Universal credit and tax credits using redundancy payment to calculate final award

gazza1988

Right, I was made redundant on the 14th October 2020. I have a p45 dated 19th October 2020.

 I was paid in lieu of notice and for 11.5 days, I was on furlough for most of the tax year, I returned for a brief period but was furloughed again and then made redundant on the 14th. The final payment occurred on normal pay day (25th, but because it was a Sunday it was the 23rd).
My p45, dated the 19th October included the payment yet to be made to me that arrived on the 23rd bringing my total to date before tax on 12,000 

Tax credits are claiming I earned £12,000 between 6th April and 22nd October and on their calculation we have been overpaid by over £600 and are demanding it back.

Universal credit have calculated that we are entitled to £1,650 a month but because I earned £2,700 which was paid on the 23rd October my universal credit will be deducted by £1,500 because of it.

Who do I contact? Tax credits or universal credit? My next lot of income was today (25th Nov) because I started work in a new job  on the 16th November. But its not alot and we've got to get by with £400 to pay for £600 of bills/rent etc and food for 6 people on top of that until the 24th December when I get paid again or the 29th December when universal credit gets paid again. Its just not possible.

Tax credits overpayment appears to start coming out of universal credit payments but one of them must be in the wrong or have I applied at completely the wrong time? It's nearly £2,100 I'm now going to be "down because I recieved a redundancy payment of £2,700. That does not seem right to me. 

Icequeen1

They are two separate issues. You will need to contact HMRC for tax credits and DWP for the UC. 
Redundancy pay should not be taken into account for tax credits unless it is taxable. Were you taxed on it? 

Spoonie_Turtle

What exactly made up the £2700? If it's wages / PILON then it's treated as earnings and the UC deduction is correct.
https://www.litrg.org.uk/latest-news/news/191120-have-you-just-left-work-and-need-claim-universal-credit#:~:text=Your final payment from your,your last wage/salary payment.

calcotti

UC works on a cash accounting basis. Any earnings received within the UC assessment period are taken into account - it doesn't matter if they were earned in an earlier period. The only amount that should be disregarded is any redundancy pay which should instead be treated as capital.

(It really would help if UC included a warning that if you are claiming UC because you have recently lost your job it may be better to defer claiming UC until final wages from employment have been received.)

gazza1988 said: My p45, dated the 19th October included the payment yet to be made to me that arrived on the 23rd bringing my total to date before tax on 12,000 

Tax credits are claiming I earned £12,000 between 6th April and 22nd October and on their calculation we have been overpaid by over £600 and are demanding it back.

If your P45 says you earned £1200 then Tax Credits are correct to use that figure. Their calculation is based on when you earned money, not when you received it.

gazza1988

So there is nothing I can do?

So because my employer reported my earnings before paying them to me it means tax credits can claim an overpayment despite me not having been paid all the earnings reported in my p45. Also, universal credit can deduct 90% or so of my universal credit because my employer actually paid me the earnings in my p45 after this date?

That seems incredibly unfair. 

calcotti

gazza1988 said:

So there is nothing I can do?

So because my employer reported my earnings before paying them to me it means tax credits can claim an overpayment despite me not having been paid all the earnings reported in my p45. Also, universal credit can deduct 90% or so of my universal credit because my employer actually paid me the earnings in my p45 after this date?

That seems incredibly unfair. 

You may not have been paid them but presumably you had already earned them - you didn't earn it on the 23rd. Wages are almost always paid a little while after the last day of work when employment ends.

As I said in my earlier post you have fallen victim to the fact that UC doesn't give you any warning that wages paid after you claim will be taken into account. The opposite is true though. When you find new work you may get a full UC payment even though you have started work because you may not be paid your wages until after your assessment period ends

Spoonie_Turtle

gazza1988 said:

So there is nothing I can do?

So because my employer reported my earnings before paying them to me it means tax credits can claim an overpayment despite me not having been paid all the earnings reported in my p45. Also, universal credit can deduct 90% or so of my universal credit because my employer actually paid me the earnings in my p45 after this date?

That seems incredibly unfair. 

UC deducts 63% of earnings, unless you have the work allowance (if you have children or limited capability for work). How much that eats up of your maximum UC entitlement depends entirely on your wages and your UC. It's a means-tested benefit and if you've received money during your assessment period, that is counted as part of your means to live. That's why it's based on when money is received.

But its not alot and we've got to get by with £400 to pay for £600 of bills/rent etc and food for 6 people on top of that until the 24th December when I get paid again or the 29th December when universal credit gets paid again.

What happened to the £2700 you received in October? Did you get a UC payment in October?
I'm trying to work out your AP/payment dates but failing.

gazza1988

Spoonie_Turtle said:

gazza1988 said:

So there is nothing I can do?

So because my employer reported my earnings before paying them to me it means tax credits can claim an overpayment despite me not having been paid all the earnings reported in my p45. Also, universal credit can deduct 90% or so of my universal credit because my employer actually paid me the earnings in my p45 after this date?

That seems incredibly unfair. 

UC deducts 63% of earnings, unless you have the work allowance (if you have children or limited capability for work). How much that eats up of your maximum UC entitlement depends entirely on your wages and your UC. It's a means-tested benefit and if you've received money during your assessment period, that is counted as part of your means to live. That's why it's based on when money is received.

But its not alot and we've got to get by with £400 to pay for £600 of bills/rent etc and food for 6 people on top of that until the 24th December when I get paid again or the 29th December when universal credit gets paid again.

What happened to the £2700 you received in October? Did you get a UC payment in October?
I'm trying to work out your AP/payment dates but failing.

I had to use most of the £2700 to pay off bills/rent arrears after being on furlough for most of the tax year so far. Wasn't expecting issues tbh. My partner made a claim on the 23/10/2020, the same day I recieved the money. Our payment date for UC is 5 weeks and 2 days later that that date on the 29th. 

Im not sure what the AP bit means. 

poppy12345

gazza1988 said:

Spoonie_Turtle said:

gazza1988 said:

So there is nothing I can do?

So because my employer reported my earnings before paying them to me it means tax credits can claim an overpayment despite me not having been paid all the earnings reported in my p45. Also, universal credit can deduct 90% or so of my universal credit because my employer actually paid me the earnings in my p45 after this date?

That seems incredibly unfair. 

UC deducts 63% of earnings, unless you have the work allowance (if you have children or limited capability for work). How much that eats up of your maximum UC entitlement depends entirely on your wages and your UC. It's a means-tested benefit and if you've received money during your assessment period, that is counted as part of your means to live. That's why it's based on when money is received.

But its not alot and we've got to get by with £400 to pay for £600 of bills/rent etc and food for 6 people on top of that until the 24th December when I get paid again or the 29th December when universal credit gets paid again.

What happened to the £2700 you received in October? Did you get a UC payment in October?
I'm trying to work out your AP/payment dates but failing.

Im not sure what the AP bit means. 

AP = Assessment period, which starts on the first day of your claim and lasts for 1 month. . As you started your claim for UC on the same day you received your final earnings then sadly it's likely to reduce your first UC payment to zero. https://www.gov.uk/government/publications/universal-credit-different-earning-patterns-and-your-payments/universal-credit-different-earning-patterns-and-your-payments-payment-cycles

calcotti

Had you claimed one day later the earnings would have been ignored - as I noted earlier it is really wrong, in my opinion, that there is no warning about this.

gazza1988

Yeah I've noticed the error in when the claim was put in.. The other issue though is how can tax credits use income recieved outside the claim period? My final wage slip has the date 25/10/2020 on it (this is incorrect because it's a Sunday, we are always paid the Friday before when this happens, which is standard practice) so this income is outside the tax credit award period. 

Surely they can't have it both ways? It basically means that 1 benefit stops (tax credits) and another starts the following day (universal credit) but both benefits can "punish" me for the same singular payment to me made on 1 day.

Or can they?