WTC/CTC and personal pension contribution help

zagfles

art200380 wrote: »

With regards to the income fall disregard, staying with the same numbers....so they calculate 2016/17 based on £17,500 but after the end of the 2016/17 tax year do they re-calculate and pay over the difference of what they should have paid? If not, would I be better stating that my 2016/17 earnings were going to be £12,500 knowing that they would really be £15,000 to account for the disregard?

The disregard applies to the difference between actual income last year and this. It doesn't apply to estimates - otherwise everyone would give a low estimate!

If you estimate £12,500, they will initially pay you based on £15,000, but then at the end of the year there'll be an overpayment which you'll have to pay back, as the disregard will be added to the £15k actual - you should have been paid based on £17,500.

xylophone

Pension contributions are deductible in UC too you know!

But savings will be taken into account, even ISA savings?

https://forums.moneysavingexpert.com/discussion/comment/71200143#Comment_71200143

Hi

I have a S&S ISA with Interactive Investor that I started approx. 4-4.5 years ago.

I currently have £82k in it, which is invested in 15 FTSE 100 blue chip stocks and I've elected to reinvest the dividends.

I check it every day but don't trade every day - I typically only trade maybe once or twice per month, if the share increases by more than a limit which I believe to be a good return.

bridgend_girl

If it's a pension payment direct to the provider it's likely you will have to pay it gross then reclaim the 20% tax from HMRC.

art200380

Xylophone - where have you read that ISA savings will be taken in to account in UC calculations? can we have the source please.

I believe that any other savings will, which is why I am contributing everything outside my ISA in to my pension over the next 2-3 years, hence the WTC/CTC query.

Darksparkle

art200380 wrote: »

Xylophone - where have you read that ISA savings will be taken in to account in UC calculations? can we have the source please.

I believe that any other savings will, which is why I am contributing everything outside my ISA in to my pension over the next 2-3 years, hence the WTC/CTC query.

http://www.entitledto.co.uk/help/Working-out-the-value-of-your-savings-and-other-capital-Universal-Credit

art200380

Thanks - I hadn't seen this as don't use that website.

According to the HMRC website it just states "savings" unless savings is expanded on somewhere else on the website.

I guess when UC time comes, a good use of the ISA would be to pay off the mortgage then? Our mortgage currently stands at £110k and I have approx. £80-84k in an ISA, but I usually pay the max in so within a couple of years I would have enough to clear the mortgage.

zagfles

art200380 wrote: »

Thanks - I hadn't seen this as don't use that website.

According to the HMRC website it just states "savings" unless savings is expanded on somewhere else on the website.

I guess when UC time comes, a good use of the ISA would be to pay off the mortgage then? Our mortgage currently stands at £110k and I have approx. £80-84k in an ISA, but I usually pay the max in so within a couple of years I would have enough to clear the mortgage.

ISA savings will count just like any other savings for UC. Pensions won't count, at least not while you're under the age at which you can access them.

Paying off the mortgage with ISA savings could be seen as deprivation of capital, but when I read the draft regulations a few years ago it did seem to say that paying a debt is not deprivation - see https://forums.moneysavingexpert.com/discussion/4264823 But that's quite old, things might have changed since then.

There will also be transitional protection, which last I heard would apply to people with savings currently getting tax credits. But it's not really clear exactly how transitional protection will work, and some changes of circumstances will end it.

xylophone

it did seem to say that paying a debt is not deprivation

I wonder if this is the case though? If you don't have to repay and you depart from the repayment schedule with the specific intention of retaining or increasing your entitlement to benefits?

Does this not currently cause problems to benefit claimants who eg inherit cash under a will and want to do likewise?

zagfles

xylophone wrote: »

I wonder if this is the case though? If you don't have to repay and you depart from the repayment schedule with the specific intention of retaining or increasing your entitlement to benefits?

Does this not currently cause problems to benefit claimants who eg inherit cash under a will and want to do likewise?

Yes it does now, hence my surprise in the thread linked above as the regs seemed to say any paying down of a debt is OK.

But as I said that was a few years ago and things could have changed...

FBaby

It would actually seem that this will be even more beneficial under UC. I guess another reason why landlords feel no guilt making profit of the back of those on lower income.