When a spouse or civil partner passes away, tax can be far from the mind of the widow or widower. What many people do not realise is that they may be eligible to apply for certain state benefits. The two most common are the Bereavement Payment and the Bereavement Allowance (formerly known as the Widow’s Pension).
The Bereavement Payment is a £2,000 tax-free lump sum paid to the surviving spouse or civil partner. To qualify the deceased must meet one of two conditions. Condition A is that they must have been either:
(a) Under State Pension age at the time of their death; or
(b) Over State Pension age but not entitled to a State Pension based on their national insurance contributions.
Condition B is that they must have either:
(a) Paid enough national insurance contributions; or
(b) Died as a result of an industrial accident or disease.
With regard to (a) the person only needs to have paid NIC for a period of 6 months throughout their entire working life, so even if they haven’t been paying NIC in their final years they may still qualify.
Note: the payment is not available to divorcees, or persons living with another as husband, wife, or civil partner.
The Bereavement Allowance is a separate, weekly payment, available to a surviving spouse or civil partner based upon their age at the time the deceased passes away. Currently, the allowance ranges from £33.77 per week for someone who is 45 years old, to £112.55 for those aged 55 and above. Unlike to Bereavement Payment, the allowance is taxable.
To qualify, the following conditions must be met:
(a) You must be 45 or over when your husband, wife, or civil partner died;
(b) You must be below State Pension age; and
(c) The deceased must have paid enough national insurance contributions or died as a result of an industrial accident or disease.
The allowance is not available for those who are bringing up children. Instead, there is a separate Widowed Parent’s Allowance available. This is a weekly payment for up to £112.55 available to parents who are eligible for child benefit.
As with the Bereavement Payment, the allowance is not available to divorcees, or those who remarry or live with another person as if they are married or in a civil partnership. It is also subject to the benefits cap which was introduced in 2013.
The Bereavement Allowance is claimable for the first twelve months after the date of death, but importantly must be claimed within three months of death to be fully available. If a claim is made after this date then only the remaining allowance will be payable. The Bereavement Payment is claimable within twelve months of the date of death. It is therefore important to make sure clients are aware of these benefits and how to claim.
Sometimes it will be unknown whether or not the deceased paid enough National Insurance. The advice here is to submit a claim in any case.
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