In his Pre-Budget Report the Chancellor said:
'… I will ensure that every pensioner will get a one-off payment of £60, on top of the £10 Christmas Bonus, from January. And for couples, £120, also from January. And this £70 payment will also go to children with disabilities.'
The position turns out to be a little more complicated.
The regular £10 rate of the Christmas Bonus will be paid in December to those who qualify and an additional instalment of £60 will then be paid between January and March 2009. The bulk of the payments of the additional instalment are expected to be paid in January.
Those who qualify
The payments will go to people who are ordinarily resident in the UK (or a member state) and were in receipt of a relevant benefit for one day of this week (the week commencing 22 December).
A relevant benefit includes the state pension, pension credit, incapacity benefit (long term), employment and support allowance, carer’s allowance, attendance allowance, disability living allowance, bereavement benefits and war pensions.
Around 15 million people will receive payments. 85% will be pensioners. Of the remainder, around 2 million will get paid through entitlements to a disability benefit, 350,000 through receiving carer’s allowance, and 150,000 due to bereavement benefits.
Qualifying for more than one benefit does not entitle you to more than one Bonus.
Tax free
Some of the relevant benefits that entitle you to the Christmas Bonus are free of tax, such as disability living allowance, whilst others, such as the state pension, are taxable. Regardless of the qualifying source the whole of the £70 is free of tax and does not need to be disclosed to HMRC. It is not clear if the additional payment, when paid, will be joined with other payments from the Department for Work & Pensions, so be sure that you identify it and exclude it from any sums you declare for tax purposes.
So some good news at Christmas, albeit deferred.
(23-10-2008)
Contact John Andrews (Tel: 0844 579 6700 Fax 0844 579 6701)
