Marriage allowance and impact on UC payments

sarahlply

Hi everyone 
I had to give up work in 2020 due to poor health and after medical tests I have been unfortunately told my situation won’t improve so we applied to transfer my part of  marriage allowance to my husbands tax code.
He then got a refund via his wages for the current tax year (plus a cheque for the previous year), uc then deducted the money from my uc payment which then meant we lost our council tax discount. My husband only works part time due to my medical issues and he is registered with uc As my carer.

I can’t find anything online stating marriage allowance affects uc but can see that a tax rebate does, we only got four days notice of the deduction so it’s left us up the creak for the month which has been hard due to my medical issues needing specialist dietary changes. They haven’t requested the money paid.by cheque back yet. I have queried why the two different approach’s, as a former payroll clerk I am baffled but do see see refunds get classed as income even though it’s from previous pay packets but not sure how this works due to it being related to marriage allowance?, by the time we repay everything we will be less that £20 better off for this current tax year.

has anyone been through this? I am disputing as they can’t give me an answer, my Gp has referred me for financial advice locally re disability benefits due to my medical situation but that’s going to take a while obviously. As we had no warning my husband used the money to spend half term with his son and repair the car.

would appreciate any advice you may have or experience of this matter. I have cognitive neurological issues so trying to deal with this has triggered symptoms due to using screens for research being a big trigger for me.

thanks for reading.
sarah 

sheramber

The marriage allowance transfer is nothing to do with your UC.

It is purely the tax rebate , which is counted as income when it is received, that affects your UC.

A tax refund for any reason, not just marriage allowance transfer,  would have the same affect. It would be counted as income when received.

Dazed_and_C0nfused

sheramber said:

The marriage allowance transfer is nothing to do with your UC.

It is purely the tax rebate , which is counted as income when it is received, that affects your UC.

A tax refund for any reason, not just marriage allowance transfer,  would have the same affect. It would be counted as income when received.

And if he received a lump sum refund for a previous year I'm sure HMRC advice is that UC claimants need to declare this to DWP.

It used to be in the notes that accompany the tax calculation but maybe things have changed?

Maybe just if UC was being claimed in the tax year the tax refund is for though?

calcotti

Dazed_and_C0nfused said:

Maybe just if UC was being claimed in the tax year the tax refund is for though?

Any tax refund received while receiving UC is used as earning income if employed or self employed in the year that the refund comes from. Actual cause of the refund makes no difference and whether or not UC was claimed in that year is also irrelevant.

If not in employed or self employment in the year the tax refund recurs from then the tax refund is treated as capital..  

sarahlply

sheramber said:

The marriage allowance transfer is nothing to do with your UC.

It is purely the tax rebate , which is counted as income when it is received, that affects your UC.

A tax refund for any reason, not just marriage allowance transfer,  would have the same affect. It would be counted as income when received.

Thank you for replying, there was nothing on either dwp or HMRC sites to explain this, we declared the cheque refund as well and were told they didn’t need to know, they only needed the current years figure which is what’s confused me, I was a payroll clerk years ago so am confused as to why both payments are not being treated the same as I don’t suddenly want another shock loosing over £200 of my uc when I am going in and out of hospital for tests.. Appreciate your reply.

sarahlply

Dazed_and_C0nfused said:

sheramber said:

The marriage allowance transfer is nothing to do with your UC.

It is purely the tax rebate , which is counted as income when it is received, that affects your UC.

A tax refund for any reason, not just marriage allowance transfer,  would have the same affect. It would be counted as income when received.

And if he received a lump sum refund for a previous year I'm sure HMRC advice is that UC claimants need to declare this to DWP.

It used to be in the notes that accompany the tax calculation but maybe things have changed?

Maybe just if UC was being claimed in the tax year the tax refund is for though?

I declared everything once we found out my uc payment had been deducted, we had four days warning of the deduction, we didn’t receive any paper notes just a letter to say both refunds had been issued and would follow, one by cheque and one via payroll, the amount from payroll was then deducted from my uc , my uc claim started in 2020 but the refunds apply years 21/22 and 22/23 but uc are saying only the current years uc claim needs to be repaid and that’s what’s confused us as we both think both years refunds should then impact my uc award, I have raised a dispute to ask why they are saying this. Thank you for replying .

sarahlply

calcotti said:

Dazed_and_C0nfused said:

Maybe just if UC was being claimed in the tax year the tax refund is for though?

Any tax refund received while receiving UC is used as earning income if employed or self employed in the year that the refund comes from. Actual cause of the refund makes no difference and whether or not UC was claimed in that year is also irrelevant.

If not in employed or self employment in the year the tax refund recurs from then the tax refund is treated as capital..  

my husband was employed part time during the two relevant years and I was on uc due to be on lcwra, they have confirmed that they are only deducting uc for the current year and not the previous year, I think they are wrong and scared they will suddenly deduct me again. Thank you for taking the time to reply.