Universal credit as a non-working homeschooler

blagoslovljena

andrewmp said:

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.

That’s a good point actually. If I made a payment to AMEX to clear the balance just before my capital’s assessed each month it could still work with the cashback. All a bit of a faff though!

I live in Gloucester as it happens so no, not this week! Is there any way of finding out when they’ll move over certain cities/towns in advance?

blagoslovljena

andrewmp said:

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.

Tbh I didn’t know you could donate via PAYE, so will get my husband to ask his employer about it. 👍

Spoonie_Turtle

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.

That's very interesting.  I wonder what sort of things are classed as approved schemes (I have absolutely no idea what options there are).

andrewmp

blagoslovljena said:

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. 

Many people would say that if you're claiming benefits then you shouldn't be able to afford to give to charity.  Such a blinkered viewpoint is usually due to certain people not really understanding the full dynamics of tax credits, but not always.

Tax Credits were never designed to be the benefit of the desperate, their reach, pretty much (initially at least) included circa 90% of working families in certain parts of the country.  Obviously these days that's been massively reduced, but they're still not exclusively in the domain of the desperate.  I have dealt with many professional people, solicitors, teachers, police etc where they still claim tax credits.  People who enjoy a much better lifestyle because of tax credits, but who also wouldn't starve if they ceased to exist.

I understand the viewpoint that people shouldn't be able to give when they take - but I don't agree with it.  Their view is as valid as mine.

sheramber

Payroll Giving requires the employer to set up the scheme , deduct the donation and pass it on. to the agency they are registered with.

https://www.gov.uk/payroll-giving

Charities

The Payroll Giving Agency will pass on employee donations to you. You must:

• be recognised by HMRC
• use the donation for charitable purposes

There is nothing more to do as a charity. You can’t claim Gift Aid on Payroll Giving donations

https://www.gov.uk/charities-and-tax/get-recognition

To get tax relief your charity must be:

• based in the UK, EU, Iceland, Liechtenstein or Norway
• established for charitable purposes only
• registered with the Charity Commission or another regulator, if this applies to you
• run by ‘fit and proper persons’
• recognised by HM Revenue and Customs (HMRC)

Apply for recognition

Register your charity’s details using HMRC’s online service.

NedS

WRT charity donations, my understanding of the intention of the legislation was that if tax relief was available for the donation then it is deemed as an approved scheme and would be deductible under UC. If it's done through payroll then it's handled automatically through RTI by UC, whereas if you donate out of net take-home pay, then you'd need to notify UC and have the donations taken into account in much the same way as someone who contributes from net pay to an approved pension scheme (e.g, SIPP).

When you make a gift aid donation, you sign some kind of declaration authorising the charity to reclaim the tax on your donation, right? I think those kind of donations would qualify as a deduction to earned income under UC. Obviously you'd need proof by way of a bank statement and/or receipt.

blagoslovljena

andrewmp said:

blagoslovljena said:

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. 

Many people would say that if you're claiming benefits then you shouldn't be able to afford to give to charity.  Such a blinkered viewpoint is usually due to certain people not really understanding the full dynamics of tax credits, but not always.

Tax Credits were never designed to be the benefit of the desperate, their reach, pretty much (initially at least) included circa 90% of working families in certain parts of the country.  Obviously these days that's been massively reduced, but they're still not exclusively in the domain of the desperate.  I have dealt with many professional people, solicitors, teachers, police etc where they still claim tax credits.  People who enjoy a much better lifestyle because of tax credits, but who also wouldn't starve if they ceased to exist.

I understand the viewpoint that people shouldn't be able to give when they take - but I don't agree with it.  Their view is as valid as mine.

I think you’ve put that very well Andrew, with consideration for both sides. 

Even if we didn’t qualify for any income other than my husband’s salary, we would still give. And I think that it’s helped us as a family to recognise that there are so many people so much worse off than us, and it’s a privilege to help them where we can. 

blagoslovljena

sheramber said:

Payroll Giving requires the employer to set up the scheme , deduct the donation and pass it on. to the agency they are registered with.

https://www.gov.uk/payroll-giving

Charities

The Payroll Giving Agency will pass on employee donations to you. You must:

• be recognised by HMRC
• use the donation for charitable purposes

There is nothing more to do as a charity. You can’t claim Gift Aid on Payroll Giving donations

https://www.gov.uk/charities-and-tax/get-recognition

To get tax relief your charity must be:

• based in the UK, EU, Iceland, Liechtenstein or Norway
• established for charitable purposes only
• registered with the Charity Commission or another regulator, if this applies to you
• run by ‘fit and proper persons’
• recognised by HM Revenue and Customs (HMRC)

Apply for recognition

Register your charity’s details using HMRC’s online service.

That’s really helpful, thank you!

My husband works for a fairly large organisation so I would’ve thought they’d have this scheme in place.

 It does mean that he’d get the tax relief instead of each charity being able to claim gift aid, but we could always adjust his payroll donations to them to compensate for that.

Worth looking into methinks…

blagoslovljena

NedS said:

WRT charity donations, my understanding of the intention of the legislation was that if tax relief was available for the donation then it is deemed as an approved scheme and would be deductible under UC. If it's done through payroll then it's handled automatically through RTI by UC, whereas if you donate out of net take-home pay, then you'd need to notify UC and have the donations taken into account in much the same way as someone who contributes from net pay to an approved pension scheme (e.g, SIPP).

When you make a gift aid donation, you sign some kind of declaration authorising the charity to reclaim the tax on your donation, right? I think those kind of donations would qualify as a deduction to earned income under UC. Obviously you'd need proof by way of a bank statement and/or receipt.

It’s always surprised me that I’ve never had to provide HRMC with proof of our gift aid payments for our TC claims tbh, although I’ve always kept careful records in case they wanted to check we weren’t scamming the system!

I do hope you’re right about the gift aid though. It would certainly make things less fiddly.

 I was always under the impression that the point of UC was to be a less complicated system than those of the legacy benefits it replaced. I have to say, it certainly has the potential to make keeping track of our finances  a lot more awkward!

NedS

blagoslovljena said:

sheramber said:

Payroll Giving requires the employer to set up the scheme , deduct the donation and pass it on. to the agency they are registered with.

https://www.gov.uk/payroll-giving

Charities

The Payroll Giving Agency will pass on employee donations to you. You must:

• be recognised by HMRC
• use the donation for charitable purposes

There is nothing more to do as a charity. You can’t claim Gift Aid on Payroll Giving donations

https://www.gov.uk/charities-and-tax/get-recognition

To get tax relief your charity must be:

• based in the UK, EU, Iceland, Liechtenstein or Norway
• established for charitable purposes only
• registered with the Charity Commission or another regulator, if this applies to you
• run by ‘fit and proper persons’
• recognised by HM Revenue and Customs (HMRC)

Apply for recognition

Register your charity’s details using HMRC’s online service.

• 
  

That’s really helpful, thank you!

My husband works for a fairly large organisation so I would’ve thought they’d have this scheme in place.

 It does mean that he’d get the tax relief instead of each charity being able to claim gift aid, but we could always adjust his payroll donations to them to compensate for that.

Worth looking into methinks…

Yes, you just donate the gross amount directly, instead of the net amount from take-home pay and the charity claiming back the tax from HMRC.