A means-tested benefit is a payment available to people who can demonstrate that their income and capital (their 'means') are below specified limits. It is a central part of the welfare state in the United Kingdom.
The main means-tested benefits in 2013 are:
- Income Support
- Income-based Jobseeker's Allowance
- Income-related Employment and Support Allowance
- Pension Credit Guarantee Credit
- Working tax credit
- Child Tax Credit
- Universal Credit
- Housing Benefit
Receipt of such benefits other than Housing Benefit and tax credits is a passport to other non-cash help such as free school meals, free prescription charges, Legal Aid, cold weather payment. The claimant, their partner and dependent children are covered.
Assessment of means
The income and capital limits are specified in relation to the needs of a household, normally a couple and any children living with them. A couple who are not married may be treated as Living together as a married couple.
The value of the home in which the claimant lives is completely ignored if they normally live in it. So is money deposited with a housing association. Other property in which they are not living in can be ignored for six months, or longer if it is reasonable.
Investments are valued for what they could be sold, apart from current National Savings certificates, which are valued at cost. Personal possessions are not counted unless acquired in order to claim benefit. If it will cost something to turn property into cash there will be a deduction of 10% for the cost of the sale. If there is a debt or charge like a mortgage secured on property then the value of the charge will be deducted. Apart from that there is no provision for counting debts against assets.
The surrender value of any life assurance or endowment policies is ignored. Any premises occupied by an elderly or incapacitated relative or by a former partner are disregarded. Arrears paid of means-tested benefits, attendance or Disability Living Allowance for up to a year after the payment will be ignored. Business assets can be ignored if it seems reasonable to do so. They will always be ignored if you are temporarily unable to work because of illness or injury. Money held in trust which the claimant is entitled to is counted, unless it is money for a personal injury or a discretionary trust in which case it is ignored.
- "Help for people on a low income - Income Support". Adviceguide. Citizens Advice. Retrieved 1 January 2014.