FACT SHEET NO. 26

Becoming a Couple: Benefits & Tax Credits

Introduction

This factsheet aims to set out the benefit and tax credit implications for you when your circumstances change because you are no longer a single person but part of a couple.

In the social security system, some benefits are paid to you because of your individual circumstances. These are non-means-tested benefits and will not be adversely affected whether you are a single person or part of a couple. Some non-means tested benefits have additional amounts, called adult dependant additions, which can provide you with extra benefit if you are part of a couple. See also factsheet F13.

Non-means tested benefits include the following:

Attendance allowance

Disability living allowance

Contribution-based jobseeker’s allowance

Industrial injuries disablement benefit

Incapacity benefit*

Severe disablement allowance*

Carer’s allowance*

State retirement pension*

You may be able to get extra benefit called adult dependant additions if you are part of a couple.

Other benefits rely on means-testing. If you are entitled to means-tested benefits such as income support or the guarantee credit of pension credit, you will also be able to get other help, including free prescriptions and other health benefits together with help from the social fund e.g. community care grants and budgeting loans.

The following benefits are means-tested and will be affected by your income and capital, your partner’s income and capital and (for HB and CTB whether you have dependant children).

Income support

Income-based jobseeker’s allowance

Guarantee credit of pension credit

Housing benefit

Council tax benefit

HM Revenue & Customs (the Revenue) administers tax credits. For child tax credit, you need to be responsible for a dependant child or young person to be eligible to claim whether you are in work or not. All financial help for children is paid through child tax credit, whether you are in work, claiming means-tested benefits or both.

Working tax credit provides financial help for those who are working for at least 16 hours a week but on a low income.

What is a couple?

For social security benefit and tax credit purposes, a couple consists of two people of the opposite sex or the same sex in a relationship living together in the same household. This includes married couples, couples living together as if they were married, same-sex couples who have entered into a civil partnership and same-sex couples living together as if they were civil partners. (Since 5 December 2005 when the Civil Partnership Act 2004 came into effect, same sex couples have virtually identical rights and responsibilities to opposite sex couples).

Benefits and couples

In the benefits system, a couple will generally receive less money than two single people. Disputes can occur where two people live in the same accommodation but do not consider themselves as a couple. They may be treated by the Department for Work and Pensions (DWP), the Revenue or the local authority as a cohabiting couple (i.e. an opposite sex couple who are living together as if they were husband and wife or a same-sex couple who are living together as if they were civil partners).

It is important to challenge a decision if you think it is wrong. The factors which will be taken into consideration when making a decision about whether you are considered a couple or not, are financial support arrangements, whether you have a sexual relationship, the stability of your relationship, whether you have children and how you present yourselves in public. No one factor alone is conclusive. The relationship will be looked at as a whole. For example, two people living together for mutual care, companionship and sharing of household expenses would not necessarily be considered to be ‘living together as husband and wife’ or ‘living together as if they were civil partners’ on that basis alone (see example 2 Bert and Brendan).

Tax Credits and couples

The Revenue will consider the same factors as the DWP when deciding who is and who is not to be treated as a couple for tax credits purposes. There is the right of appeal to challenge any decision if you are unhappy about it. The Revenue needs to be notified straightaway if you become or cease to be part of a couple.

Making a claim

For all social security benefits, single people make single claims. For couples claiming income support, pension credit, income based job-seeker’s allowance, housing benefit and council tax benefit, one person makes a claim on behalf of themselves and their partner. A partner is defined as someone who lives in your household such as your husband or wife or partner of the opposite sex. Since 5th December 2005, same sex couples are included in the definition of partner. (See also ‘Further help and assistance’, para 2 at the end of the factsheet.)

When claiming tax credits, if you are single, you claim for yourself, but if you are part of a couple, you must make a joint claim.

Like most social security benefits, tax credits have rules about residence and presence in the UK. In effect, this means that if you have a temporary absence for eight weeks (or 12 weeks in certain circumstances) you can continue to be paid tax credits.

For couples, where one partner is temporarily absent from the UK for longer than the above periods, the remaining partner must let the Revenue know and they will terminate the joint claim and start a fresh single claim (provided they meet the relevant conditions). Failing to report such a change can result in an overpayment and a penalty. (See also ‘Further help and assistance’, para 3 at the end of the factsheet).

The following are some examples of the impact on the benefits and/or tax credits of a single person who starts to live with a partner or non-partner where one or both of them have a disability.

Anne and Arnie

Anne, aged 38, lives alone and is a single person who has been incapable of work for the last two years. She claims incapacity benefit and pays a small amount towards her rent. She gets housing benefit and council tax benefit.

Anne and Arnie are planning to get married soon and live together in Arnie’s local authority rented flat. Arnie is 45 and has been severely disabled since 2000. He currently lives on his own. He cannot work and claims severe disablement allowance, disability living allowance and income support including the severe disability premium. He also gets full housing benefit and council tax benefit.

The main financial implication of Anne and Arnie living together in the same household is that one of them will have to claim income support for them both as a couple. Arnie will lose his severe disability premium. This is because he no longer satisfies the qualifying condition of ‘living alone’. However, if Anne cares for Arnie, she may be able to claim carer’s allowance and this will mean the couple receive a carer premium. Full housing benefit and council tax benefit should continue to be paid. Anne will now be able to gain access to ‘passport’ benefits such as free prescriptions (see factsheet F14 Prescription Charges/Health Benefits).

Anne and Arnie will be worse off by £64.85 per week when they live together – see Appendix 1 for full details and calculation.

Bert and Brendan

Bert, aged 23, is a single man with a disability. He currently lives alone but would like his carer, Brendan, to move in with him. Bert does not work and lives in his own property for which he has a mortgage. He receives disability living allowance and income support including help with mortgage interest payments. He also receives full council tax benefit.

Brendan, also aged 23, works full-time (35 hours per week) and earns £18,000 pa. Brendan does not have a disability and does not claim any benefits. He would like to move in with Bert because it would save him money he now pays in rent, it would be convenient for his work, close to where his girlfriend lives and will allow him to spend more time caring for Bert. Bert wants to know how his benefits might be affected if Brendan moves in.

Bert and Brendan are not a couple and should be treated as two single people for benefit purposes. Bert’s benefits will not be affected. [Note: this would not be the case if Bert was receiving a severe disability premium in his income support entitlement. If he was, this would continue for 12 weeks after the date Brendan joined the household and then cease because Bert would no longer be classed as ‘living alone’]. There will be no non-dependant deduction made from Bert’s income support housing costs or council tax benefit because he receives DLA care component. Bert’s income will not increase because Brendan will not be paying him any money for living there.

Bert will not be better off or worse off financially when Brendan moves in but his quality of life will improve because he has someone with him to provide care. Brendan will be better off because he will no longer be paying rent.

Chrissy and Clive

Chrissy is 20, single, disabled and currently lives with her parents. She claims no-contribution incapacity benefit and disability living allowance only.

Clive is 22, single, disabled and also currently lives with his parents. His benefits are identical to Chrissy’s. He claims no-contribution incapacity benefit and disability living allowance only.

Clive and Chrissy want to get married and live together in a housing association property they have been offered. They will be responsible for rent and council tax and will be able to care for each other.

When they set up home together, Clive and Chrissy will become entitled to income support because their income and capital are below the required limits. They will have their combined incapacity benefits topped up by income support which will include the severe disability premium and enhanced disability premium for both of them because no one else will live in their new household and no one currently gets carer’s allowance for looking after either of them.

Their disability living allowance is paid on top of their income support entitlement.

Chrissy and Clive should each claim carer’s allowance for looking after the other.

The usual rule is that if you claim carer’s allowance for looking after someone, the person cared for cannot get the severe disability premium. However, the overlapping benefit rules mean that you cannot be paid the full amount of carer’s allowance at the same time as receiving the full amount of entitlement to some other benefits such as incapacity benefit. Where this happens, you are said to have an ‘underlying entitlement’. This underlying entitlement to carer’s allowance means that Chrissy and Clive can receive two carer premiums and two severe disability premiums within their claim for income support.

They will also be entitled to full housing benefit and council tax benefit.

Chrissy and Clive will be better off by £100.85 per week when they live together - see Appendix 3 for full details and calculation.

Donna and Diana

Donna is 40 and has been incapable of work for more than a year following a climbing accident. She claims incapacity benefit. She lives in her own home with a mortgage. She has investments for which she receives income of £15,000 pa. She has too much capital to claim any means-tested benefits. She wants to get back to work and is currently doing a few hours work under the permitted work rules, earning £65 per week.

Diana is a lone parent with two small children and works 35 hours per week and her gross income is £20,000 pa. She receives child benefit for each child, child tax credit for each child and working tax credit including help with childcare costs of £79.80 per week. She also lives in her own home and has a mortgage, which she pays herself. She is not entitled to council tax benefit.

Donna and Diana consider themselves to be a couple and would like to move in together. Diana is obliged to report this straightaway to HM Revenue & Customs. Diana’s current claim for working tax credit will end immediately when she becomes part of a couple. Donna and Diana will have to make a joint claim. Donna will continue to receive her incapacity benefit.

If Donna decides to let her property to tenants, any income from that property will be included in the calculation (but the first £300 will be ignored). There are no capital limits for tax credits but actual income from savings will be taken into account in the calculation.

Donna and Diana will be worse off by £69.32 per week when they live together. (See Appendix 4 for full details and calculation).

Further help and assistance

To find out the financial consequences of living together it is always advisable to get full individual advice and have a benefit check carried out by an advice agency - see factsheet F15 Finding a Local Advice Centre.

Contact the Benefit Enquiry Line of the Department for Work and Pensions for general advice on benefits and to request a claim pack:

England and Wales -Telephone 0800 882200

Textphone 0800 243355

Northern Ireland Telephone 0800 220674

Contact the Inland Revenue Helpline if you have questions about tax credits or wish to request a claim form:

England and Wales telephone 0845 300 3900

Northern Ireland telephone 0845 603 2000

For speech or hearing impaired:

England and Wales telephone 0845 300 3909

Northern Ireland telephone 0845 607 6078

For full information on all benefits and tax credits, see the Disability Rights Handbook.

See also the following factsheets:

Tax Credits

Benefits and Tax Credits Checklist

Prescription Charges/Health Benefits

Finding a Local Advice Centre.

Appendix 1

Anne and Arnie – better off calculation:

Anne
As a single person Anne receives the following benefits:	£
Incapacity benefit (IB)	81.35
Plus age addition	8.55
Total Income	89.90
Less outgoings (i.e. rent)	1.95
Actual income	87.95
Anne has to pay £1.95 towards her rent, housing benefit pays the balance and she gets full council tax benefit
Arnie
As a single person Arnie receives the following benefits:	£
Disability living allowance (43.15 & 45.00)	88.15
Severe disablement allowance (SDA)	49.15
Income support (132.85 – 49.15)	83.70
Total income	221.00
BETTER OFF CALCULATION:
Total income as single people (89.90 – 1.95 + 221.00)	308.95
Total income as a couple: (IS 155.95 + DLA 88.15)	244.10
Total amount per week worse off as a couple	£64.85

Calculation:	£
Arnie’s non-means tested benefits: Severe disablement allowance	49.15
Arnie’s disability living allowance: (43.15 + 45.00) (middle rate care/higher rate mobility)	88.15
Arnie’s income support applicable amount (single): Personal allowance, disability premium and severe Disability premium (59.15 + 25.25 + 48.45)	132.85
Anne and Arnie as a couple
Arnie should advise his income support office of his change in circumstances due to Anne moving in with him. There is no advantage or disadvantage to either one making the new claim for income support in their present circumstances.
Anne and Arnie’s benefits as a couple are:	£
IB – Anne (89.90), SDA - Arnie (49.15) and DLA - Arnie (88.15), IS as a couple (16.90)	244.10
IS for Anne and Arnie is calculated as follows:
Personal allowance (couple rate 92.80), disability premium (couple rate 36.00) and carer premium* (27.15)	155.95
Less income (Anne IB 89.90 + Arnie SDA 49.15)	139.05
Income support entitlement as a couple =	£16.90
NB: Arnie loses his severe disability premium because he is no longer ‘living alone’. Anne can now access ‘passport’ benefits such as free prescriptions because she is on income support.
* carer premium is paid because Anne has an underlying entitlement to carer’s allowance

Appendix 2

Bert and Brendan – better off calculation

Bert
As a single person Bert receives the following benefits:	£
Disability living allowance (DLA)	34.20
Income support (IS)	70.00
Help with mortgage interest payments	51.65
Total income	155.85

Brendan
As a single person Brendan receives no benefits and earns £18,000 pa.
Total net income per week (approx.)	260.00
Bert and Brendan will maintain their single status because they are not ‘a couple’. Bert will continue to receive his benefits unchanged once Brendan moves in. It would be different if Bert was receiving a higher rate of the care component of DLA because this would have entitled him to a severe disability premium in his income support provided he fitted into the definition in the income support rules that he was ‘living alone’. If Bert was receiving the severe disability premium he would lose this after 12 weeks if Brendan moved in.

Appendix 3

Chrissy and Clive – better off calculation:

Chrissy
As a single person Chrissy receives the following benefits:
Disability living allowance (DLA) (64.50 + 45.00)	109.50
Incapacity benefit (IB)	81.35
Plus age addition	17.10
Total income	207.95
Clive
As a single person Clive receives the following benefits:
Disability living allowance (DLA) (64.50 + 45.00)	109.50
Incapacity benefit (IB)	81.35
Plus age addition	17.10
Total income	207.95
BETTER OFF CALCULATION:
Chrissy and Clive
Total income as single people (207.95 + 207.95)	415.90
***Total income as a couple (2 x 109.50 = 219.00 + 297.75)	516.75
Total amount per week better off as a couple	100.85
Chrissy and Clive will also get full housing benefit and council tax benefit
Calculation of income as a couple:
Income support (IS) (92.80 + 36.00 +17.75 + 96.90 + 54.30)	297.75

Appendix 4

Donna and Diana – better off calculation

Donna
As a single person Donna receives the following benefits:	£
Incapacity benefit (£81.35 + £8.55)	89.90
Earnings from permitted work	65.00
Income from investments (£15,000 pa)	288.46
Total income	443.36
Diana
As a single person (lone parent), Diana receives the following:
Child benefit (£18.10 + £12.10)	30.20
Tax credits award (£4149.40 pa)	79.80
Income from earnings (£20,000 pa)	384.60
Total income	494.60
BETTER OFF CALCULATION:
Donna and Diana
Total income as single people (£443.36 + £494.60)	937.96
Total income as a couple (£443.36 + Diana’s earnings £384.60; child benefit 30.20; CTC 10.48)	868.64
Total amount per week worse off as a couple	69.32

Tax credits calculations:
Diana as a lone parent
Child tax credit (545.00 + 3,690.00)	4,235.00
Working tax credit - basic element	1,730.00
- lone parent element	1,700.00
- 30 hour element	705.00
- childcare element (based on £30 pw eligible childcare costs (1,560 x 80%)	1,248.00
Maximum award	9,618.00
WTC threshold (5,220 less annual income of 20,000)	14,780.00
Taper (14,780 x 37%)	5,468.60
Total WTC (9,618 – 5,468.60)		4,149.40

Tax credits calculations:
Donna and Diana as a couple
Child tax credit (545.00 + 3,690.00)	4,235.00
Working tax credit - basic element	1,730.00
- couple element	1,700.00
- 30 hour element	705.00
- childcare element (based on £30 pw eligible childcare costs (1,560 x 80%)	1,248.00
Maximum award	9,618.00
WTC threshold (annual income of 20,000 + 23054.72 = 43,054.72 – 5,220)	37,834.72
Taper (37,390.12 x 37%)	13,998.85
Total WTC (9,618 – 13,998.85)		NIL
Entitlement to CTC family element only	545.00 (£10.48pw)

WHERE CAN I GET HELP?

You should seek further advice if you want to challenge a decision about your benefit. You can get help with your appeal at a local advice centre, such as a citizen's advice bureau. You can get more information about this from our factsheet F16, Finding a local advice centre, which is available at www.cara-online.org

Central Africa’s Rights and AIDS (CARA) Society has also published Benefit appeals - A guide to benefit appeals for advisers and disabled people. This guide helps you prepare for an appeal tribunal and will increase your chances of success at the hearing. It takes you through all the stages of the benefit decision-making process from the moment you receive an unsatisfactory decision through to the tribunal hearing.

It is available to have a look at it on our website at www.cara-online.org or by contacting Central Africa’s Rights and AIDS (CARA) Society on 020 7254 6415 (voice and minicom) or by fax on 020 7254 6415.

01 December 2007