NP45 - A guide to Bereavement Benefits

Meaning of terms used in this guide

Employee’s earnings threshold

This is the level of earnings above which you have to start paying Class 1 National Insurance (NI) contributions if you work for an employer. You have to pay contributions on the amount of your earnings above this level. This is also known as the Primary Threshold (PT).

Lower earnings limit (LEL)

This is the level that your earnings become relevant for benefit purposes. It is a lower amount than the employee’s earnings threshold where you actually have to start paying NI contributions (see above). If your earnings are at least equal to the LEL but are at or below the employee’s earnings threshold, you will not pay Class 1 NI contributions but you will be treated as if you had paid them for benefit purposes.

Upper earnings limit (UEL)

This is the maximum amount of earnings on which contributory benefits are calculated. It is also the level at which you stop paying Class 1 contributions at the main Class 1 rate. If you have earnings above the UEL you continue to pay Class 1 contributions but at the additional Class 1 rate, which is lower than the main rate.

For the current limits see leaflet GL23 Social security benefit rates. [Legislation (1)]

Tax year

This starts on 6 April in one year and ends on 5 April in the following year. [Legislation (2)]

Full liability

If you have full liability, it means that you must pay main Class 1 contributions at the full rate when you are working for an employer, or Class 2 contributions when you are self-employed.

Reduced liability

Before the present arrangements started, married women and widows who worked could choose to have reduced liability. If you have reduced-rate liability, it means that you pay main Class 1 contributions at a reduced rate when you are working for an employer, but no Class 2 contributions when self-employed. Reducedrate contributions do not count for any contributory benefit.

For more information about reduced liability, see leaflets CA13 National Insurance contributions for women with reduced elections or CA09 National Insurance contributions for widows or widowers.

Category A State Pensions

This is a contributory pension made up of Basic pension, which is based on the number of qualifying years you have in your working life, and Additional Pension, which is based on your earnings since April 1978.

Graduated Retirement Benefit

This is a pension based upon the amount of graduated NI contributions you and your late spouse or civil partnermay have paid between April 1961 and April 1975 when there was the Graduated Pension Scheme.

Contributory and non-contributory benefits

You can only get a contributory benefit if you meet (or your late spouse or civil partner

met) the NI contribution conditions for that benefit. Usually, this means having paid (or been credited with) a minimum value of the right classes of NI contributions during a stated period.

You can get a non-contributory benefit even if you have paid no contributions at all – provided that you meet the other qualifying conditions for the benefit.

Taxable and tax-free benefits

If a benefit is taxable, HM Revenue and Customs will assess it for taxation purposes with your other taxable income. This does not mean that tax will be taken off the benefit payments before you get them, but you will have to show them on your income tax return.

A tax-free benefit is not assessed as income for taxation purposes and so will make no difference to the amount of tax you pay, whatever your income.

Decision Makers

Decision Makers decide whether there is entitlement to benefit. They also decide how much benefit the law says is payable.

Great Britain (GB)

This is England, Scotland and Wales only.

United Kingdom (UK)

This is Great Britain and Northern Ireland, but not the Channel Islands or the Isle of Man.

Countries where European Community (EC) regulations apply

European Union countries: Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain (including Balearic and Canary Islands), Sweden and the UK (including Gibralter but excluding the Isle of Man and the Channel Islands).

The EC health care and social security rules also apply to Iceland, Liechtenstein, Norway and Switzerland.

State pension age

Pensionable age is the minimum age people must be before they can claim and receive a State Pension. This is currently 60 for a woman and 65 for a man. Pensionable age will be equalised at 65 for both men and women from 6 April 2020. The change from the current pensionable age of 60 for women to 65 will be phased in over a ten-year period from 2010 to 2020. Pensionable age for: [Legislation (3)]

• men is 65
• women born on or before 5 April 1950 is 60
• women born on or after 6 April 1955 is 65 the same as men.

For women born after 5 April 1950 but before 6 April 1955, pensionable age is 60 plus one month for each month (or part month) that their date of birth fell after 5 April 1950. Table 1 shows the pensionable age for women born in that period and the earliest date (pension date) a pension can be paid.

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