Housing Benefit - Time period to "allocate" annual bonus to HB claim

andrean

Hello,

I've renewed my HB claim to find that I no longer qualify. I also need to pay some money back. This I accept, however, I don't agree with the amount.

I received an annual bonus at the end of October last year (within the tax year to 4 April 2010).

What the local council have done is apply the bonus figure (in this case £4,990) to my claim for 12 months from November 2009 to end October 2010. They have not (or will not) recognised it as being part of my annual income for the tax year to 4 April 2010 ONLY.

What they have said is that in November 2010 I can claim again because my bonus income will have been "used up" so to speak.

Are they right? Or could I reasonably assert that I should be able to claim afresh from 5th April 2010. (For the current tax year there won't be a bonus)

Thank you very much.

fluffymovie

Hi there

I have had a similar claim on my desk this week.

Basically, HB regs say that we have to use something like a bonus for the period it is paid in respect of and not necessarily tax years if they are different.

The advice received from the Adelphi (DWP head!) is that "bonus payments related to a past period should be used as income over that perod and the result may be an overpayment"

I would say that HB have done it right with regard to the regs and that a request for a reconsideration would be unlikely to suceed

Sorry!

andyandflo

fluffymovie wrote: »

Hi there

I have had a similar claim on my desk this week.

Basically, HB regs say that we have to use something like a bonus for the period it is paid in respect of and not necessarily tax years if they are different.

The advice received from the Adelphi (DWP head!) is that "bonus payments related to a past period should be used as income over that perod and the result may be an overpayment"

I would say that HB have done it right with regard to the regs and that a request for a reconsideration would be unlikely to suceed

Sorry!

Yes I can fully understand why they have worked it that way. But if I was the OP, I would check my contract of employment to see what the conditions are as regards being given the bonus. Is it contractural or is it at ex gratia?

If it is contractural, then yes it should be spread back over the period in which the bonus was earned. If it is ex gratia, then it should be treated as a 'one off' payment in the week/month that it was received.

andrean

Thank you very much Fluffymovie. I'm still not quite clear on this. Sorry.

"HB regs say that we have to use something like a bonus for the period it is paid in respect of and not necessarily tax years if they are different."

How do I or HB define the period that it is paid?

Where can I find the regs that HB use? I really want to be certain that it's not a "grey" area that is open to individual interpretation. If it's black and white and concrete then fair one, but if anything is slightly woolly then I want to pull it apart!

Andyandflo, the bonus is contractual but not guaranteed (if we make a profit then the shareholders agree a certain pot and we're given a share of the pot on merit). I've had one every year for the last 5 years but I won't have one this year because there isn't a pot .

coopers33

Im so glad someone else has asked about this - I have been receiving HB for a while now at a rate of 281.22 a fortnight based on a wage of 21965 per annum ony thing is i am going to receive a bonus next month of 6647 - does anyone know if this is going to stop my benefits completely? Reading the comment earlier worries me, does this mean that they will take this money off what they have given me already from April 2010 and from any additional payments up until April 2011? or will they just stop paying me for a whole year until september 2011 as they take this money as if it the start of a new year? sorry if this sounds confusing to anyone, i am finding it difficult to understand myself.

aso does anyone know what would happen with regards to tax credits as well, will these be reduced straight away or in the new tax year?

Hope someone can help with my query! Thanks

Benefits_Bod

In my view, fluffymovie was entirely correct.

HB/CTB regulations expressly deem bonuses derived from employment to be earnings and, in conjunction with long established legal authorities, such monies must be attributed to the period they are in respect of.

So, if a bonus is in respect of say January 2010 to June 2010, that is the period it *should* be taken into account for HB/CTB purposes. Some councils take a view that bonuses only affect FUTURE entitlement. In my opinion, the latter approach is not supported by either legislation or legal authority related to HB/CTB.

{Edit} Sorry, don't know enough to answer the Tax Credits side.

coopers33

Benefits_Bod wrote: »

In my view, fluffymovie was entirely correct.

HB/CTB regulations expressly deem bonuses derived from employment to be earnings and, in conjunction with long established legal authorities, such monies must be attributed to the period they are in respect of.

So, if a bonus is in respect of say January 2010 to June 2010, that is the period it *should* be taken into account for HB/CTB purposes. Some councils take a view that bonuses only affect FUTURE entitlement. In my opinion, the latter approach is not supported by either legislation or legal authority related to HB/CTB.

{Edit} Sorry, don't know enough to answer the Tax Credits side.

As the bonus is one off payment just for the month of September but every other wage i receive after that is going to be the same as before, instead of telling them in September when i receive the payment (and they cancel my claim all together, and having to reapply all over again and wait for payment) would it not be logical to give them the payslip for Septembers (normal wage with bonus) with the next two wage slips which will be normal wage to prove that it is just that one off payment for that month? i.e give them all 3 payslips in November. If I did it this way would they recaclulate it from future payments? as up until September the payments i had received already were right as i was unaware of the bonus before this time. Would they take the year from September to September for future payments or would it be from September 2010 to the normal tax year of April 2011? Sorry I find it very confusing!

Benefits_Bod

coopers33 wrote: »

As the bonus is one off payment just for the month of September but every other wage i receive after that is going to be the same as before...

On that basis, HB/CTB should be changed for the period 6th Sept 10 to 3rd Oct 10.

Effectively, there would be two changes of circumstances; the first with the bonus, the second back to normal.

If the first change knocks out entitlement, there is some debate whether it is lawful to simply knock out the stand-alone month (i.e. Sept in this case) and then simply allow benefit to continue without a new claim being needed (this is known in the trade as a "closed period supersession"). Anecdotally, the majority of LAs say this is lawful, but some think it is not. I can see the arguments on both sides - it isn't clear cut.

If your LA says a "closed period supersession" is allowed, you would be ok to delay notification of the change(s) in your circs - but don't delay beyond the first "normal" payslip. BUT, if your LA says it doesn't think a "closed period supersession" is lawful, you will have to reclaim and there is no benefit at all in delaying notification of the first change in circs. In fact, delaying *may* result in an unwanted break in benefit if a new claim is needed and isn't promptly made.

My advice? WRITE to your LA's benefits section, tell it you are expecting a change of circs (as described by you); what does it want from you in order that you don't lose benefit?