Universal credit

atlantis187

Sorry to bring more bad news to you OP but you state that your husband is a taxi driver most of my relatives are taxi drivers and unfortunately they have received nothing from the government since the lockdown and not likely to in future either due to their there yearly 'declared' income being so low. I'm not saying this will happen with your husband but something to be weary of if you are depending on that money in June.

calcotti

Have a look at this thread https://forums.moneysavingexpert.com/discussion/6136633/universal-credit-quandary/p1
Two points arise:
It is arguable that the property has no value at the moment because it cannot be sold at the current time.
Rental income should not be treated as income, it should be treated as capital.

Galloglass

Rental income should not be treated as income, it should be treated as capital.

The surplus element of BTL income is treated as income by HMRC for Income tax purposes. The surplus capital after the BTL property is sold is capital [gain] as decided by HMRC. Can't understand why the whole income is treated differently by UC, so it may be the capital element that has resulted in zero award. 

Coming back to the first point, you might be able to argue that the whole rental amount should not be treated as income - only the element that is "surplus". As regards the capital value, it will be up to you to show valuations that the equity in the BTL is less than £16000 on the open market. A big couple of hoops for you to jump through but if you can, you can ask for a Mandatory Reconsideration of your UC award within 28 days. Your UC award will have the details.

lloyd7

Thank you all for your advice, the 80% is definitely not going to make me rich but I will be able to pay all my bills. I just assumed that they would take my actual income from the flat what I receive after mortgage and service charges. The surplus money I still have to pay tax on. I have asked for a mandatory reconsideration but the guy on the phone yesterday had never done one and I have to say I didn’t understand half of what he was telling me. The decision won’t be until end of May so it is probably all point less. Having read through the forum I can see many others have been caught like me thinking we have to apply for UC when we should have stayed on tax credit and definitely not realised we can’t go back. 

[Deleted User]

OP, surely the easiest thing to do is stop paying the mortgage on your BTL flat.   Aren't lenders granting 3-month mortgage holidays without question?    So then you have a lot more money to live on.   Yes, you will have to repay these 3 payments eventually, but spread over the next up to 25 years it will make very little difference to your monthly payments.

lloyd7

One other question in regards to UC. We were receiving a small amount from tax credit, which I now can’t go back to!, once we are allowed to go back to work we won’t be earning anywhere near what we did before the lockdown for a long time especially the taxi. Tax credit topped up our income but if I understand correctly we won’t ever qualify for any UC because of the buy to let property? UC doesn’t have the same system as tax credit? 

Trying to think ahead but I know my flat is hard to sell, even more so now with the pandemic. 

calcotti

lloyd7 said:

One other question in regards to UC. We were receiving a small amount from tax credit, which I now can’t go back to!, once we are allowed to go back to work we won’t be earning anywhere near what we did before the lockdown for a long time especially the taxi. Tax credit topped up our income but if I understand correctly we won’t ever qualify for any UC because of the buy to let property? UC doesn’t have the same system as tax credit? 

Trying to think ahead but I know my flat is hard to sell, even more so now with the pandemic. 

A key difference between UC and Tax Credits is that UC has a capital limit of £16,000 above which there is no entitlement to claim UC, Tax Credits have no capital limit. There are therefore many people who can claim Tax Credits who are not eligible for UC.

lloyd7

So any equity in the property is classed as capital under UC? And if it’s above £16000 you won’t qualify for UC? Is my understanding correct? 

pmlindyloo

From the Decision Makers Guide

Premises person is trying to sell
H2115 Where a person is trying to dispose of premises, they can be disregarded from the calculation of that person’s capital where they are taking reasonable steps to dispose of the premises and those steps have been commenced within the last 6 months1.
1 UC Regs, Sch 10, para 6
Is it reasonable to disregard for longer
H2116  The DM may decide to disregard the premises for a longer period where for example the person has done all they can to sell the premises and the asking price is no more than the premises are worth. 
In theory you could inform the DWP that you intend to sell the property (having realised that your buy to let is counted as capital) and therefore it should not be counted as capital.
You may have to show evidence of putting it on the market or giving your tenants notice your intention to sell/eviction notice (but be aware of current restrictions in respect of evicting tenants).  Not sure what evidence the DWP would need but you could go down this route and see what their response would be.

calcotti

lloyd7 said:

So any equity in the property is classed as capital under UC? And if it’s above £16000 you won’t qualify for UC? Is my understanding correct? 

Essentially, yes. There is an allowance for sales costs (I can't remember the % allowed off the top of my head). As Jeremy has highlighted it can be disregarded if it is for sale.