Does Equity Release Affect Attendance Allowance?
Attendance Allowance is a government benefit available to individuals of State Pension age who require care due to having a severe disability (1). This can be a physical or mental disability.
As this form of income support is intended for people who need to pay for disability-related costs, it is not simply available to anyone with a disability, but specifically people who can prove they need the money for their long-term care.
That being said, Attendance Allowance can be offered even if someone is not currently paying personal care costs (such as hiring a carer), as long as there is evidence that they would benefit from government support in managing their disability.
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How much money could I get from Attendance Allowance?
The amount of funds given as Attendance Allowance varies depending on the situation of the applicant. The main factor taken into consideration is the severity of the applicant’s health condition.
The lower rate for Attendance Allowance is £68.10 per week, and this tends to be given to people who only need personal care during the day, or during the night, respectively.
The higher rate of £101.75 per week is suitable for individuals requiring round-the-clock care, including people with a terminal illness.
Am I eligible for Attendance Allowance?
As we have outlined above, you must have a severe disability to be eligible for Attendance Allowance. This disability must have affected you for a minimum of six months (exceptions apply for terminal illness), so the scheme is mainly targeted at people with long-term health conditions.
Age is another important requirement – you must be of State Pension age to claim this benefit.
As Attendance Allowance is not means-tested, your income will not be factored in (2). This means you can claim this benefit even if you have a high income, or lots of savings.
Finally, the extra cash is intended for a specific purpose, so you must be able to demonstrate that the money would cover living costs relating to your disability.
For example, perhaps you require someone to supervise you overnight, or help you to get dressed each morning and evening.
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How can I apply for Attendance Allowance?
Applying for Attendance Allowance income support is a straightforward process for most people. You can either complete a claim form on the government website, or call the Attendance Allowance helpline on 0800 731 0122.
The form requires applicants to outline their medical history, including any prescriptions they are taking, and letters from their GP. They must also provide an explanation of their symptoms, to demonstrate the severity of their disability.
Will I get Attendance Allowance forever?
Some people are offered Attendance Allowance permanently, but others receive regular payments for a fixed period. You will find out how long direct payments will be made when your application is approved, and the decision in writing is sent to you.
There is also a Constant Attendance Allowance, which also requires people to need regular personal care, but they must also be receiving a War Disablement Pension or an Industrial Injuries Disablement Benefit to qualify.
The rates of Constant Attendance Allowance range from £166.20 (exceptional rate) to £41.55 (part day rate), and the money is sent as a direct payment.
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Does Equity Release Affect Attendance Allowance?
With some common benefits, income is taken into account, and applicants must prove that they are not over the savings threshold. For example, to be eligible for Universal Credit, applicants must have less than £16000 in savings (3).
However, this is not the case with Attendance Allowance. It is not a means-tested benefit, so the amount of savings possessed by the applicant are irrelevant.
This means that equity release does not affect Attendance Allowance income support. Regardless of the amount of money released through this scheme, the customer can continue to claim Attendance Allowance.
In terms of Attendance Allowance affecting equity release retirement income, there is also nothing to worry about.
Your equity release provider is not concerned with which benefits you are receiving, as income is not part of the eligibility requirements for the equity release scheme.
If you are releasing equity with your spouse or civil partner, their means-tested benefits will also not intervene with equity release.
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What is the Best Way to Release Equity When You Get Attendance Allowance?
If you receive Attendance Allowance, you can release equity in the same way as everyone else, following the normal rules. There is no need to calculate how much you have in savings, as equity release funds can be provided regardless.
It is important to consider whether equity release is a necessity for you. There is risk involved, such as reducing your family’s inheritance, so it is often an option for people who do not have a great source of income, and believe this risk is worth it.
If you are earning plenty from Attendance Allowance, on top of other forms of income, speak to a financial adviser to figure out whether equity release is the right option for you.
However, do not rule out equity release money simply because you are not nearing poverty. It is a great type of income support that can be hugely supportive even for people who already have other funds to rely on.
This is especially true at the moment, as we are seeing the cost of living rise, and our savings are no longer stretching as far.
To release equity from your home, you need to get in touch with an equity release company and file an application with them.
However, our clients know all too well that any extra help with the application is appreciated, so we recommend contacting us on 0330 058 1579 to learn more about the process.
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Can You Pursue an Alternative to Equity Release If You Get Attendance Allowance?
The majority of equity release alternatives allow you to continue to receive Attendance Allowance. For example, you can downsize or remortgage while on Attendance Allowance.
You can also use credit cards if you are claiming benefits, provided that the lender believes you are in a position to repay the funds by the deadline.
Something else to keep in mind is that Attendance Allowance can boost your weekly income in other areas, which could be a suitable alternative to equity release for people who simply need to pay their bills.
Once you are claiming Attendance Allowance, you are allowed to earn more income before your benefits are affected, which could make you eligible for other government funds. What’s more, any benefits you are currently claiming could increase.
Attendance Allowance can also make people eligible for a Blue Badge and the Disabled Person’s Railcard. Though this is not direct financial help, it can save travel money and therefore is an excellent form of income support.
Many people get council tax support when they claim Attendance Allowance. This is something you have to apply for, but it’s certainly worth it if it leads to a reduction in council tax payments.
Finally, carers of people claiming Attendance Allowance as funding for care can sometimes benefit from Carer’s Allowance. The eligibility for this carer support payment includes working 35 or more hours per week as the carer, and earning less than £132 per week after tax.
Yet, the increased money you could get due to Attendance Allowance is often nowhere near the amount you could earn by taking equity from your home. For people who need to significantly increase their income, or access a lump sum in the near future, equity release may be essential.
This is why it’s so important to seek financial advice, including a personalised illustration. Not everyone needs the same type of financial support, so you must find out which route is the best for you personally.
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Does Equity Release Affect Any State Benefits?
Yes, equity release can get in the way of some state benefits – namely, means-tested benefits. If your savings exceed a certain amount after releasing equity, your benefits could either be reduced or stopped entirely.
It is important to understand what counts as savings, as the following do not count:
- State benefits arrears
- Business assets
- Sales proceeds of a home (for six months) if you are purchasing a new home
- Personal possessions
- Loan or grant money to fund essential improvements or repairs
- Currency conversion charges
- The property value of a close relative who is ‘incapacitated’ or qualifies for Pension Credit
- Social Fund grant payments
- Value of a previous home that has been left due to relationship breakdown (up to 26 weeks, or permanently if previous partner is staying there)
- Pre-paid funeral plans
- Insurance claims funds used to replace or repair (for up to six months)
- Life insurance policies
- Value of property purchased either to live in, to sell, or to repair/seek legal advice before living there (for up to 26 weeks)
Examples of savings that will be assessed are:
- Bank account funds
- Cash
- Stocks and shares
- Premium Bonds
- Owned property
- National Savings accounts and certificates
- Tax-free Childcare account funds
- Income bonds
As Universal Credit has replaced many other benefits, it is now much easier to figure out how equity release could affect your entitlement to benefits.
You simply need to consider that UC will be reduced if your savings amount to £6,000 or more, and it will be stopped if you have over £16,000.
Another benefit to consider is Council Tax Reduction – again, you must have less than £16,000 in savings to continue to receive this.
Finally, Pension Credit payments can be affected by equity release. If the equity release scheme boosts your income above £10,000, for every £500 above this amount, there will be a reduction of £1 of Pension Credit.
However, rest assured that pension rates from the State Pension fund and private pension pots (including occupational pension) will not be impacted.
To find out more about how equity release can sometimes affect government benefits, have a look at this informative article.
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Does Equity Release Affect Attendance Allowance – FAQs
Below, we answer commonly asked questions about equity release and its impact on attendance allowance:
1. Why do people need to release equity if they get Attendance Allowance?
We have acknowledged that some people can depend on benefits for steady income support, so why bother releasing equity?
Firstly, many people are not eligible for government support, even if they are on a low income. If their savings are over a certain amount, they may not qualify for the means-tested state benefits.
They would only be eligible for other benefits if they needed the extra money for a specific reason, such as having children or requiring personal care.
Secondly, benefits are not designed to provide someone with an excellent quality of life – they are simply there as essential funds to ensure people can afford to have a roof over their head, and food in their cupboards.
This means that many people of pension age who are receiving benefits do not have much money to spend on non-essentials.
Often, even when someone is on benefits, they can still struggle to make ends meet.
Equity release puts a stop to this, as the consumer can either borrow a lump sum of money, or get monthly payments, that take away the stress of being unable to fund one’s lifestyle.
Releasing equity is something that individuals of any income can do, and even if their retirement savings are low, they could end up with huge amounts of money if they live in a valuable property.
This means that equity release is not only ideal for people who need the money urgently, but also people who want to have their dream retirement.
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2. Does the amount of Attendance Allowance affect eligibility for equity release?
No, it does not matter how much money you get from benefits, including Attendance Allowance. Even if you get the maximum allowance for every single state benefit, you can still take equity from your property with an equity release provider.
3. Can I get equity release instead of Attendance Allowance?
You could pursue equity release instead of Attendance Allowance, but we do not advise it, as there is no need to. As neither scheme affects the other, it is always better to get involved with both.
If you released equity instead of claiming Attendance Allowance, you would miss out on free government income support that could help you to live with your disability, and there is no logical reason to do this.
You may feel as though equity release is providing you with more than enough money to fund disability costs. However, it is always important to plan ahead for financial difficulty.
If you find yourself needing to fund care costs, or wanting to help out a family member who is struggling financially, you don’t want to be funding this while also paying for disability costs with all of your own money.
If you are concerned about getting Attendance Allowance as an equity release consumer, you can speak to a financial adviser to put your mind at rest that it is perfectly legal, and also advisable.
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4. Does equity release affect one-off payments in the same way as Attendance Allowance?
One-off government payments are usually given to people who claim certain benefits, or earn below a specified income, unlike Attendance Allowance.
As this is means-tested, it is very likely that it would be affected by equity release.
Some examples of one-off payments that could be affected include:
- Cost of Living Payments 2023 to 2024: This is a form of financial help for vulnerable people facing the Cost of Living Crisis. There are three direct payments to be made for people who are eligible for all funding.
- Cold Weather Payment: The Cold Weather Payment applies when the temperature has been zero degrees Celsius or under for 7 or more days in a row. It is offered to people claiming certain benefits.
- Warm Home Discount: This scheme is for people on a low income facing high energy costs, or people who receive the Guarantee Credit part of Pension Credit.
As always, any one-off funding that is not related to income will not affect equity release, which is why Attendance Allowance has no impact.
Another example is the Winter Fuel Payment, which is a lump-sum payment for people born before the 26th September 1956, as opposed to low earners.
Will I pay tax on equity release or Attendance Allowance?
Both equity release and Attendance Allowance are tax-free, which means they are great options for people in need of money.
Do not make the mistake of believing that all state benefits are tax-free, as this is not the case. Income tax is applied to:
- Widowed Parent’s Allowance
- Jobseeker’s Allowance
- Incapacity Benefit (but not until the 29th week)
- Bereavement Allowance
- Pensions paid by the Industrial Death Benefit Scheme
- State Pension
- Contribution-based Employment and Support Allowance
- Carer’s Allowance
However, all types of equity release are tax-free. Lifetime mortgages and home reversions both result in tax-free money, regardless of the specific equity release product in question (e.g., drawdown plan, buy-to-let mortgage, or income mortgage).
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Contact Equity Release Warehouse
Please get in touch with us for independent advice if you have any more questions about how equity release affects Attendance Allowance and other forms of income support.
We are also happy to discuss equity release plans in general, as we know that it can be difficult to find straightforward answers to your questions.
If you aren’t yet ready to reach out, please note that our website is a complete guide to the equity release scheme.
It explains the importance of equity release advisers, the pros and cons of equity release, how an equity loan can affect your financial situation, and the differences between getting a cash lump vs regular amounts of money.
Our expert advice will give you a great background on equity release payments, but as it is not specific to you, everything you read is a rule of thumb.
This is why we encourage you to contact us directly, to discover the special rules of equity release, including how medical conditions can affect your loan, whether you would benefit from a drawdown facility, and any extra costs you might face.
The quickest way to contact our advisers is to call us on 0330 058 1579. You can also fill out our callback form.
Either way, you can anticipate a prompt response, as our customers are our main priority. That being said, please pick up the phone for any urgent questions, as we want to make sure we are providing you with support as soon as we can.
References
[1] Attendance Allowance https://www.gov.uk/attendance-allowance
[2] How your benefits are means-tested https://www.ageuk.org.uk/information-advice/money-legal/benefits-entitlements/how-your-benefits-are-means-tested/
[3] Universal Credit https://www.gov.uk/universal-credit/eligibility#:~:text=live%20in%20the%20UK,in%20money%2C%20savings%20and%20investments
