HMRC Tax Rebate on Universal Credit

Jimok

IQ, where did you answer this, i must have missed it???

Icequeen99

Icequeen99 wrote: »

If you are employed - they are correct if the refund is for a tax year in which you were in paid work. The regulations say:

'A repayment of income tax or national insurance contributions received by
a person from HMRC in respect of a tax year in which the person was in paid work is
to be treated as employed earnings unless it is taken into account as self-employed
earnings under regulation 57(4)'

There is a similar provision for the self-employed.

So yes, it is earned income and not capital.

I don't agree about the affect on gateway conditions - once you are in UC the gateway conditions are not really relevant.

IQ

I have quoted it for you. I think Mersey was suggesting I quoted tax regulations but this is taken from the Universal Credit regulations employed income section. It confirms what DWP have told you.

IQ

Jimok

So UC will withdraw or reduce payments to anyone in receipt of a tax rebate.

Makes an utter mockery of their so called "benefit."!!

Jimok

Still confused, please see below,

'Employed earnings
55.—(1) This regulation applies for the purposes of calculating earned income from employment
under a contract of service or in an office, including elective office (“employed earnings”).
(2) Employed earnings comprise any amounts that are general earnings, as defined in section
7(3) of ITEPA, but excluding—
(a) amounts that are treated as earnings under Chapters 2 to 11 of Part 3 of ITEPA (the
benefits code); and
(b) amounts that are exempt from income tax under Part 4 of ITEPA.
(3) In the calculation of employed earnings the following are to be disregarded—
(a) expenses that are allowed to be deducted under Chapter 2 of Part 5 of ITEPA; and
(b) expenses arising from participation as a service user (see regulation 53(2)).
(4) The following benefits are to be treated as employed earnings—
(a) statutory sick pay;
(b) statutory maternity pay;
(c) ordinary statutory paternity pay;
(d) additional statutory paternity pay; and
(e) statutory adoption pay.
(5) In calculating the amount of a person’s employed earnings in respect of an assessment
period, there are to be deducted from the amount of general earnings or benefits specified in
paragraphs (2) to (4)—
(a) any relievable pension contributions made by the person in that period;
(b) any amounts paid by the person in that period in respect of the employment by way of
income tax or primary Class 1 contributions under section 6(1) of the Contributions
and Benefits Act; and
(c) any sums withheld as donations to an approved scheme under Part 12 of ITEPA
(payroll giving) by a person required to make deductions or repayments of income tax
under the PAYE Regulations.'

These are from the 'Employed Earnings' section of the UC Regulations, i cannot find anything related to Tax Rebates being referred to as Earnings.

Mersey_2

IQ - Glad you now agree. I merely replied to your incorrect assertion, "Once in [UC], you stay in."


I did not say a claimant would be "kicked off" UC. You did twice. I'm not sure what you mean by that; although I suppose a fraud investigation uncovering undeclared income would result in this.


I'm aware of the Regulations, but my point is that they are not the final word on the matter as UC appeals are only just feeding through the First Tier Tribunal etc.


Caselaw trumps the Regs. That is what Judge-made law is: interpretation of the legislation in practice and whether it's what was intended and is reasonable and lawful. [That isn't intended to sound patronising it's for all readers, rather than IQ who is knowledgeable and an expert in WTCs]


I recall yourself and others on here being surprised by the effect of: 2011 UKUT 63 AAC (reported as (2011) AACR30), [because "that's not what the Regs say"] Thanks to this decision if a claimant has eg capital of £12k and a linked loan or overdraft of £7k, they are deemed to have £5k in capital and can claim means-tested benefits.


Yes, it's income (as £ received as opposed to expenditure), but it isn't reasonable to suggest all income is work-related earned income for the purposes of the next UC monthly reporting period.


If the OP puts £10 on a 100/1 winner at the Grand National Festival, that £1k is capital and not income to be declared to the DWP. Nor are packaged account reclaims or PPI refunds.




Specifically for the OP:


No specific 'tax rebate and the knock-on effect on UC' case has yet been ruled on by the Upper Tribunal.


However the DWP has lost 4 of the last 5 Appeals on the subjects of determining what is Capital and remunerative income.


I particularly liked Judge Stewart's remarks:


"It is wholly unsatisfactory that claimants should have to rely upon the discretion of a DWP Decision Maker and then cite 'good cause' grounds which are also discretionary."


"The Secretary of State is also wrong to assert the decision holds due to the Regulations, as if by legal magic. Compensation is not profit. It is to put the Appellant back into the position prior had they not been wronged."


Priti Patel MP [when DWP last year]: "Claimants who are wronged by financial institutions and receive redress should not be sanctioned for receiving such compensation so long as the same does not take them over the capital limits (sic)."


Jimok - that is the DWP's assertion. I and others think it is worth testing by appeal. Lots of the new UC regime is bizarre in practice ie a self-employed UC claimant has to report earnings 12 x pa to the DWP plus self-assessment to HMRC. Common sense would average any £ received over the year rather than a windfall resulting in no UC payment the following month.


Alternatively if you fail to report earnings the UC claim will close after one month. If you ever receive a larger windfall (ie x 10) it sounds as if you may be better claiming WTCs where capital would not affect your claim.


For those who are interested, a selection of Upper Tribunal decisions are published each month:


www.administrativeappeals.tribunals.gov.uk

NYM

IF...Universal Credit is calculated on net income (after tax/NI/pension contributions....) then it follows that if you receive a rebate of Income Tax, it should impact on UC payment.

Icequeen99

Mersey wrote: »

IQ - Glad you now agree. I merely replied to your incorrect assertion, "Once in [UC], you stay in."


I did not say a claimant would be "kicked off" UC. You did twice. I'm not sure what you mean by that; although I suppose a fraud investigation uncovering undeclared income would result in this.


I'm aware of the Regulations, but my point is that they are not the final word on the matter as UC appeals are only just feeding through the First Tier Tribunal etc.


Caselaw trumps the Regs. That is what Judge-made law is: interpretation of the legislation in practice and whether it's what was intended and is reasonable and lawful. [That isn't intended to sound patronising it's for all readers, rather than IQ who is knowledgeable and an expert in WTCs]


I recall yourself and others on here being surprised by the effect of: 2011 UKUT 63 AAC (reported as (2011) AACR30), [because "that's not what the Regs say"] Thanks to this decision if a claimant has eg capital of £12k and a linked loan or overdraft of £7k, they are deemed to have £5k in capital and can claim means-tested benefits.


Yes, it's income (as £ received as opposed to expenditure), but it isn't reasonable to suggest all income is work-related earned income for the purposes of the next UC monthly reporting period.


If the OP puts £10 on a 100/1 winner at the Grand National Festival, that £1k is capital and not income to be declared to the DWP. Nor are packaged account reclaims or PPI refunds.




Specifically for the OP:


No specific 'tax rebate and the knock-on effect on UC' case has yet been ruled on by the Upper Tribunal.


However the DWP has lost 4 of the last 5 Appeals on the subjects of determining what is Capital and remunerative income.


I particularly liked Judge Stewart's remarks:


"It is wholly unsatisfactory that claimants should have to rely upon the discretion of a DWP Decision Maker and then cite 'good cause' grounds which are also discretionary."


"The Secretary of State is also wrong to assert the decision holds due to the Regulations, as if by legal magic. Compensation is not profit. It is to put the Appellant back into the position prior had they not been wronged."


Priti Patel MP [when DWP last year]: "Claimants who are wronged by financial institutions and receive redress should not be sanctioned for receiving such compensation so long as the same does not take them over the capital limits (sic)."


Jimok - that is the DWP's assertion. I and others think it is worth testing by appeal. Lots of the new UC regime is bizarre in practice ie a self-employed UC claimant has to report earnings 12 x pa to the DWP plus self-assessment to HMRC. Common sense would average any £ received over the year rather than a windfall resulting in no UC payment the following month.


Alternatively if you fail to report earnings the UC claim will close after one month. If you ever receive a larger windfall (ie x 10) it sounds as if you may be better claiming WTCs where capital would not affect your claim.


For those who are interested, a selection of Upper Tribunal decisions are published each month:


www.administrativeappeals.tribunals.gov.uk

I rarely get frustrated on here, but really I feel like you are just not reading what I am writing and are just churning out the same things. I am an expert in tax credits, I also know the transition detail and criteria for UC - i can't say how on here but I do.

Firstly, I wasn't involved at all in discussion on here in the case you refer to.

I am fully aware of judge made law having been involved in several UT and higher cases myself.

On the issue of being kicked out of UC....you said:

If a UC claimant receives a large lump sum they then no longer satisfy the gateway conditions and have to withdraw their claim.


This happened to claimant in my area 3 months ago.


There are also 8 other changes of circumstances which have the same effect.

You used the word HAVE TO - in other words the person has no choice but to withdraw. I explained why the capital example was a bad one because you confused Gateway conditions and entitlement conditions - i linked to a perfectly good article that supported what I was saying.

You went on to say: Although I realise many DWP staff were wrongly trained to believe this. Indeed it may have been the intention; but, change of circumstances such as pregnancy, a £ windfall - and 7 others - negate the UC claim

Again the terminology you used 'negate' is wrong.

Nothing I have said on the UC part has been incorrect, the Rightsnet material is only about people who CHOOSE to leave UC if they no longer meet the gateway conditions. Which is completely different to saying they HAVE to leave - which is what you said. The only way they would have to leave UC is if they no longer met the entitlement conditions - which are not the same as the gateway conditions.

Pregnancy for example does not negate the UC claim. It just means that you can withdraw your claim and claim a legacy benefit because you no longer meet the gateway conditions. As an aside, there is nothing in the UC transitional regulations that say even if you meet the gateway conditions in a particular area that you must claim UC - and there is nothing preventing HMRC from allowing a tax credit claim (other legacy benefits have different rules) but certainly tax credits).

As for the OP's question - there is a very clear provision on this in the Regulations. Can the OP challenge the application of it - of course he can but the law is always the starting point.

IQ

Icequeen99

Jimok wrote: »

Still confused, please see below,

'Employed earnings
55.—(1) This regulation applies for the purposes of calculating earned income from employment
under a contract of service or in an office, including elective office (“employed earnings”).
(2) Employed earnings comprise any amounts that are general earnings, as defined in section
7(3) of ITEPA, but excluding—
(a) amounts that are treated as earnings under Chapters 2 to 11 of Part 3 of ITEPA (the
benefits code); and
(b) amounts that are exempt from income tax under Part 4 of ITEPA.
(3) In the calculation of employed earnings the following are to be disregarded—
(a) expenses that are allowed to be deducted under Chapter 2 of Part 5 of ITEPA; and
(b) expenses arising from participation as a service user (see regulation 53(2)).
(4) The following benefits are to be treated as employed earnings—
(a) statutory sick pay;
(b) statutory maternity pay;
(c) ordinary statutory paternity pay;
(d) additional statutory paternity pay; and
(e) statutory adoption pay.
(5) In calculating the amount of a person’s employed earnings in respect of an assessment
period, there are to be deducted from the amount of general earnings or benefits specified in
paragraphs (2) to (4)—
(a) any relievable pension contributions made by the person in that period;
(b) any amounts paid by the person in that period in respect of the employment by way of
income tax or primary Class 1 contributions under section 6(1) of the Contributions
and Benefits Act; and
(c) any sums withheld as donations to an approved scheme under Part 12 of ITEPA
(payroll giving) by a person required to make deductions or repayments of income tax
under the PAYE Regulations.'

These are from the 'Employed Earnings' section of the UC Regulations, i cannot find anything related to Tax Rebates being referred to as Earnings.

http://www.legislation.gov.uk/uksi/2013/376/pdfs/uksi_20130376_301115_en.pdf

You may be looking at the original version - the part about repayments of tax was added in November 2014.

IQ

Jimok

Thanks IQ for the link above, i could rant on about the unjustness and oppression of this Universal Credit "benefit" but to tell you the truth, i wouldn't expect anything less from a Tory Government to take all that is good in the world and give it to the rich.

satariano1981

I have been on sick for 2 and a half years and used to receive esa and I used to be still employed and receive a £879 insurance payment from my employer each month. sometime last year I missed my assessment and they kicked me off esa and currently I'm waiting for my tribunal. I then opened a new UC claim with my partner as we were one if the first areas to roll out uc but I soon found because of my £879 I was entitled to nothing. the non the 9th match 2017 I was made redundant and on the 26th April 2017 I received a large payment from my employer due to outstanding holiday entitlement for 2 years..I think it was 4750.00 something like that ..I shouldn't of been taxed because of the new tax year and personal allowance and this is why I put a tax rebate claim in as I was taxed over 2k and will not be returning to work in the near future .so Ibe had to wait all this time for my rebate the cheque is finally in my account and will b cleared on the 1st June ..my payment UC month is worked out between 5th April and 6th June and so reading this thread because I got my rebate on the 1st and not the 7th I will now miss out on a full months benefit plus housing benefit which I've had to pay for since April ..is this correct ? even though this money has already been taken into account the month before ? even though I'm not employed ? I no I've had a decent payout but Ibe just moved out of my mum's we had to private rent ..git a full flat to furnish ..bills to pay ..money owed to my mum to pay and this seems totally unfair to me .
cam anyway help ? should I close my uc claim down now I've moved to a none uc area and start again ? any help much appreciated