Migration to UC, can someone look at my figures please?

kazzyb123

Hi,

We currently claim tax credits. 

CTC for daughter who is now 16 but staying in education so should have been paid until Sept 2025. 

WTC partner is self employed earning around 15K varies from month to month.
I get contribution based ESA support group.
My dad gifted us some cash so we have savings over 16K which don’t affect tax credits because interest is less than 300. Could pay some off the mortgage otherwise I think we get nothing - does this include my ESA as well? Would we lose all tax credits and my ESA because of the savings? 

Also have a help to save account is this money included in the 16K?

Does anyone know what we will get after being moved to UC, is contribution based ESA included in the migration? 

Will there be more assessments for ESS if I’m in support group?

Any idea when this will happen, I read it’s supposed to be by end 2024, is there a plan anywhere of which areas are first?

I know we will be worse off because of minimum income floor, will the transition guarantee cover the difference?

I was hoping it wouldn’t affect us until tax credits had finished for us anyway but it looks like that’s not going to be the case.

thanks everyone

HillStreetBlues

Contribution based ESA = New Style ESA   you will stay on that

With WTC  you will get a year after being moved to UC where capital is exempt. After that the claim would end as over £16k

Under UC you can pay off a mortgage,  so if you get capital under £16k in that year, the claim will continue
There is a deduction from UC of capital between £6k and £16k,  no deduction under £6k

kazzyb123

HillStreetBlues said:

Contribution based ESA = New Style ESA   you will stay on that

With WTC  you will get a year after being moved to UC where capital is exempt. After that the claim would end as over £16k

Under UC you can pay off a mortgage,  so if you get capital under £16k in that year, the claim will continue
There is a deduction from UC of capital between £6k and £16k,  no deduction under £6k

Thanks for the reply that makes sense. 

The other worrying thing is the minimum income floor for self employed. At the moment tax credits are worked out at the end of the year and under/over payments sorted out then. If we move to UC half way through a year do they work out all of the tax credits under/over payments before we are moved over? 

Am I right to think my partner needs to earn a certain amount each month or the claim stops? Do you know what that amount is? Some months are much lower than other not just because of when work is done but also because of when invoices are paid and money comes in, if someone is late paying so he falls below MIF one month then gets two payment the next month what happens? Also don’t know full amount for tax until year end so usually get some tax back does that count as income?

This looks like a nightmare for self employed people, more expenses some months too. 

Is any of this covered by transitional protection?

HillStreetBlues

I can't help you with the finer details on WTC, but someone a lot more knowledgeable  than me will help you.

There are a  thread on here about how much of a nightmare the transfer to UC will be for some.
I will try to find that thread

kazzyb123

HillStreetBlues said:

Contribution based ESA = New Style ESA   you will stay on that

With WTC  you will get a year after being moved to UC where capital is exempt. After that the claim would end as over £16k

Under UC you can pay off a mortgage,  so if you get capital under £16k in that year, the claim will continue
There is a deduction from UC of capital between £6k and £16k,  no deduction under £6k

Actually I don’t really understand the ESA part, I have been on it for years so it’s old style ESA, do you mean I will transfer to new style ESA when we move to UC?

Thanks

poppy12345

kazzyb123 said:

Actually I don’t really understand the ESA part, I have been on it for years so it’s old style ESA, do you mean I will transfer to new style ESA when we move to UC?

Thanks

It will probably be renamed as New style ESA at some point but you won't know it's been done. As far as contributions based benefits go they are the same. The only difference is the old contributions based ESA can include the Income Related top up (if entitled)

kazzyb123 said:

Also have a help to save account is this money included in the 16K?

That will also be counted in with your savings.

kazzyb123

We also need a new car, currently running it into the ground first its worth about £500! If we buy a new car is that seen as deprivation of assets if we NEED the car and it isn't an expensive one (5-10K)?

kazzyb123

Is the 16k limit 16K each for me and my partner? Our savings aren't in a joint account? Or is it a joint claim so the total is 16K?

poppy12345

No, it's not each, it's £16,000 total. It doesn't matter where the savings are.  Buying a car will not be deprivation of capital providing you don't buy the most expensive one.

Spoonie_Turtle

The MIF for UC won't apply for the first 12 months.

When it does apply, it is assumed the self-employed earnings are a certain amount or more.  So if your partner earns more, his actual earnings will be used to calculate the UC payment for that month.  If he earns less, then the MIF amount will be used to calculate the UC payment for the month.

So for a really simplified example to demonstrate (none of these numbers are based on any real-life amounts):
If the MIF is £1000 for the month, and your maximum possible UC is £1700

If your partner earned £1200, the deduction from UC would be based on the actual earnings
If your partner earned £900, then the deduction from UC would be based on £1000 because that's the assumed minimum.

So the claim doesn't stop, it just means if you earn below the MIF you don't get the full 'top-up' from UC.

More info here
https://www.mentalhealthandmoneyadvice.org/en/welfare-benefits/universal-credit-mental-health-guide/help-with-your-universal-credit-claim/how-to-claim-universal-credit-when-self-employed/
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/minimum-income-floor/

However, the MIF does not apply to certain types of people - you don't mention PIP but if you do claim it and your partner provides 35hrs of care in a week (including mental/emotional support) then he would be exempt from the MIF.


Your concerns about fluctuating income are unfortunately well-founded; Tax Credits seems to generally work really well for self-employed people, whereas Universal Credit works better for employed people with fluctuating income.  It is certainly not ideal for self-employed people, but the best thing to do is fully understand how it works so you're prepared for it.

Saying that, with the 12 months' transitional protection, it may well be that the difficulties of UC don't actually start to affect you until not far off when you may no longer have been entitled to Tax Credits anyway, as you mention anticipating they would end.

kazzyb123

Spoonie_Turtle said:

The MIF for UC won't apply for the first 12 months.

When it does apply, it is assumed the self-employed earnings are a certain amount or more.  So if your partner earns more, his actual earnings will be used to calculate the UC payment for that month.  If he earns less, then the MIF amount will be used to calculate the UC payment for the month.

So for a really simplified example to demonstrate (none of these numbers are based on any real-life amounts):
If the MIF is £1000 for the month, and your maximum possible UC is £1700

If your partner earned £1200, the deduction from UC would be based on the actual earnings
If your partner earned £900, then the deduction from UC would be based on £1000 because that's the assumed minimum.

So the claim doesn't stop, it just means if you earn below the MIF you don't get the full 'top-up' from UC.

More info here
https://www.mentalhealthandmoneyadvice.org/en/welfare-benefits/universal-credit-mental-health-guide/help-with-your-universal-credit-claim/how-to-claim-universal-credit-when-self-employed/
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/minimum-income-floor/

However, the MIF does not apply to certain types of people - you don't mention PIP but if you do claim it and your partner provides 35hrs of care in a week (including mental/emotional support) then he would be exempt from the MIF.


Your concerns about fluctuating income are unfortunately well-founded; Tax Credits seems to generally work really well for self-employed people, whereas Universal Credit works better for employed people with fluctuating income.  It is certainly not ideal for self-employed people, but the best thing to do is fully understand how it works so you're prepared for it.

Saying that, with the 12 months' transitional protection, it may well be that the difficulties of UC don't actually start to affect you until not far off when you may no longer have been entitled to Tax Credits anyway, as you mention anticipating they would end.

Thanks so much for the reply, I do also get PIP and my partner has to do everything around the house, meal prep etc but not personal care such as washing, would that count as caring for me? If it does the it’s easily 35 hours a week.