Universal credit as a non-working homeschooler

Spoonie_Turtle

blagoslovljena said:

Spoonie_Turtle said:

Would gift aid giving be taken into account in the same way when UC is calculated?

No.  Tax Credits were based on taxable income (hence the name).  Universal Credit is based on net pay after income tax, NI and pension contributions.  No other pay deductions are taken into account, as far as I'm aware.

Ok that makes sense - thank you.

It’s a shame though. The main reason we’ve been able to give to charity fairly generously over the past 15 years, is because of our TC payments reflecting the fact that in doing so we then have less money to live off.

I can’t imagine the UC system will be helping charities all that much. I know we certainly won’t be able to give as much when we’re moved to UC. 😔

These post-Welfare Reform benefits certainly have no charitable consideration behind them.  The cold hard line is they're intended to enable people to survive*, not subsidise them giving their money away (please don't infer I agree with that or view charitable giving so flippantly, just explaining the government's general intention as far as I understand).

*Whether they do that though is debatable

blagoslovljena said:

calcotti said:

blagoslovljena said:

Does that mean that the amount you receive in UC payments is based on them completely ignoring your savings for the duration of the grace period?

No. There will be a deduction for savings over £6000. However your transitional protection amount on the day of migration will be calculated to take in to account any deduction for savings on the date of transfer. Subsequent changes in the savings amount will affect the UC payable (up or down).

Thank you.

Hmmm, that’s awkward. The money in our savings accounts goes up and down all the time, as we keep most of our disposable income in them and transfer money in/out when we get, say, a child benefit payment, or have to pay a credit card bill.

It’s just how we function to maximise our (rather pitiful) interest.

How does HMRC deal with that situation, as I can’t imagine we’re the only ones moving money about all the time?

UC is based on your circumstances on the last day of your Assessment Period.  Also capital is income from previous months that haven't been spent.  So the most accurate way would be to report the total you have on the last day of your AP, although whether it's worth working out the difference between how much is savings and how much was income during the month I don't know.  Hopefully someone else will be able to advise in more detail.

NedS

Spoonie_Turtle said:

blagoslovljena said:

Crumbs, it’s fiddly isn’t it! Thanks for the info though, that’s definitely reassuring. 😅 

I wasn’t aware that people have to do the whole job centre thing though, even if they’re employed! The tax credits system seems so much less complicated from our perspective. 🤦‍♀️

One more quick question, if I may?

At the moment gift aid payments that my husband makes to charities count as a deduction from his income for tax credits purposes, so the CTC payments we receive are based on his earnings minus the gift aid giving.

Would gift aid giving be taken into account in the same way when UC is calculated?

No.  Tax Credits were based on taxable income (hence the name).  Universal Credit is based on net pay after income tax, NI and pension contributions.  No other pay deductions are taken into account, as far as I'm aware.

UC Regulations 55(5)(c) states that deductions from earnings are to be made for:

any sums withheld as donations to an approved scheme under Part 12 of the ITEPA (payroll giving) by a person required to make deductions or repayments of income tax under the PAYE Regulations

The ADM (H3170) translates that into:

any amounts withheld as donations to charity in a scheme approved by HMRC in that assessment period

so IMHO charitable donations are deductible when calculating UC, as they are with Tax Credits.

calcotti

blagoslovljena said: The money in our savings accounts goes up and down all the time, as we keep most of our disposable income in them and transfer money in/out when we get, say, a child benefit payment, or have to pay a credit card bill.

Your capital amount includes money in your current account over and above normal income/expenditure so it really doesn't matter which account your money is in.

andrewmp

blagoslovljena said:

calcotti said:

blagoslovljena said:

Does that mean that the amount you receive in UC payments is based on them completely ignoring your savings for the duration of the grace period?

No. There will be a deduction for savings over £6000. However your transitional protection amount on the day of migration will be calculated to take in to account any deduction for savings on the date of transfer. Subsequent changes in the savings amount will affect the UC payable (up or down).

Thank you.

Hmmm, that’s awkward. The money in our savings accounts goes up and down all the time, as we keep most of our disposable income in them and transfer money in/out when we get, say, a child benefit payment, or have to pay a credit card bill.

It’s just how we function to maximise our (rather pitiful) interest.

How does HMRC deal with that situation, as I can’t imagine we’re the only ones moving money about all the time?

You won't be the only one, however capital includes money in your current account and savings account, to give one capital amount on the day in question.  It'll make no difference if it's in your current account, or savings account.

Come the day of reckoning, it'll probably be in your best interest to stop using a credit card for purchases so that your capital is instantly reduced when you buy something.

andrewmp

NedS said:

Spoonie_Turtle said:

blagoslovljena said:

Crumbs, it’s fiddly isn’t it! Thanks for the info though, that’s definitely reassuring. 😅 

I wasn’t aware that people have to do the whole job centre thing though, even if they’re employed! The tax credits system seems so much less complicated from our perspective. 🤦‍♀️

One more quick question, if I may?

At the moment gift aid payments that my husband makes to charities count as a deduction from his income for tax credits purposes, so the CTC payments we receive are based on his earnings minus the gift aid giving.

Would gift aid giving be taken into account in the same way when UC is calculated?

No.  Tax Credits were based on taxable income (hence the name).  Universal Credit is based on net pay after income tax, NI and pension contributions.  No other pay deductions are taken into account, as far as I'm aware.

UC Regulations 55(5)(c) states that deductions from earnings are to be made for:

any sums withheld as donations to an approved scheme under Part 12 of the ITEPA (payroll giving) by a person required to make deductions or repayments of income tax under the PAYE Regulations

The ADM (H3170) translates that into:

any amounts withheld as donations to charity in a scheme approved by HMRC in that assessment period

so IMHO charitable donations are deductible when calculating UC, as they are with Tax Credits.

Gift aid donations usually aren't made via PAYE though (salary sacrifice). Sometimes people use cash, sometimes direct debit.

blagoslovljena

andrewmp said:

Come the day of reckoning, it'll probably be in your best interest to stop using a credit card for purchases so that your capital is instantly reduced when you buy something.

Oh that’s a pain! We use an AMEX card for almost all of our purchases, as it usually gives us cashback of around £150ish a year! We pay off in full each month.

So would we essentially have to stop doing that, or just when we have our initial assessment period?

blagoslovljena

andrewmp said:

NedS said:

Spoonie_Turtle said:

blagoslovljena said:

Crumbs, it’s fiddly isn’t it! Thanks for the info though, that’s definitely reassuring. 😅 

I wasn’t aware that people have to do the whole job centre thing though, even if they’re employed! The tax credits system seems so much less complicated from our perspective. 🤦‍♀️

One more quick question, if I may?

At the moment gift aid payments that my husband makes to charities count as a deduction from his income for tax credits purposes, so the CTC payments we receive are based on his earnings minus the gift aid giving.

Would gift aid giving be taken into account in the same way when UC is calculated?

No.  Tax Credits were based on taxable income (hence the name).  Universal Credit is based on net pay after income tax, NI and pension contributions.  No other pay deductions are taken into account, as far as I'm aware.

UC Regulations 55(5)(c) states that deductions from earnings are to be made for:

any sums withheld as donations to an approved scheme under Part 12 of the ITEPA (payroll giving) by a person required to make deductions or repayments of income tax under the PAYE Regulations

The ADM (H3170) translates that into:

any amounts withheld as donations to charity in a scheme approved by HMRC in that assessment period

so IMHO charitable donations are deductible when calculating UC, as they are with Tax Credits.

Gift aid donations usually aren't made via PAYE though (salary sacrifice). Sometimes people use cash, sometimes direct debit.

We make ours via direct debit, standing orders and one off credit/debit card payments to make sure we have a paper trail, so to speak.

I guess that wouldn’t count for UC deductions then as it’s not through PAYE. 😔

andrewmp

blagoslovljena said:

andrewmp said:

Come the day of reckoning, it'll probably be in your best interest to stop using a credit card for purchases so that your capital is instantly reduced when you buy something.

Oh that’s a pain! We use an AMEX card for almost all of our purchases, as it usually gives us cashback of around £150ish a year! We pay off in full each month.

So would we essentially have to stop doing that, or just when we have our initial assessment period?

You could keep doing it, but you would probably have to ensure your payment dates matched up so that the money you had already spent on your Amex wouldn't be classed as capital.

You'll need to ensure that you pay however much you owe from your amex each month before they day they assess your capital.  I'm not sure how it works in reality, it seems implausible that they actively monitor all of your accounts, maybe you just have to declare it each month?

The good news is, unless you live in Bolton or Medway, you won't be getting a letter this week.

andrewmp

blagoslovljena said:

andrewmp said:

NedS said:

Spoonie_Turtle said:

blagoslovljena said:

Crumbs, it’s fiddly isn’t it! Thanks for the info though, that’s definitely reassuring. 😅 

I wasn’t aware that people have to do the whole job centre thing though, even if they’re employed! The tax credits system seems so much less complicated from our perspective. 🤦‍♀️

One more quick question, if I may?

At the moment gift aid payments that my husband makes to charities count as a deduction from his income for tax credits purposes, so the CTC payments we receive are based on his earnings minus the gift aid giving.

Would gift aid giving be taken into account in the same way when UC is calculated?

No.  Tax Credits were based on taxable income (hence the name).  Universal Credit is based on net pay after income tax, NI and pension contributions.  No other pay deductions are taken into account, as far as I'm aware.

UC Regulations 55(5)(c) states that deductions from earnings are to be made for:

any sums withheld as donations to an approved scheme under Part 12 of the ITEPA (payroll giving) by a person required to make deductions or repayments of income tax under the PAYE Regulations

The ADM (H3170) translates that into:

any amounts withheld as donations to charity in a scheme approved by HMRC in that assessment period

so IMHO charitable donations are deductible when calculating UC, as they are with Tax Credits.

Gift aid donations usually aren't made via PAYE though (salary sacrifice). Sometimes people use cash, sometimes direct debit.

We make ours via direct debit, standing orders and one off credit/debit card payments to make sure we have a paper trail, so to speak.

I guess that wouldn’t count for UC deductions then as it’s not through PAYE. 😔

Yeah, you be out luck (or rather than charity will) unfortunately, unless you can join some sort of charitable salary sacrifice scheme.

blagoslovljena

Spoonie_Turtle said:

blagoslovljena said:

Spoonie_Turtle said:

Would gift aid giving be taken into account in the same way when UC is calculated?

No.  Tax Credits were based on taxable income (hence the name).  Universal Credit is based on net pay after income tax, NI and pension contributions.  No other pay deductions are taken into account, as far as I'm aware.

Ok that makes sense - thank you.

It’s a shame though. The main reason we’ve been able to give to charity fairly generously over the past 15 years, is because of our TC payments reflecting the fact that in doing so we then have less money to live off.

I can’t imagine the UC system will be helping charities all that much. I know we certainly won’t be able to give as much when we’re moved to UC. 😔

These post-Welfare Reform benefits certainly have no charitable consideration behind them.  The cold hard line is they're intended to enable people to survive*, not subsidise them giving their money away (please don't infer I agree with that or view charitable giving so flippantly, just explaining the government's general intention as far as I understand).

*Whether they do that though is debatable

blagoslovljena said:

calcotti said:

blagoslovljena said:

Does that mean that the amount you receive in UC payments is based on them completely ignoring your savings for the duration of the grace period?

No. There will be a deduction for savings over £6000. However your transitional protection amount on the day of migration will be calculated to take in to account any deduction for savings on the date of transfer. Subsequent changes in the savings amount will affect the UC payable (up or down).

Thank you.

Hmmm, that’s awkward. The money in our savings accounts goes up and down all the time, as we keep most of our disposable income in them and transfer money in/out when we get, say, a child benefit payment, or have to pay a credit card bill.

It’s just how we function to maximise our (rather pitiful) interest.

How does HMRC deal with that situation, as I can’t imagine we’re the only ones moving money about all the time?

UC is based on your circumstances on the last day of your Assessment Period.  Also capital is income from previous months that haven't been spent.  So the most accurate way would be to report the total you have on the last day of your AP, although whether it's worth working out the difference between how much is savings and how much was income during the month I don't know.  Hopefully someone else will be able to advise in more detail.

Thank you.

I completely understand the government’s position in a way, but it’s been nice to be able to help others through the gift aid system. We’ve made sacrifices to be able to do that, and we’ll definitely still give, just sadly not as much under UC. Especially with our bills going up and paying for my eldest to sit her GCSEs.

Seems a little short-sighted of the government in view of how many people are relying on charities just now - both here and abroad.