Tax credits/pension contributions and transition to UC

justwhat

We are trying to hold on to our tax credit payments for as long as possible  As we have a large amount of savings we are not entitled to UC.

We declare  around 4k per annum income from SE
I have now got a PAYE job that brings in around 12k for a full year . Informed WTC additional pro-rata  income based on 16hrs PAYE.

My understanding is i can contribute a large percentage to my pension to bring my income down for WTC calculation purposes. Depending on my SE income was looking at around 5k additional contribution(NEST)

I am still currently registered as SE. As a partnership and business is still trading.

What will trigger a changeover to UC? 
Do i need to remain SE and PAYE to keep my hours up for WTC purposes?

calcotti

None of the above ‘triggers’ a move to UC. UC can only be claimed by making a claim.

If your WTC ends because you no longer qualify the help you get will stop because you said you cannot claim UC due to savings. If you wish to remain eligible for WTC then you need to meet the number of hours required from a combination of employment and SE. It doesn’t matter where they come from, if the employment hours alone are sufficient then the SE doesn’t matter.

If you are receipt of WTC when under ‘managed migration’ you are told your WTC will end and you are invited to apply for UC your capital above £16,000 will be ignored for 12 months allowing you to claim UC for that 12 month period. If you have more than £16,000 at the end of the 12 months your UC will end.

(Completely off topic but if you have only been earning about £4000 from SE have you been paying voluntary Class 2 NI contributions towards your future State Pension or are you getting NI credits some other way? If not you should get a State Pension forecast and if you need to boost your NI record, Class 2 contributions for years in which you are registered as self employed are incredibly cheap.)

justwhat

calcotti said:

None of the above ‘triggers’ a move to UC. UC can only be claimed by making a claim.

If your WTC ends because you no longer qualify the help you get will stop because you said you cannot claim UC due to savings. If you wish to remain eligible for WTC then you need to meet the number of hours required from a combination of employment and SE. It doesn’t matter where they come from, if the employment hours alone are sufficient then the SE doesn’t matter.

If you are receipt of WTC when under ‘managed migration’ you are told your WTC will end and you are invited to apply for UC your capital above £16,000 will be ignored for 12 months allowing you to claim UC for that 12 month period. If you have more than £16,000 at the end of the 12 months your UC will end.

(Completely off topic but if you have only been earning about £4000 from SE have you been paying voluntary Class 2 NI contributions towards your future State Pension or are you getting NI credits some other way? If not you should get a State Pension forecast and if you need to boost your NI record, Class 2 contributions for years in which you are registered as self employed are incredibly cheap.)

WTC migration - i thought first year they could not leave me worse off , then subsequent years it gets tapered? 
Ill have too look into the thresholds for hours worked.(maybe best to remain SE)

Class ? NI has been paid. (unsure if i get a rebate as i currently pay NI via PAYE and still pay SE contributions) When i do a forecast it says i will get the max pension amount. i think its class 2 around £150 per annum that i pay for SE.

I have not looked into NI any further.

calcotti

justwhat said:

WTC migration - i thought first year they could not leave me worse off , then subsequent years it gets tapered? 

That’s sort of correct. You are guaranteed to be no worse off on the day of transfer.. After 12 months the normal capital rules apply so if you have more than £16,000 in capital the UC will end.

then is no need to pay voluntary Class 2 contributions if you are getting Class 1 contributions or credits through PAYE. You will get Class 1 credits from employment if you earn more than £123/week. You won’t get a rebate for paying twice.

justwhat

calcotti said:

justwhat said:

WTC migration - i thought first year they could not leave me worse off , then subsequent years it gets tapered? 

That’s sort of correct. You are guaranteed to be no worse off on the day of transfer.. After 12 months the normal capital rules apply so if you have more than £16,000 in capital the UC will end.

then is no need to pay voluntary Class 2 contributions if you are getting Class 1 contributions or credits through PAYE. You will get Class 1 credits from employment if you earn more than £123/week. You won’t get a rebate for paying twice.

So after first year of migration, i am will not be entitled to anything as there is no way to get rid of my savings. (There is far too much)

It says there is a form for Class 2 nic refunds ?

https://www.gov.uk/government/publications/national-insurance-application-for-a-refund-of-class-2-national-insurance-contributions-ca8480

calcotti

justwhat said:So after first year of migration, i am will not be entitled to anything 

Correct.

justwhat said:

It says there is a form for Class 2 nic refunds ?

https://www.gov.uk/government/publications/national-insurance-application-for-a-refund-of-class-2-national-insurance-contributions-ca8480

My earlier comment assumed that, based on the SE earnings you mentioned, the Class 2 contributions you had made were voluntary contributions. As stated at the bottom of the link you provided you cannot reclaim voluntary contributions.