HMRC Tax Rebate on Universal Credit

calcotti

mineral68 wrote: »

It would appear that the DWP are operating a policy that is clearly discriminatory: employed people are being discriminated against compared to self-employed people.

I don’t see any discrimination. A refund from a year in paid work (which presumably covers both employed or self employed work) falls to be treated as either employed earnings or self employed earnings the treatment of which is then the same.

The Universal Credit Regulations 2013

Self-employed earnings
57(4) The receipts referred to in paragraph (3) include receipts in kind and any refund or repayment of income tax, value added tax or national insurance contributions relating to the trade, profession or vocation.

mineral68

It's discrimination because self-employed people don't get most of their income tax refund taken off them by the DWP, whereas employed people do.

calcotti

mineral68 wrote: »

It's discrimination because self-employed people don't get most of their income tax refund taken off them by the DWP, whereas employed people do.

This should really be in the discussion forum rather than the help forum but..
I still don't follow your argument, a tax refund to a self employed person appears, to me, to be treated in exactly the same way as a tax refund to an employed person. The clause I quoted clearly states that a tax refund to a self employed person is to be treated as self employed earnings. This has the same effect as a tax refund to an employed person being treated as employed earnings.


The important bit is that they are treated as earnings and therefore subject to 63% taper rather than as unearned income subject to 100% deduction. Of course, under legacy benefits tax refunds were ignored as income and were treated as capital and in most cases did not affect a claimant's benefits at all.


(I think it's bad policy under UC but it does appear to be the same policy for the employed and self employed.)

mineral68

Self-employed and employed people are not treated the same way. The Regulations say that:

'A repayment of income tax or NI received by a person from HMRC is to be to be treated as employed earnings UNLESS it is taken into account s self-employed earnings.'

In other words, self-employed people get to keep all their income tax refund and employed people have most of it taken off them if they are both claiming UC.

calcotti

mineral68 wrote: »

Self-employed and employed people are not treated the same way. The Regulations say that:

'A repayment of income tax or NI received by a person from HMRC is to be to be treated as employed earnings UNLESS it is taken into account s self-employed earnings.'

In other words, self-employed people get to keep all their income tax refund and employed people have most of it taken off them if they are both claiming UC.

But if it is taken into account as self employed earnings these are then taken into account in exactly the same way as employed earnings when working out how much UC is payable. A 63% deduction is made in both cases as both are earned income.

tomtom256

calcotti wrote: »

But if it is taken into account as self employed earnings these are then taken into account in exactly the same way as employed earnings when working out how much UC is payable. A 63% deduction is made in both cases as both are earned income.

No point arguing with trolls.

mineral68

Yes OK, both employed and self-employed ARE subject to the 63% deduction. I think we can probably agree that it's very unfair. It means that some people are effectively denied their full personal income tax allowance, because if they have paid too much income tax then they should get it back - and keep it.

calcotti

mineral68 wrote: »

I think we can probably agree that it's very unfair. It means that some people are effectively denied their full personal income tax allowance, because if they have paid too much income tax then they should get it back - and keep it.

Completely agree on that one - hence my concluding remark at #104.

whitey225

hi i am 43 and worked all my adult life untill a few mnths ago, i have been claiming universal credit for the past few months, i need help know how to go about a tax refund from a previous year, from the capial i spent out while self employed. (eg travel expensives, tools, food, accomadations) i was wondering how this would effect the universal credit im currently recieving, as i was single and living on my own when self employed, and now im claiming uc with my parnter?



will the uc payment stop?


do i have to notifiy the job centre or will they just recieve the infomation from hmrc?


do i get to keep the refund?


will 63p be taken from each pound?


i havnt claimed benifits before this so not really sure how it works and just want to know im doing it right as i dont want to be sactioned for something i wasnt sure of.


am hoping to use the refund to renew my out dated work card (icats, ccnsg, cscs, ipafe) and get back in to work

calcotti

If you get an income tax refund then this will be treated as earnings and added to any other earnings you receive in that assessment period. A 63% deduction will be made from your UC entitlement for any earnings in excess of any Work Allowance you have (there will only be a Work Allowance if there are children on your claim or one of you has LCW or LCWRA).