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Wednesday, 3 October 2023

Income, benefits and Pension Credit

Your income may affect how much Pension Credit you can get. Find out more about how your income may affect Pension Credit, how Pension Credit is paid and how it might affect your other benefits.

Income that is counted towards Pension Credit

The amount of Pension Credit you get depends on how much income you have each week and how much you have saved or invested.

The following types of income are taken into account when calculating your Pension Credit:

  • State Pension (including basic State Pension and additional State Pension)
  • occupational and private pensions
  • most social security benefits like Carer's Allowance
  • £1 a week for every £500 (or part of £500) of 'capital' you have over £10,000 - capital includes savings and investments, and property that's not your main home
  • earnings after tax and expenses from employment or self-employment, less half of any company or personal pension contribution you make

If you have a partner you and your partner’s income and capital will be added together when calculating your Pension Credit.

The term ‘partner’ refers to your husband, wife or civil partner. Or the person you live with as if they were your husband, wife or civil partner.

If you're a self-assessment tax payer

If you're a self-assessment taxpayer who claims Pension Credit - you must tell The Pension Service how much Income Tax you expect to pay for the current tax year. This will help make sure you are getting the right amount of Pension Credit and may mean you get more. This is because Pension Credit takes account of your net income after tax, including any tax on your State Pension (State Pension is taxable).

You can find out more about Income Tax by contacting HMRC.

Income that is not counted towards Pension Credit

Income that is not counted towards Pension Credit includes:

  • Attendance Allowance
  • Christmas Bonus
  • Disability Living Allowance
  • Housing Benefit
  • Council Tax Benefit

Further information is available on the following benefits:

You may still get Pension Credit if you are living with your family. The Pension Service look only at your income and not at theirs. Also you may still get Pension Credit if you own your own home - the home you live in does not count towards your ‘capital’.

How Pension Credit is paid

All benefits, pensions and allowances are paid into the account of your choice, for example your bank account. This is the safest, most convenient and efficient method of payment.

What to do if your circumstances change

If your circumstances change, for example your capital goes up or down, you should contact The Pension Service. They will be able to look at your claim again to make sure you are getting the right amount of Pension Credit.

How to appeal about a Pension Credit decision

If you are refused Pension Credit or think it has been calculated wrongly, ask the office that dealt with your claim to reconsider the decision. If you are still unhappy with the outcome you can appeal to an independent Tribunal.

Find out more about the appeals process in the booklet 'If you think our decision is wrong'.

Effect of Pension Credit on other benefits

If you are getting Pension Credit you may be able to get additional benefits/help such as:

  • Housing Benefit
  • Council Tax Benefit
  • Cold Weather Payment
  • Funeral Payments
  • Community Care Grant
  • Budgeting Loans
  • Crisis Loans
  • Winter Fuel Payments
  • Sure Start Maternity Grant
  • free school meals

The Pension Service can now help you apply for Pension Credit, Council Tax Benefit and Housing Benefit at the same time over the phone.

Help on Pension Credit

For more help call the Pension Credit helpline on 0800 99 1234 or textphone 0800 169 0133. Lines are open 8.00am to 8.00pm Monday to Friday.

Additional links

Simpler, Clearer, Faster

From 17 October, GOV.UK will be the best place to find government services and information

Being enrolled into a workplace pension

Starting from October 2012, millions of workers will be enrolled into a workplace pension

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