HMRC Tax Rebate on Universal Credit

bigbassman91

just throwing in my opinion as no one can help so wasnt asking for it, but have the answer today from the dwp that tax rebates are classed as earnings if you paid this tax after nov2014 as in post #19 ,

poppy12345

bigbassman91 wrote: »

just throwing in my opinion as no one can help so wasnt asking for it, but have the answer today from the dwp that tax rebates are classed as earnings if you paid this tax after nov2014 as in post #19 ,

For UC purposes, yes they are. If your payment was less this month for UC because of the tax rebate then payment will return to normal next month.

PRViiS

I claimed a rebate today and it’s effected my universal credit. I claimed back £1052 and my monthly UC is now £33 I have no idea if I need to start a new claim or what

calcotti

You cannot start a new claim, your existing claim is still live. If the tax rebate relates to a tax year in which you did some paid work then it is taken into account as earned income and 63% is deducted from your monthly entitlement. If it’s a one off payment then your UC amount will go back to the usual amount next month. If it were a monthly rebate through PAYE then it would be taken into account each month for as long as it continues.

This is a change from legacy benefits which treated tax refunds as capital which in most cases had no impact on a claimants benefit entitlement.

I believe that a tax refund for a tax year in which a claimant was not working is still treated as capital but I can’t find a definitive statement on this.

konark

calcotti wrote: »

Y
I believe that a tax refund for a tax year in which a claimant was not working is still treated as capital but I can’t find a definitive statement on this.

Go on then, how do you pay income tax if you're not working?


I think the moral of this story is don't bother to claim a tax rebate whilst you're on , or shortly likely to be on, UC, wait until you're off UC..

calcotti

konark wrote: »

Go on then, how do you pay income tax if you're not working?


I think the moral of this story is don't bother to claim a tax rebate whilst you're on , or shortly likely to be on, UC, wait until you're off UC..

Income tax is due on savings and investment income so it is possible to get a tax rebate for a year in which someone was not working. Not many people on means tested benefits are likely to be in this position unless they have experienced a dramatic change in circumstances but obviously the rules need to take account of the possibility.

It is not always possible to time a tax rebate. For people getting sick pay a tax refund is likely to be included each month through PAYE and in most cases HMRC are supposed to automatically issue tax refunds after the end of the tax year.

mineral68

If HMRC send you a cheque for an income tax refund whilst you are claiming Universal Credit then perhaps you could just close down your UC claim, then the following day put your cheque into the bank, then make a fresh claim for UC several days later. The day that your cheque was put into your account would be when you were not on UC (effectively earnings paid on that day) and the DWP should then not be able to reduce your fresh claim UC by 63%.

calcotti

If you claim UC within 6 months of closing a claim your assessment periods start on the same date of the month as the previous claim so you would have to wait a whole month to avoid the income being counted - I cannot see there is anything to be gained by doing this.

mineral68

I don't understand this Calcotti. How can a new assessment period (new claim) start on the same day of the same month that your old claim ended? How could an assessment period include a period when you are not on UC? That would mean that if you closed your UC claim to do say a week's work and then re-claimed UC a week later then that week's work would be included in any new claim (assessment period)? This means that once you've claimed UC once you are forever trapped in a bureaucratic money-taking nightmare with no way of ever getting out of it.

calcotti

mineral68 wrote: »

I don't understand this Calcotti. How can a new assessment period (new claim) start on the same day of the same month that your old claim ended? How could an assessment period include a period when you are not on UC? That would mean that if you closed your UC claim to do say a week's work and then re-claimed UC a week later then that week's work would be included in any new claim (assessment period)? This means that once you've claimed UC once you are forever trapped in a bureaucratic money-taking nightmare with no way of ever getting out of it.

That’s the way I read it. Within 6 months of a UC claim ending you make a rapid reclaim through your journal and keep the same payment dates. I infer that they will look at claimant circumstances for the full assessment period linked to the first payment date.

Once you’ve been off UC for 6 months the link with a previous claim is broken.

I assume it’s designed like that to stop people doing exactly what you suggest - coming off Benefit for a week to try and avoid having earnings counted.