How does Marriage Allowance impact Universal Credit? 17 March at 9:20AM edited 17 March at 9:35AM in Benefits & tax credits 28 replies 603 views

Tommy_77723

Icequeen1 said:

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)

Sorry I still don't follow. 
So for this, I would to physically tell them for them to know? 
Because this changes your tax code but is also a refund? 
Which one is it haha? 

molerat

If your tax code for this year is amended before your March pay then you will get the extra £252 in that pay packet.  The refund for past years will come as a cheque and you need to inform them of this.  Whether they know about it is completely different from you having to tell them about it.

sheramber

The previous years' rebate is paid in a lump sum and you need to advise UC when it is received.

For the tax year 2022/23, which finishes on 5 April it is not likely the increased allowance will operate for this year so it will be dealt with after the end of the tax year when pay and tax figures for the year are known.and any refund issued.

Your tax code will n be amended until 2023/24 - tax year from 6 April 23- so the  tax you pay weekly/monthly will be reduced  so relief is given over the year. 

 if your tax code is not amended until later in the year then the reduced tax will be worked out back to  the start of the tax year and will be paid in the  pay packet that week/month. 

Subsequent pay packets  will  have less tax deducted.

born_again

Tommy_77723 said:

Icequeen1 said:

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)

Sorry I still don't follow. 
So for this, I would to physically tell them for them to know? 
Because this changes your tax code but is also a refund? 
Which one is it haha? 

Why should you tell them about change in tax code? Certainly not anything they request when starting a claim.
But it would be better to tell them of the refund & reason, asking if it will effect UC.

sarahlply

Tommy_77723 said:

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

Hi we are going through this at the moment, uc took money off us against the back dated money and we then lost our council tax discount and have to now wait to see when it will be reinstated. Uc gave us four days notice they were deducting money following my husband having tax refunded via his wages.
we are still waiting to see if the refund cheque money will also need to be paid back to uc/ off set in some way, it’s caused so much stress, if it does then I will also owe council tax more money.
with all the stress it has caused due to my long term health situation then I wish I had never done it. Hope you fair better than we did.

sarahlply

Tommy_77723 said:

born_again said:

https://forums.moneysavingexpert.com/discussion/6432175/marriage-allowance-and-impact-on-uc-payments#latest

This person says that he had to tell UC about the tax rebate?
Is it not automatically known then?

The refund for current year is done through wages so uc get told automatically but the back dated refund that I mentioned doesn’t get informed direct so you do have to tell them yes, I am awaiting an update on my husband’s refund status on the back dated money but at the moment it’s looking like I owe them money and will owe council tax money as well because of applying for the back date, we will be virtually no better off and so stressed by it all.

poppy12345

sarahlply said:

we are still waiting to see if the refund cheque money will also need to be paid back to uc/ off set in some way,

If you were employed or self employed in the year which the refund refers to then it's classed as income and will reduce your UC.

sarahlply

poppy12345 said:

sarahlply said:

we are still waiting to see if the refund cheque money will also need to be paid back to uc/ off set in some way,

If you were employed or self employed in the year which the refund refers to then it's classed as income and will reduce your UC.

I agree but our uc team are saying they don’t know! Complete farse and there’s nothing online on their systems to confirm any of this or what should happen, same on the HMRC pages either, it’s been referred to a special team now apparently to check what should happen!

Icequeen1

sarahlply said:

poppy12345 said:

sarahlply said:

we are still waiting to see if the refund cheque money will also need to be paid back to uc/ off set in some way,

If you were employed or self employed in the year which the refund refers to then it's classed as income and will reduce your UC.

I agree but our uc team are saying they don’t know! Complete farse and there’s nothing online on their systems to confirm any of this or what should happen, same on the HMRC pages either, it’s been referred to a special team now apparently to check what should happen!

I'm not sure what UC team you are referring to but the DWP's own guidance (which refers to the legislation) is here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1087474/admh3.pdf Page 10/11 confirms what I said in my earlier post. Where a refund is given by amending a tax code, you don't need to notify DWP (unless your employer doesn't use the RTI system) as they will get your net pay data directly from HMRC. Where the refund relates to a year in which you were employed or self-employed then you have to declare it and it is counted as income. 

The UC staff can access this staff guidance. You can give them the link. 

sarahlply

Icequeen1 said:

sarahlply said:

poppy12345 said:

sarahlply said:

we are still waiting to see if the refund cheque money will also need to be paid back to uc/ off set in some way,

If you were employed or self employed in the year which the refund refers to then it's classed as income and will reduce your UC.

I agree but our uc team are saying they don’t know! Complete farse and there’s nothing online on their systems to confirm any of this or what should happen, same on the HMRC pages either, it’s been referred to a special team now apparently to check what should happen!

I'm not sure what UC team you are referring to but the DWP's own guidance (which refers to the legislation) is here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1087474/admh3.pdf Page 10/11 confirms what I said in my earlier post. Where a refund is given by amending a tax code, you don't need to notify DWP (unless your employer doesn't use the RTI system) as they will get your net pay data directly from HMRC. Where the refund relates to a year in which you were employed or self-employed then you have to declare it and it is counted as income. 

The UC staff can access this staff guidance. You can give them the link. 

Hi
thank you for this, it’s not the net pay that’s the issue for most recent year, they can’t decide what to do about the payment for back pay refunded by cheque by HMRC, I queried why I didn’t have to pay that back as like you say and reference it’s a tax refund, apparently they don’t deal with it. Because I have a neurological disorder that’s worsening I am about to hand over to my social worker so need to tie up loose ends. Will read and send on, thank you!