UC & NT tax code (Bankrupt)

stepha4

Hi. I have asked on the bankruptcy thread but no one could help so wondered if this is a better place.

my husbands tax code has changed this month and now the tax he is not paying we have to pay to the insolvency service each month as part of the bankruptcy. I’m really frightened that it’ll look to UC like he’s making more money and our UC will be stopped? I’ve asked our case worker at the insolvency service but she wasn’t sure! 

Does anyone know? Thanks

Icequeen1

If his net income increases, then yes UC will decrease as a result. As far as I am aware there isn't anything in the UC rules that would allow you to make a deduction for this sort of payment to the insolvency service. 

poppy12345

Use benefits calculator to check how much UC you'll be entitled if net earnings have increased. https://www.entitledto.co.uk/benefits-calculator/Intro/Home?cid=e2c2430b-2f6d-447c-8953-7e2603424c9c

stepha4

His income will increase but anything over what he’s usually paid will go straight out to the insolvency service so we won’t see a penny of it. This ‘increase’ will mean we lose our UC (£600) even though we’re not actually receiving any extra money a month. 

Seems crazy!

Icequeen1

stepha4 said:

His income will increase but anything over what he’s usually paid will go straight out to the insolvency service so we won’t see a penny of it. This ‘increase’ will mean we lose our UC (£600) even though we’re not actually receiving any extra money a month. 

Seems crazy!

When you say it goes straight to the insolvency service - is it deducted from his wages? 

I think you will just need to explain to the insolvency service that your income will be £600 a month less and presumably they will adjust how much they expect from you

poppy12345

Why is it crazy? UC depends on earnings received during your assessment period. Bills, debts and anything else is not taken into consideration.

calcotti

stepha4 said:

His income will increase but anything over what he’s usually paid will go straight out to the insolvency service so we won’t see a penny of it. This ‘increase’ will mean we lose our UC (£600) even though we’re not actually receiving any extra money a month. 

Seems crazy!

For UC of £600 to disappear completely the extra income would need to be £950/month - was he actually paying that much tax previously and will he be paying that much to IS?

I don't know how bankruptcy is administered. If your income will drop is it possible to get IS to review the amount that is affordable?

stepha4

poppy12345 said:

Why is it crazy? UC depends on earnings received during your assessment period. Bills, debts and anything else is not taken into consideration.

Because we pay them nothing because of our income. The year of your bankruptcy your tax code changes till the financial year end and what you would pay in tax/no usually, you pay to the insolvency service instead. This is going to make it look to UC like my husband is earning more (even though we won’t get any more) and I expect they will reduce our UC. We went through a very long process with the insolvency service of working out budget etc which seems pointless to then potentially take away a a load of it. All seems backwards.  

stepha4

Icequeen1 said:

stepha4 said:

His income will increase but anything over what he’s usually paid will go straight out to the insolvency service so we won’t see a penny of it. This ‘increase’ will mean we lose our UC (£600) even though we’re not actually receiving any extra money a month. 

Seems crazy!

When you say it goes straight to the insolvency service - is it deducted from his wages? 

I think you will just need to explain to the insolvency service that your income will be £600 a month less and presumably they will adjust how much they expect from you

No it doesn’t get taken straight from wages. It comes to us and we have to send on to Insolvency service each month. Hoping they’ve dealt with this before and we won’t be absolutely screwed.

Spoonie_Turtle

stepha4 said:

Icequeen1 said:

stepha4 said:

His income will increase but anything over what he’s usually paid will go straight out to the insolvency service so we won’t see a penny of it. This ‘increase’ will mean we lose our UC (£600) even though we’re not actually receiving any extra money a month. 

Seems crazy!

When you say it goes straight to the insolvency service - is it deducted from his wages? 

I think you will just need to explain to the insolvency service that your income will be £600 a month less and presumably they will adjust how much they expect from you

No it doesn’t get taken straight from wages. It comes to us and we have to send on to Insolvency service each month. Hoping they’ve dealt with this before and we won’t be absolutely screwed.

I also don't know how any of this works but surely if your actual income drops overall you should be able to let them know and rebudget accordingly?

Clouds88

Hello I had this in my bankruptcy...

Firstly do you have an IPA? If so, maybe it will be now that you dont need one due to this.

If you dont- tell the OR that your benefits will be reduced because of this. My OR just allowed me to keep the extra money and not send it on as it would cause me financially hardship. Uc were useless and wouldnt do anything. Talking to the OR is your best bet. Also you will lose 0.63p per pound that he is suppose to pay for 'tax' so unless he is a very high earner (in which case you wouldnt be getting UC!) Then it wouldnt wipe out all of your UC. Nethertheless that isnt the point.

I hope that is helpful and good luck with the BR, I hope it is positive for you.  X