Universal Credit account closed

11krage

Yes. 191 is the one I was referring to. Most of it appears to just be about taking lump sums out of a pension. Only the very last sentence seems to refer exclusively to UC which is 'Treat this payment as capital.'


I remember the guidance I can access next week as being much clearer about it not being considered as unearned income when it's a lump sum, but as I've said I haven't dealt with a case where I've needed to look that up for a while, so would need to double check next week if you want confirmation.

calcotti

11krage wrote: »

I remember the guidance I can access next week as being much clearer about it not being considered as unearned income when it's a lump sum, but as I've said I haven't dealt with a case where I've needed to look that up for a while, so would need to double check next week if you want confirmation.

That would be very helpful. To me the paragraph we have identified appears to refer only to annuities and personal pensions.

It also occurs to me now that in this case OP has taken a sum as a commutation payment in lieu of a future pension and I am not sure whether such a sum still falls to be treated as a pension payment.!!!!

xylophone

I did contact the tax office and according to them I should not have paid tax on it either.

In terms of tax - the OP has "trivially commuted" a small dependant's (widower's) pension.

https://www.pensionsadvisoryservice.org.uk/content/spotlights-files/uploads/Death_benefits_commutation_SPOT014_V1.2.pdf

How is a trivial commutation lump sum death benefit taxed?

The whole lump sum is taxable as if it was part of your income. The pension scheme administrator should deduct the tax from the lump sum payment before it is paid to you.

However, it is possible that the OP has been overtaxed if his other gross taxable income plus the TC is less than his personal allowance(s).


Re UC

https://www.turn2us.org.uk/Benefit-guides/Universal-Credit-income-and-capital/Unearned-income

It would seem that it should be regarded as "unearned income"?

11krage

No problem. The part of the guidance I remember was regarding pensions as a whole, so should apply. Unless of course there's something different due to being a spouse's pension. One off lump sums are usually only considered for capital reasons, so I'd think the result would be the same anyway. I'll write myself a note to check and send you a message on Monday if I remember, or Tues if I don't.


For OP after he's done his reclaim. The first thing he should do is find out whether the wife's employer made an error telling HMRC it was earnings and chase that. And of course, please inform UC if your capital is now over 6k so you don't get into trouble.

FlyingOnMyOwn

Thanks to everyone for the informative information, but I'm still confused over the whole situation. UC is certainly a minefield, with nothing being very clear to the average Joe Public.
I am going to contact UC and ask for a verbal explanation as to why my account was closed, and perhaps contact the pension payer to see if they have done things correctly. If my options seem favourable I will submit another claim for UC.
Thanks again, I will let you know how I get on.

FlyingOnMyOwn

Hi again, just an update regarding my original post. An agent for UC raised a dispute regarding my late wife's pension payment, and it went in my favour.
I received my August payment, and the lump sum I took was classified as Capital and not earnings.
It would seem that it is the way HMRC (which is all done automatically by computer systems) send information to UC that sums of money a person receives is not differentiated between earnings and capital, it would need to be picked up, as in my case and looked at closer.
I hope this information is helpful, and perhaps someone else is experiencing the same situation at the moment, or for future reference to forum members who might come up against similar circumstances.
I would like to thank all forum members who advised me with this situation, much appreciated.:j

calcotti

FlyingOnMyOwn wrote: »

Hi again, just an update regarding my original post. An agent for UC raised a dispute regarding my late wife's pension payment, and it went in my favour.
I received my August payment, and the lump sum I took was classified as Capital and not earnings.
It would seem that it is the way HMRC (which is all done automatically by computer systems) send information to UC that sums of money a person receives is not differentiated between earnings and capital, it would need to be picked up, as in my case and looked at closer.
I hope this information is helpful, and perhaps someone else is experiencing the same situation at the moment, or for future reference to forum members who might come up against similar circumstances.
I would like to thank all forum members who advised me with this situation, much appreciated.

Thanks for posting back. It's very helpful to know how matters get resolved.

UC is conceived as a largely automated process which was supposed to therefore have large cost savings in respect of administration. In practice there are huge numbers of events which require manual intervention (sometimes, I understand, repeated every month) so the cost savings don't exist and claimants are mucked about in the meantime. Human lives are much too complicated and variable to be encompassed by a piece of software.

Good luck going forward.

AG47

An old lady friend of ours says that her late husbands private pension is a terrible hindrance, she would be better off without it.

She can’t get any help with rent, dentists etc

sportsarb

AG47 wrote: »

An old lady friend of ours says that her late husbands private pension is a terrible hindrance, she would be better off without it.

She can’t get any help with rent, dentists etc

She surely can use the money from the inherited pension to do that stuff?

Given inherited pensions are disregarded for ESA(C) it must be a decent size of pension if it is knocking her out of income related entitlement altogether.

xylophone

disregarded for ESA(C)

I doubt whether it's a question of ESA.

The OP mentions an "old lady friend" - if one takes this to mean a post state pension age female friend of the family, I should think that her state pension (which may be boosted by her entitlement to additional pension from late spouse's SP), any occupational pension of her own plus the widow's pension from her husband's provider, are enough to make her ineligible for any means tested benefits.