Contribution based or Income based?

[tier-1]

Hello Friends,

I became unemployed from April this. I am on ILR visa and my wife is on Dependent visa and she was pregnant when I applied for JSA.

The question is am I not eligible for the income based JSA (£112.00) as opposed to contribution based JSA(£71.59) given that my own needs are enhanced because I have to take care of a family (wife and the child). Is there any legislation which prohibits me from getting Income based JSA.


Many Thanks for your replies.

[Amber]

Contribution based JSA can be topped up with income based JSA, however, as your spouse is subject to immigration control, you can only receive a single person amount JSA - £71.59. For the children claim child benefit and tax credits and look at council tax and housing benefit.

[tier-1]

Thanks D4109125 for reply.

Okay, Then how come after six months I will be moved from Contribution Based JSA to Income based JSA?

I read somewhere that if contribution based JSA are not being sufficient to run the family, then one came be moved to income based JSA from first day? Will that not apply to me if I have to take care of my would-be child.

Also, will I have to pay tax on the £71.59 that I receive?

[Amber]

What Country is your spouse native to?

[tier-1]

Hey D4109125, I understand that if the wife is on Dependent Visa, then one cannot claim the expenses needed to support her. Is this correct?

Also can you please tell me what will happen after six months? Will I be moved to Income based JSA? Will the weekly amount then be some £112.00? Why does the benefit increase after six month?

[Amber]

You did not answer my question, however, I'll assume she's an from an exempt Country.

For 6 months JSA is contribution based if you paid enough NI contributions over the last 2 years. After 6 months you may be eligible for income based subject to a means test.

Your JSA will not increase to £112.50 as your spouse is subject to immigration control. For your children you can claim child benefit and tax credits. If your wife is no longer subject to immigration control then you can claim an additional amount of JSA, more commonly known as the 'couple rate'. Regarding tax paid on JSA see the technical manual (click).

I hope that is clearer.

[tier-1]

Hey D4109125

Thanks for the reply. I am clear on issues related to claims based on my wife.

Why can I not be on income based JSA (~£112.00 ) from first the very beginning (on my own and not because of my wife)?

Its quite ironical that if I have paid NI for last two years, therefore I will get the lesser, contribution based JSA (£71.59) . Is there any reason for this.

Also if I have mortgage to pay, then will I get the SMI ( support for mortgage interest) if I am on contribution based JSA?

[Amber]

Support with mortgage interest is part of income based JSA which you would need to tell them you need help with. There may be a waiting period (13 weeks?) before you can get help with housing costs and it may be for a limited time (2 years?). Your contribution based JSA can be topped up with income based I.e. for SMI or if you have an eligible partner.

For both income based jsa and contribution based, your basic applicable amount is £71.70 for a single person and not £112.50 this is because your spouse is subject to immigration control, I assume a spouse visa or PBS dep.

[tier-1]

Yes, I just checked. I would have got £71.59/week even if I was on income based JSA.

Thanks for clarifying on SMI as well. What will happen to the interest that accrues during waiting period? Will SMI clear it ? And if so can I advise the lending bank accordingly and will the bank hold on till the waiting period.

[Amber]

You must continue to pay your contractual obligations to your mortgage provider, if you don't you face repossession. If you're struggling ask for assistance or change to interest only.

SMI is normally paid direct to your lender after a waiting period, which is 13 weeks after you’ve claimed benefit. There is no payments made until 13 weeks and no accrued interest.

[tier-1]

Was the wait-period 39 weeks previously? If the wait-period changes in future back to say 39 weeks , then I will have to pay the interest that accrues for wait-period?

That can become too much? Its better to stay in rented accommodation. No?

[Amber]

It changed in 2009. Before that, 100% support with mortgage interest was paid after 39 weeks but 50% support kicked in well before. Rented may be better, but sometimes SMI can be advantageous, I.e. when the SMI rate exceeds your mortgage interest rate, in such case, some capital is paid too.

[tier-1]

Hey D4109125,

Thanks for the reply.

Just to make it clear once more:

The interest that accrues for the wait period (say 13 weeks) will not be paid by SMI. After 13 weeks, only the monthly interest (at standard interest rate set by council) will be paid directly to the Bank.

Is the above right?

Also, Does the housing benefit continue to be paid for a month after the start of job? If so, Does it matter if I was getting contribution based JSA or Income based JSA?

[Amber]

Yes that's correct, SMI is paid at the level of the Bank of England’s published Average Mortgage Rate rather than what the council say, that's around 3.63% at the moment.

If you've been on JSA for 26 or more weeks then yes there should be a 4 week run on of Help with housing costs (SMI/housing benefit).

[tier-1]

Will I get the £100.00 from JSA, now that I am employed?

[Amber]

Job Grants stopped on 1 April 2013.

[tier-1]

ah.. austerity measures due to recession.. Isn't it!!