Benefits Overhaul in Scotland
- The snappily-titled Social Security (Scotland) Act 2018 (Winter Heating Assistance)(Consequential Modifications) Order 2022 came into force last month. Topical though it may be with its indirect evocation of cold weather this note says little about it. But it functions as a prompt to saying something of the radical overhaul to the benefits system in Scotland brought about by the Social Security (Scotland) Act 2018 which is now in full swing.
The Social Security (Scotland) Act 2018
- Social Security has been a reserved matter since devolution was implemented in 1999. The Scotland Act 2016 added various exceptions to the reservation of social security to the UK Parliament and now, under the Social Security Scotland Act 2018, various benefits are devolved and will be administered by “Social Security Scotland” instead of the Department for Work and Pensions.
Benefits now dealt with by Social Security Scotland
- The Social Security Scotland website shows that there are now thirteen benefits administered by them some of which are new but others of which were formerly administered by the Department of Work and Pensions (“the DWP”). The thirteen (and counting) are:
- Carer’s Allowance Supplement
- Best Start Grant Pregnancy and Baby Payment
- Best Start Grant Early Learning Payment
- Best Start Grant School Age Payment
- Best Start Foods
- Funeral Support Payment
- Young Carer Grant
- Job Start Payment
- Scottish Child Payment
- Child Winter Heating Assistance
- Winter Heating Payment
- Adult Disability Payment (financial support for people if they are aged between 16 and state pension age, and are disabled, have a long-term health condition or have a terminal illness), and
- Child Disability Payment (a payment every 4 weeks to help with the extra costs of caring for children with a disability, illness or health condition).
- In particular, the “Adult Disability Payment” replaces “Personal Independence Payment” (known as “PIP”) and dealt with by the DWP. And the “Child Disability Payment” replaces “Disability Living Allowance for Children” (known as “DLA”) and also formerly dealt with by the DWP.
- Such changes cannot happen overnight. By way of example, in relation to PIP, Social Security Scotland send a letter to claimants saying:
“From 2022 around 300,000 people in Scotland who get Personal Independence Payment (PIP) will have their benefit moved to Social Security Scotland and start getting a new benefit called Adult Disability Payment. This is because Social Security Scotland is taking over some benefits from the Department for Work and Pensions for people in Scotland. Payments will be the same amount as they are with the Department for Work and Pensions and there will be no gap in payments.”
Benefits not dealt with by Social Security Scotland
- Universal Credit is a UK-wide benefit still reserved to Westminster and operated by the Department of Work and Pensions, see: Universal Credit (Scottish choices) – Social security – gov.scot (www.gov.scot). It will generally be a single monthly payment to replace the following six benefits:
- income-related Employment and Support Allowance (ESA);
- income-based Jobseeker’s Allowance (JSA);
- Housing Benefit;
- Working Tax Credit;
- Child Tax Credit; and
- Income Support.
- In Scotland however Universal Credit claimants can receive payments twice monthly instead of monthly and can ask for the rent part of Universal Credit to be paid directly to their landlord.
- The State Pension and Pension Credit also remain reserved benefits delivered by the Department for Work and Pensions.
The ripple effect
- Legislative changes often have ripple effects that are not necessarily obvious. Two particular ripples relate (perhaps unexpectedly) to (a) trusts for the benefit of those who have been paid compensation for “personal injury” (PI trusts”) and (b) trusts for the benefit of those who qualify as “disabled” for tax purposes (“disabled trusts”).
- As regards PI trusts property held in the trust is generally ignored when it comes to the assessment of the beneficiary’s income and capital for means-tested benefits (including in particular Income Support).
- And, as regards disabled trusts, these may qualify for favourable tax treatment for Inheritance Tax (and other taxes) if the beneficiary concerned is in receipt of certain benefits – including n particular “PIP” now replaced in Scotland by the Adult Disability Payment.
- These advantages are provided for under Westminster legislation which has had to be adjusted in order to continue to apply in relation to the new Scots benefits system.
- These adjustments (and other ripples) are addressed in another snappily-titled Order (2021/886) the full title of which is omitted owing to considerations of space.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Lauren Booth: email Lauren@mitchells-roberton.co.uk