UC, pension contributions and working hours

spaniel101

We are also aware RTI is not the Red line in the sand either.  As discussed frequently Regulation 55 'Employed Earnings':-


"The amount of employed earnings for the assessment period is to be based on the information which is reported to HMRC for PAYE purposes and is received  by the Secretary of State from HMRC in that assessment period.   Where no information is received in an assessment period from a real time information employer - the amount of earnings is to be treated as nil.   However this general rule does not apply:-

In respect of any assessment period where the Secretary of State considers that the information from the employer is unlikely to be sufficiently accurate or timely or In respect of any assessment period where:-

No information is received from HMRC and DWP consider this is because of a failure of the employer to report the information to HMRC or a failure of the HMRC computer system or DWP considers that the information received from HMRC is incorrect, or fails to reflect the definition of employed earnings in the UC regulations, in some material respect.   Where any of these exceptions apply, DWP must make a decision as to the amount of the person's employed earnings for the assessment period in accordance with the UC regulations using such information or evidence as the DWP thinks necessary".



Where one might argue for the disregard of even private pension contributions (RAS) from employed earnings to be applied accordingly in line with the legislation, an increased UC calculation being the result of appropriately revised    'Gross Taxable' Earnings, one wonders how the DWP could negate/ignore the pension contributions when it comes to the AET/CET, (which would be the opposite of how Child/Working Tax credits legislation operated)  given they are deemed Pension Contributions from 'Earned Income', how else would they be made  (leaving aside the £3.6K non-earned income contribution, ...or perhaps this is the level they assumed to be working with, when in reality, some may want to contribute more) ?  

NedS

spaniel101 said:

We are also aware RTI is not the Red line in the sand either.  As discussed frequently Regulation 55 'Employed Earnings':-

<snip lots of interesting discussion>

Yes, but I'm guessing 99% of the time RTI data is used, and for the purposes of this discussion we really want to understand what the system is doing in the vast majority of cases - it's default behaviour.

When the RTI data is overridden and manual calcs are performed, all sorts of other unexpected things can happen and in such cases a manual decision to override the work group regime may also be required.

the_pink_panther_2

kaMelo said:

the_pink_panther_2 said:

kaMelo said:

Earnings reported via RTI to HMRC are gross so I don't see how, or why, UC would calculate net earnings to apply against AET/CET. UC would surely just take the figures given to them from HMRC as is.

The only possible glitch could be how the OP's workplace pension is paid, the last sentence in the opening post would suggest pension contributions are paid via net pay. This is the guidance for RTI reporting: 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/915807/RTI_Data_Item_Guide_21-22_v1-0.pdf

The gross pay reported would be net of pension deductions because net pay deductions are reported in a different data field (58b) (61)  There is also the data field for the number of normal hours worked (54)  So while HMRC have all the data needed it's unclear whether all of this data is shared with DWP or just the gross pay figure. If only the latter is shared then this will mean an incorrect calculation for UC purposes..

Thanks.  Is RTI how the finance dept. at a workplace report employee pay?  I'm taking it from this then that HMRC can see the breakdown, and if this is shared with DWP then so can UC?

Yes, but how much of the information HMRC have is shared with DWP is unclear.
It would be good if you could answer the question originally posed by @Dazed_and_C0nfused as to whether your pension contributions are made via a net pay method.

I don't know how to know or find out the answer to that - is there a way of knowing from my payslip?  On my payslip it includes my gross pay, my taxable pay, my income tax, NI contributions, employee pension contribution and employer pension contribution.  Maybe that breakdown is enough to know the answer?  

huckster

Should be gross deduction for pension in your case.

The net earnings deduction would be where you are making arranged additional contributions to a pension, where the employer is not able to deduct from gross earnings. And you would know if this was the situation, as you would have had to agree the deduction arrangement.