computation of Earnings Regulations 1995). Anyone on Incapacity Benefit wanting to do permitted work needs to inform the DWP.

Paul: Can I get an extra payment added to my Incapacity Benefit now my wife is a dependent? If so what is the maximum payment? She can declare no income as she has delayed her state pension. When you apply for these allowances they ask 'do you have any income' - they do not ask about pensions delayed or in my case pension funds which in theory I could take early.

I am currently receiving Long Term Incapacity Benefit (as a result of contributions paid) and Disability Living Allowance.

I am not receiving any other income. I have a pension fund which I hope to leave to 65, I am now 61 years. My wife is 60 and retired recently but has no pension or income. She is entitled to a state pension but has delayed this so it can be increased and we are supplementing income from savings.

Edward says: Deferring entitlement to the State Retirement Pension will entitle the person to a higher rate of pension when it is eventually claimed.

However, there are rules which prevent an increase from being accrued if the person is receiving certain other state benefits during the period of deferment.

Paul is entitled to claim an increase in his Incapacity Benefit for his wife, but if he does she will not accrue any extra Retirement Pension. Paul will have to weigh up the benefits of the extra amount (�48.65 p.w. until he is 65) of Incapacity Benefit against the future possible increase in entitlement (retirement pension is increased by 1% for every five weeks it is deferred.

Only private or occupation pensions that are actually in payment affect the amount of Incapacity Benefit you are entitled to, and if you have been getting Incapacity Benefit since April 2001 they do no affect it at all.

Pension Credit

Paul from Rugby: Can I apply for Pensions Credit? I'm 55 and they told me things will change in 2010.

No. The qualifying ago for Pension credit is 60 for the Guarantee Credit and 65 for the Savings Credit.

The changes in 2010 are that the qualifying age for the State retirement pension for women will be changed to equalise it with that for men. The change will be phased in: the qualifying age for women will rise from 60 to 65 between 2010 and 2020. The qualifying age for the Guarantee Credit (for both men and women) will rise in the same way at the same time.

Celestine from Newcastle: I have read that banks cannot charge customers overdraft interest whose main income are benefits according to section 187 of the 1992 Social Security Administration Act, is this correct?

No. The legislation referred to concerns the payments of certain benefits to people who have been declared bankrupt.

Disability Living Allowance

Mr Ager: I am on Incapacity Benefit, however my mobility is not what it used to be but I'm afraid of putting in for Invalidity Benefit as I do not want to put in a claim for anything I am not entitled to but must admit the forms are not exactly user friendly. I am certainly not stupid but they seem to phrase things as if to make you feel guilty just for applying.

People who are under 65 and have problems with mobility out of door, whether due to a physical or metal health problem may qualify for the mobility component of Disability Living Allowance, which is the benefit that Mr Ager is probably referring to.

Whilst the forms can be long and off-putting, the benefit is not means tested, not taxable and can be paid on top of other benefits, so is well worth applying for if you think you might qualify. You can get a claim form from the DWP by calling 0800 88 22 00. A local advice agency like a Citizens Advice Bureau should be able to help you fill in the forms.

The opinions expressed are Edward's, and not the programme's. The answers are not intended to be definitive and should be used for guidance only. Always seek professional advice for your own particular situation.