R01 State benefits: free practice questions

1. Question 1 of 5

   What is meant by a 'means-tested' benefit?

   Option A: A benefit paid only to those whose income and/or savings are below set levelsOption B: A benefit paid at the same rate to everyoneOption C: A benefit that is always taxableOption D: A benefit paid only to people who have paid enough National Insurance contributions

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   The answer is A: A benefit paid only to those whose income and/or savings are below set levels

   A means-tested benefit depends on an assessment of income and capital; it's paid only where these are below set limits.

   Why the other options are wrong

   B

   Benefits paid at a flat rate to all are universal.

   C

   Whether a benefit is taxable is a separate question from means-testing.

   D

   Benefits depending on NI records are contributory, not means-tested.

2. Question 2 of 5

   Who does the benefit cap apply to?

   Option A: Everyone over State Pension age who receives Pension CreditOption B: Only households living inside Greater LondonOption C: Only people who receive disability-related benefitsOption D: Most working-age people, broadly 16 to State Pension age

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   The answer is D: Most working-age people, broadly 16 to State Pension age

   The cap limits the total benefits most working-age households (16 to State Pension age) can receive, so non-working households don't receive more than average working household earnings. Higher limits apply in Greater London.

   Why the other options are wrong

   A

   The cap is aimed at working-age claimants.

   B

   The cap applies throughout the UK, with higher limits inside Greater London.

   C

   Receiving certain disability benefits exempts a household from the cap.

3. Question 3 of 5

   A homeowner on Universal Credit asks about Support for Mortgage Interest (SMI). Which statement is correct?

   Option A: SMI covers both the capital and interest parts of the mortgageOption B: SMI is a grant, so it never has to be repaid by the claimantOption C: It helps with interest on up to £200,000 and is paid as a loanOption D: SMI starts from the very first Universal Credit payment received

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   The answer is C: It helps with interest on up to £200,000 and is paid as a loan

   SMI helps with interest on up to £200,000 (£100,000 for Pension Credit) and is a loan repaid when the home is sold or transferred. UC claimants must first receive three consecutive UC payments.

   Why the other options are wrong

   A

   SMI only helps with the interest, not the capital.

   B

   SMI is paid as a loan, repayable with interest.

   D

   UC claimants must receive three consecutive payments before SMI starts.

4. Question 4 of 5

   A widowed parent receiving Child Benefit claims Bereavement Support Payment promptly. What will they receive?

   Option A: £3,500 plus 18 monthly payments of £350Option B: A weekly pension until the youngest child turns 18Option C: £2,500 plus 18 monthly payments of £100Option D: £3,500 plus 12 monthly payments of £350

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   The answer is A: £3,500 plus 18 monthly payments of £350

   The higher rate (with Child Benefit entitlement or pregnancy) is £3,500 followed by up to 18 monthly payments of £350. The claim must be made within three months of the death to get the full amount.

   Why the other options are wrong

   B

   BSP is a lump sum plus monthly payments for 18 months, not a weekly pension.

   C

   £2,500 plus £100 a month is the lower rate, for those without children or pregnancy.

   D

   The monthly payments run for up to 18 months, not 12.

5. Question 5 of 5

   An employer makes a redundancy payment of £45,000. How is it taxed?

   Option A: All of it is tax-free, as it is a redundancy paymentOption B: The first £30,000 is tax-free; the rest faces tax and employer NIOption C: All of it is taxed as earned income in the year it is paidOption D: The first £21,570 is tax-free; the rest is subject to income tax

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   The answer is B: The first £30,000 is tax-free; the rest faces tax and employer NI

   Redundancy payments up to £30,000 are tax-free. The excess is subject to income tax and employer (but not employee) National Insurance. £21,570 is the maximum statutory redundancy payment.

   Why the other options are wrong

   A

   Only the first £30,000 is tax-free.

   C

   The first £30,000 is exempt.

   D

   £21,570 is the statutory maximum payment, not the tax-free limit.

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