NHS pay deal in England and benefits

chips123

My NHS employer has asked me if I want back pay and lump sum(s) from the NHS pay deal in one go, or spread over 10 months. I'm on working tax credits and child tax credits. What should I do?

chips123

Took over an hour but finally reached HMRC on phone and they said it doesn't matter whether I get the whole amount in one go or over 10 months as it's all in same tax year. 

Not sure if that's the case for people on universal tax credits though. 

Alice_Holt

Tax credits are calculated annually based on your earnings for the Tax Year.

So, it should make no difference as whatever you chose, as it will be in the 2023/24 tax year earnings.

May be worth notifying TC of your new estimated 23/24 earnings, though.

calcotti

It seems to make more sense to take it now because it doesn't matter for Tax Credits. If you spread it out and have to switch to UC before you've received it all then would impact when the UC claim. 

If your total taxable income for 23/24 is going to be more than £2500 different to 2022/23 it's important to update Tax Credits because they will have recalculate entitlement based on this year's income.

peteuk

For future advice, when you’re transferred to universal credit, it is worked out on a monthly wage amount.  So therefore it would make a difference if you took it as a lump sum. But it would only effect that month (unless its over £6K or leave you with £6K savings) 

However as mentioned above Tax credit is based on your annual income, however I would add once you've received your back pay and your new rate recalculate your annual income and advise HMRC as if its significantly higher you may end up repaying an overpayment.