Universal Credit Query/thought

MarkRobinsonVCS

Am i right in thinking the following
For those claiming UC and in employment , that benefit is worked out in the assessment period for what is earned (not hours worked)
So if they were paid £100 during the assessment period that is what would taken into account when the award was calculated.
I believe this to be the case because people on UC can be affected where they are paid twice within the same award period or over time paid in arrears...
What would be the hypothetical situation where Someone started a job and instead of monthly or weekly pay was paid 4 times a year (so quarterly).
they would then declare their earnings correctly for that assessment period but for the other 8 months would receive nil income so could legitimate claim UC
Ok the above is just about the possibility of gaming the system (not committing any kind of fraud) but i am curious as to
1.if it would work
2.if it would be legal
If it both the above are true what would stop being done?

Spoonie_Turtle

MarkRobinsonVCS wrote: »

Am i right in thinking the following
For those claiming UC and in employment , that benefit is worked out in the assessment period for what is earned (not hours worked)
So if they were paid £100 during the assessment period that is what would taken into account when the award was calculated.
I believe this to be the case because people on UC can be affected where they are paid twice within the same award period or over time paid in arrears...
What would be the hypothetical situation where Someone started a job and instead of monthly or weekly pay was paid 4 times a year (so quarterly).
they would then declare their earnings correctly for that assessment period but for the other 8 months would receive nil income so could legitimate claim UC
Ok the above is just about the possibility of gaming the system (not committing any kind of fraud) but i am curious as to
1.if it would work
2.if it would be legal
If it both the above are true what would stop being done?

Yes it's worked out based on pay.

What would prevent your idea? Surplus earnings https://www.understandinguniversalcredit.gov.uk/new-to-universal-credit/universal-credit-and-work/

Also not sure how favourably HMRC would view an employer who only pays quarterly (may simply be unorthodox, or may be illegal - I genuinely don't know).

calcotti

There are complicated rules about surplus earnings. So if someone is paid a large amount in one month a calculation is done which can result in some of the earnings being carried forward to the next month. The process is then repeated and there may still be earnings to carry forward. At the moment there are some generous disregards included in the calculation but this is due to change in April.

From a practical point of view the claimant would have their UC claim closed every time there was a nil entitlement and would then have to make a rapid reclaim to keep the claim live.

MarkRobinsonVCS

thank you
So one could in theory assuming had enough savings (but within the required limits) have an employer who deffered payment for 6 months, claimed UC and reported nil wages (quite correctly) then when paid reported correct earnings and didnt bother with UC again........

calcotti

MarkRobinsonVCS wrote: »

thank you
So one could in theory assuming had enough savings (but within the required limits) have an employer who deffered payment for 6 months, claimed UC and reported nil wages (quite correctly) then when paid reported correct earnings and didnt bother with UC again........

I think if a claimant was telling UC that they are employed but are not being paid any money then DWP are going to ask questions. Not sure what they’d get you under (and I can’t be bothered to investigate!)

In the absence of income I think they would be expected to look for work.

tomtom256

If you declare work but receive nil income for 2 assessment periods, your claim would be suspended until evidence of this odd pay system was provided.

If it was deemed that this payment method was set up to take advantage of the benefit system they would refuse the claim.

The only way to do it would be to setup as a Ltd company and PAYE that way, however they treat all business income - expenses as profit for UC purposes which is then used as income for the award.

Not really sure how a PAYE company could defer a payment for 6 months or why they would want to, as it would potentially cause them issues with HMRC.

Sharon87

I don't get the surplus thing, even after looking at the Universal Credit website. Just say I have a claim, then I start a temporary job for say 5-6 weeks, the first month I get paid is 5 weeks pay at say £2600, does that mean the next month I wouldn't be able to get any Universal Credit payments?

I work contracts and currently on UC for the first time in years. If I take a job now I would have missed this month's payroll, so end of Feb I may earn over the £2500. If theoretically I need to claim UC after that job is finished, does that mean I won't get a payment the next month?

I miss the days of JSA and no benefit cap. So much simpler!

Spoonie_Turtle

Sharon87 wrote: »

I don't get the surplus thing, even after looking at the Universal Credit website. Just say I have a claim, then I start a temporary job for say 5-6 weeks, the first month I get paid is 5 weeks pay at say £2600, does that mean the next month I wouldn't be able to get any Universal Credit payments?

I work contracts and currently on UC for the first time in years. If I take a job now I would have missed this month's payroll, so end of Feb I may earn over the £2500. If theoretically I need to claim UC after that job is finished, does that mean I won't get a payment the next month?

I miss the days of JSA and no benefit cap. So much simpler!

No.

You'll have a maximum amount you can earn before receiving no UC, the surplus earnings rule is if you earn £2500 or more above that maximum amount.

Edit: so if you don't have a work allowance, if you do the calculation:
Max UC entitlement ÷ 0.63
That will be how much you can earn before the payment stops (because they reduce the payment by 63%, or 63p for every £1 you earn).


If you have a work allowance ... I no longer have the brainpower to work out what calculation you'd do for that. (Perhaps the difference between your work allowance and your max UC entitlement, ÷ 0.63, plus the work allowance? :huh: really not sure.)

Either way,
Surplus earnings would only come into play at £2500 above that max earnings amount.

Sharon87

Spoonie_Turtle wrote: »

No.

You'll have a maximum amount you can earn before receiving no UC, the surplus earnings rule is if you earn £2500 or more above that maximum amount.

ah I see, so say I get £800/month in UC and earn over £3300 in a month, then that's the surplus? Makes sense now! I won't need to worry then, I don't earn that much in a month when I do work!

Spoonie_Turtle

Sharon87 wrote: »

ah I see, so say I get £800/month in UC and earn over £3300 in a month, then that's the surplus? Makes sense now! I won't need to worry then, I don't earn that much in a month when I do work!

If you get £800 a month, you can earn 1269.84 per month before nil entitlement (I rhink, if I'm understanding it right). So that would take you up to £3769.84 before the rule applies

For now, anyway, until it changes as calcotti said!

calcotti

Sharon87 wrote: »

ah I see, so say I get £800/month in UC and earn over £3300 in a month, then that's the surplus? Makes sense now! I won't need to worry then, I don't earn that much in a month when I do work!

No. My understanding is as follows.
If your maximum UC amount is £800 and you have no Work Allowance then the amount you can earn before UC becomes nil is £1,269.84/month (£800/63%). If you actually earn £3,300 in the month the surplus earnings are therefore £2,030.16. Currently surplus earnings below £2,500 are ignored so these surplus earnings would have no impact on UC entitlement the following month. From April the disregard is scheduled to drop to £300. Once this happens, in this scenario £1,730.16 would be taken into account as earnings in the second month. This would result in a nil UC payment and there would still be £460.32 of surplus earnings of which £160.32 would be taken as earnings the following month.

I note that you say you work on contract. Note that if you are self employed the rules for how UC is calculated are different and you may be subject to the Minimum Income Floor.

Sharon87 wrote: »

I miss the days of JSA and no benefit cap. So much simpler!

The benefit cap is something else altogether.