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How does Marriage Allowance impact Universal Credit?

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Tommy_77723
Tommy_77723 Posts: 43 Forumite
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edited 17 March 2023 at 9:35AM in Benefits & tax credits
Hello,

We have just applied for Marriage Allowance and would stand to gain backdated pay for the last 4 years.

We claim Universal Credit and I was wondering how this will impact our next statement and our subsequent ones after this?

I'm worried that a backdated tax rebate over 4 years would result in one-lump sum increase in my income that would close our claim. Would that happen?

Questions:
1) How is the Marriage Allowance for a current year allocated? Is it one lump sum or is it split over the entire year?

2) Will I have to tell Universal Credit about our backdated pay? Or is this something that they would automatically know as it is through HMRC?

3) How will this impact our monthly earnings and therefore our statement for UC?

4) I'm worried that a backdated tax rebate over 4 years would result in large one-lump sum increase in my income that would close our claim. Would that happen?

Thank you for any help
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Comments

  • sammyjammy
    sammyjammy Posts: 7,494 Forumite
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    They will see it automatically, a tax refund will be taken into account with your universal credit  and may impact your monthly payment when it is received, but will not close your claim.  
    "You've been reading SOS when it's just your clock reading 5:05 "
  • Tommy_77723
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    They will see it automatically, a tax refund will be taken into account with your universal credit  and may impact your monthly payment when it is received, but will not close your claim.  
    My friend said he received a cheque and that it was not automatically paid into his account? I just want to make sure I get it right. 

    If I get a tax rebate of four years (circa £1000), would I have an extra £1000 income that month for UC? 
  • calcotti
    calcotti Posts: 15,696 Forumite
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    edited 17 March 2023 at 10:50AM
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    If I get a tax rebate of four years (circa £1000), would I have an extra £1000 income that month for UC? 
    If you receive a tax refund I think you should inform UC because I’m not sure that HMRXC will tell UC. The refund will be treated as an earnings payment when calculating your UC payable for that monthly period. If this results on a nil UC payment for that month you will miss out on a Cost of Living payment if it’s based on your UC for that month.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • Tommy_77723
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    calcotti said:
    If I get a tax rebate of four years (circa £1000), would I have an extra £1000 income that month for UC? 
    If you receive a tax refund I think you should inform UC because I’m not sure that HMRXC will tell UC. The refund will be treated as an earnings payment when calculating your UC payable for that monthly period. If this results on a nil UC payment for that month you will miss out on a Cost of Living payment if it’s based on your UC for that month.
    Would the entire four year rebate be classed as one lump some for that month? 

    Would I be able to delay telling UC about the payment until after a cost of living month had passed? 
  • calcotti
    calcotti Posts: 15,696 Forumite
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    Would the entire four year rebate be classed as one lump some for that month? 

    Would I be able to delay telling UC about the payment until after a cost of living month had passed? 
    As already advised the refund payment should be taken into account when the money is received. You should not delay telling UC.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • Tommy_77723
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    calcotti said:
    Would the entire four year rebate be classed as one lump some for that month? 

    Would I be able to delay telling UC about the payment until after a cost of living month had passed? 
    As already advised the refund payment should be taken into account when the money is received. You should not delay telling UC.
    I though they automatically knew about the rebate though?
    I'm not sure what to do now.
    Is there a way to calculate the payment beforehand?
  • Tommy_77723
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    This person says that he had to tell UC about the tax rebate?
    Is it not automatically known then?
  • calcotti
    calcotti Posts: 15,696 Forumite
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    This person says that he had to tell UC about the tax rebate?
    Is it not automatically known then?
    I am not sure but I don't think it will immediately happen from HMRC.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • Icequeen1
    Icequeen1 Posts: 444 Forumite
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    Where the refund is given by amending your tax code (which means you get a higher amount in your pay packet) then that will feed through automatically from HMRC to DWP and your UC will be reduced as a result. 

    Where you receive a refund directly, you need to tell DWP about that. 

    tax refunds are taken into account where the refund relates to any tax year that you were in paid work (it doesn't matter whether the refund relates to that paid work)
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