Tax Credits v Universal Credit

Taxidriver108

Hi, I am 63, married and we are currently claiming Working Tax credit.  My wife is disabled (Severely sight impaired), she receives PIP at the higher rate for both care and mobility. She also receives ESA with the support component.

I work self employed approx 10hrs a week (profit £100) and also claim carers allowance. 

We have savings of £4000, and live in a housing association property.  We do not claim for rent or council tax relief.  During Covid I have not been working, I have claimed (and are grateful for) the SEISS payments. Unfortunately these will only just cover my fixed annual business expenses.

I understand that it may be beneficial to claim for universal credit, which includes an allowance for rent and council tax.

I have tried a Universal Credit calculator but because of Covid and projected benefits are shown for a 1 month period it is difficult to access.

Tax credits asks for an estimate which I update if nessesary

My April expenditure is normally 50% of annual expenditure and remaining expenditure spread equally throughout the year. My Monthly Income is constant. I do not show profit until month 5.

I wonder if someone can explain how this works with universal credit please. Any help appreciated. 

calcotti

Taxidriver108 said: I understand that it may be beneficial to claim for universal credit, which includes an allowance for rent and council tax.

You have probably been missing out by not claiming housing Benefit in the past but you are correct that the only way you can now get help with your rent would be to claim UC. Universal Credit can include help with rent. It does not include help with Council Tax. Help with Council is through Council tax Reduction which is claimed from your local authority. You may be eligible for that without claiming UC. Entitlement can be different depending on whether you are claiming 'legacy benefits' or UC because many councils calculate entitlement differently for people claiming UC.

Savings are ignored for Tax Credits but you cannot claim UC if over £16,000 and anything over £6000 will reduce UC payable. In your case the £4000 will make no difference.

It is difficult to compare Tax Credits and UC because they are worked out so differently. Tax Credits are calculated annually and based on last year's income unless the change in income between the current year and previous year is more than £2500. For UC a self employed claimant has to report their income and expenditure every month on a cash basis and the difference is taken as earnings for the month (or a loss). Self employed people are also normally subject to a Minimum Income Floor which means that they are treated as earning at least a certain amount every month even if they earn less. However the MIF is currently suspended and because you are a carer would not apply to you anyway.

If you did look at claiming UC it might be beneficial to try and spread your expenditure out if this is possible.

Is your wife's ESA a contribution based award? If so it will continue if UC is claimed. If it is solely income based the ESA would end when UC is claimed.

(I don't understand how you are getting Working Tax Credits if you only work 10 hours/week and your wife doesn't work.)

poppy12345

UC is based on earnings received during your assessment period (AP). AP last for 1 month and start on the first day of your claim, so if you started a claim today your AP will be 21st - 20th of the month and each month after that. As you're self employed you will need to report your earnings and expenses each month onto your journal.

I would assume that your wife's ESA is contributions based, which isn't part of UC and she would continue to receive this. As she's in the Support Group this would be honoured in UC and she will be placed into the LCWRA group, although this doesn't always happen straight away.

You'll be entitled to couples standard element of £594.04 + LCWRA element £341.92 + carers element £162.92  for yourself because your wife claims daily living PIP (providing no one else claims carers allowance or carers element of UC for looking after her. Plus the housing element.

You will also have a work allowance of £292, which means you'll be able to earn that amount of money each month before you start to see the 63% deductions for your earnings received each month.

Your wife's ESA  of £492.05 will be deducted in full from any UC entitlement. Council tax reduction isn't part of UC and can be claimed from your local council, if you're eligible.

A benefit calculator will tell you whether you're entitled to anything, providing you put the correct figures into it.

Taxidriver108

Thanks for both our replies... My wifes ESA is contribution based. 
My Local council informs me that claiming council tax benefit requires me to switch to Universal credit.
Before my wife's sight loss I worked full time (40+hrs) and also received the over 30hrs additional payment. When she could no longer work I reduces my hours to 16hrs to continue claiming Tax credits and to care for her, but also to keep my sanity! Because as you point out Tax credits is not subject to a Minimum Income Floor. My self employment earns me approx £6.50 per hour, so working 16 hrs enable me to claim Tax credits and also earn below the threshold limit of earning for Carers allowance.
I mistakenly thoughts there was a requirement of 16hrs minimum for Universal credit, because of the Minimum Income floor, they would have accessed me as earning £130+. Since Covid I have not worked, and now decided if it is in our best interests financially reduce to 10hrs work and claim Universal Credit. Can you also clarify weather my wifes contribution based ESA will continue or be lost. We have been trying to get advice since my wifes loss of sight, but unfortunately we have been unable to find anyone. Our local CA is 15 miles away and you can never get an appointment.  It is simply a minefield of rules and regulations.
Thankyou

poppy12345

As previously advised, council tax reduction is not part of UC so the advice you were given that if you claimed this, you would need to claim UC, is not correct.

Your wife's ESA contributions based will continue because it's not part of UC. Although they will deduct the ESA amount £1 for £1 from any UC entitlement, as i previously advised above.

Taxidriver108

poppy12345 said:

As previously advised, council tax reduction is not part of UC so the advice you were given that if you claimed this, you would need to claim UC, is not correct.

Your wife's ESA contributions based will continue because it's not part of UC. Although they will deduct the ESA amount £1 for £1 from any UC entitlement, as i previously advised above.

Ok thankyou, Calcotti's comments were slightly different with regards to ESA.

poppy12345

Taxidriver108 said:

poppy12345 said:

As previously advised, council tax reduction is not part of UC so the advice you were given that if you claimed this, you would need to claim UC, is not correct.

Your wife's ESA contributions based will continue because it's not part of UC. Although they will deduct the ESA amount £1 for £1 from any UC entitlement, as i previously advised above.

Ok thankyou, Calcotti's comments were slightly different with regards to ESA.

I went into more detail because i assumed that because you are working then your wife's ESA should be Contributions based, rather than Income Related. Contributions based ESA is £113.55 per week and payments will continue as normal if you claim UC but the full amount will be deducted from any UC entitlement.

calcotti said:

Is your wife's ESA a contribution based award? If so it will continue if UC is claimed. If it is solely income based the ESA would end when UC is claimed.

calcotti

Taxidriver108 said:

poppy12345 said:

As previously advised, council tax reduction is not part of UC so the advice you were given that if you claimed this, you would need to claim UC, is not correct.

Your wife's ESA contributions based will continue because it's not part of UC. Although they will deduct the ESA amount £1 for £1 from any UC entitlement, as i previously advised above.

Ok thankyou, Calcotti's comments were slightly different with regards to ESA.

I think you must have misread what I wrote, My advice was that if the ESA was contribution based it would continue, if it was income based it would stop - same advice as poppy.

Just to add the Carer's Allowance you receive will also be deducted from the UC payable.

As poppy has said Council Tax Reduction is separate from UC - I am somewhat appalled that the council advised you that you need to claim UC in order to claim CTR. (As an aside the reason CTR is not part of UC, as I understand it, is that it is too complicated to include since the government allowed local authorities to vary the rules. If we still had a standardised CTR scheme nationwide I think it would have been lumped into UC.)

Taxidriver108

Thank you both for your help.

tazwhoever

Calcotti - I know recently, you told me my backdated PIP and now monthly PIP would be above £6k. Would this mean I can't claim CTR or would 52 weeks ignored apply? 

Thanks

calcotti

Every council can vary the rules for CTR but there are certain mandatory rules.The 52 week disregard for benefit arrears is one of these rules.
The Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012 (legislation.gov.uk)

Capital to be disregarded
18.  Any amount specified in paragraph 19, 20, 21 or 25 of this Schedule for a period of one year beginning with the date of receipt.
..
21.—(1) Subject to paragraph 22 any amount paid—
(a) by way of arrears of benefit;..

If you apply, include a note about the arrears payment (including how much it was and when it was received). In fact it may be better to not include it in your total. So you could say "I have £xxx of capital. In my statement of capital I have not included a payment of £yyy which I received on dd/mm/yy which was an arrears payment for PIP, I understand this payment can be ignored for 52 weeks from the date I received it." The current PIP payments are only capital if you are not spending them, any money left over at the end of the month becomes capital.