UC & NT tax code (Bankrupt)

stepha4

JCS1 said:

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.

Thankyou JCS1. I will speak to the OR tomorrow to discuss, we have no surplus income (as deemed by the OR)  so no IPA in place and so where they think this money will be found I have no idea! 

huckster

calcotti said:

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.

Have dealt with no tax issue  related to UC and Calcotti is correct in their observations.   Nothing to add to what they have said.
Cannot see any UC Decision Maker deciding to reduce the earnings to take into consideration the tax amount being paid to the Insolvency Service.
The claimant should be prepared to go through UC Mandatory Reconsideration and take it to Courts Tribunal.

calcotti

huckster said:

Cannot see any UC Decision Maker deciding to reduce the earnings to take into consideration the tax amount being paid to the Insolvency Service.
The claimant should be prepared to go through UC Mandatory Reconsideration and take it to Courts Tribunal.

Thanks for confirming but I can’t see what MR and appeal can achieve given that there is no provision in UC Regulations to enable these payments to be taken into account.

huckster

@calcotti perhaps there is other social security legislation that can assist.  And the OP needs to seek further help with any appeal process.  There are organisations that have better knowledge of all of the legislation and legal precedents. 

calcotti

I think the best suggestion is to back to the IS. Presumably the idea begins the IS taking the money that would otherwise be taken in tax is that this makes no difference to the bankrupt’s disposable income. In this case however that is not true because the claimant does lose 63% of the tax that would otherwise be taken anyway.