TAXABLE INCOME OR NOT

RachelK19

Good afternoon, 
I am looking for some advise, I recently received a letter from UNIVERSAL CREDIT advising me they had reviewed my benefits!! and i had been under paid which was a surprise, i was advised i was entitled to just under £1000 and that i would hear back in due course in regards to this money, i then received another letter from DWP debt management team advising the money owed would be used to clear any outstanding debt, which i had no issue with. a few weeks later i received another letter stating the money had cleared the debt, happy no more debt. i then noticed on my universal credit journal a list of payments totaling the amount taken from DWP, I queried this with universal credit as i have not been paid these amounts and why they are stating them as payments made to me. To which i was advised this was normal and is nothing they can change, i questioned the fact that this is now classed as TAXABLE INCOME even though i have not received this money from them within this TAX YEAR? so my questions are, 1, can universal credit list these payments as paid? 2, Can the DWP take the whole amount even though i am already in a payment plan with them? 3, how does this affect my TAX CALCULATION if i haven't received this money, can it be used as taxable income, and how will this affect my benefits and tax for next year as my income is wrong.

Thank you 

Regards 

Rachel  

calcotti

DWP debt management can indeed take arrears due to pay off debts owed. In terms of the treatment you have received the money albeit it has gone straight out to pay off debt. It is no different to receiving money from an employer and then using it to pay off debt.

However Universal Credit is not a taxable benefit so nothing paid or notionally paid through UC affects your tax liability.
https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits

Nor will this affect any future benefit entitlement as UC is worked out on a monthly basis. The only thing that might change is that when all your debt has been paid off there will be no debt deductions from your ongoing payments.