UC & NT tax code (Bankrupt)

calcotti

Clouds88 said: Uc were useless and wouldnt do anything. 

To be fair to DWP I don’t think they have any power to do anything because the law prescribes what is taken into account and what is excluded.

Clouds88 said: 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. 

That was my point earlier

calcotti said: 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?

JCS1

To explain, the tax for the tax year goes into your Bankruptcy Estate, and HMRC issue the person with a NT Tax Code - this means they pay no tax for the rest of the year.  But that tax not paid to HMRC, the person has to put aside and pay over to the Official Receiver instead.  So it is not an increase in earnings, even though RTI may think it is.

I suggest talking to your examiner at the Insolvency Service, they may be able to provide a letter to be sent to DWP.

JCS1

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 it is part Insolvency Legislation, the OP has no say and they do not see the increase at all.  Whilst they will pay no tax for the rest of the tax year, they have to pay the same amount of money over to the Official Receivers.  

Alice_Holt

JCS1 said:

I suggest talking to your examiner at the Insolvency Service (IS), they may be able to provide a letter to be sent to DWP.

    But as calcotti states UC are unlikely to have the power to do anything because the law prescribes what is taken into account and what is excluded.  Perhaps the OP should raise this issue with their MP (who determine the law around UC).

   As the OP's overall income will change, would this not be a change of circumstances to be reflected in the calculation of debt repayments by the IS?   

JCS1

This NT Tax Code has been happening for at least 10+ years. It's also covered by Insolvency Act as amended by Enterprise Act.   DWP should have someone there who can deal with it.
And nothing to do with Income Payment Agreement from surplus money, this is paying over the same amount of money they would usually pay in Tax that they no longer have to pay to HMRC.

calcotti

JCS1 said:

This NT Tax Code has been happening for at least 10+ years. It's also covered by Insolvency Act as amended by Enterprise Act.   DWP should have someone there who can deal with it.
And nothing to do with Income Payment Agreement from surplus money, this is paying over the same amount of money they would usually pay in Tax that they no longer have to pay to HMRC.

There is nothing in the UC regulations, as far as I can see, that would allow DWP to take payments to the Insolvency Service as an allowable deduction from gross earnings. DWP cannot do something not provided for in the regulations they apply.

Alice_Holt

JCS1 said:

 DWP should have someone there who can deal with it.

      I fear you may be overly optimistic.
     Unless this is specifically covered in the UC legislation (and I'm not aware that it is), there may be nothing UC can do.
     UC is calculated by reference to monthly net earnings (via HMRC RTI), levels of individual outgoings / debt repayments have no bearing whatsoever on the UC calculation.   

    The OP's overall income will change, so I would expect this change of circumstances to be eventually reflected in a revised calculation of debt repayments by the OP.    

 
     

JCS1

It is a conflict between the two legislations. But it has been happening for at least 12 years as that is when i left the Insolvency Service. it is nothing new, hence my suggestion to talk to their examiner to see what they have suggested in previous cases.

JCS1

Alice_Holt said:

JCS1 said:

 DWP should have someone there who can deal with it.

      I fear you may be overly optimistic.
     Unless this is specifically covered in the UC legislation (and I'm not aware that it is), there may be nothing UC can do.
     UC is calculated by reference to monthly net earnings (via HMRC RTI), levels of individual outgoings / debt repayments have no bearing whatsoever on the UC calculation.   

    The OP's overall income will change, so I would expect this change of circumstances to be eventually reflected in a revised calculation of debt repayments by the OP.    

 
     

An nt tax code is not a debt repayment. It is covered by insolvency legislation.

calcotti

JCS1 said:

Alice_Holt said:

JCS1 said:

 DWP should have someone there who can deal with it.

      I fear you may be overly optimistic.
     Unless this is specifically covered in the UC legislation (and I'm not aware that it is), there may be nothing UC can do.
     UC is calculated by reference to monthly net earnings (via HMRC RTI), levels of individual outgoings / debt repayments have no bearing whatsoever on the UC calculation.   

The OP's overall income will change, so I would expect this change of circumstances to be eventually reflected in a revised calculation of debt repayments by the OP.    

An nt tax code is not a debt repayment. It is covered by insolvency legislation.

And is not referenced in UC legislation. Earnings for UC are gross earnings less prescribed deductions (NI, income tax and pension contributions). Money being paid to Insolvency Service is not referenced and therefore cannot, as far as so can see, be taken into account.