New UC claim, what are the next steps likely to be?

ElwoodBlues

I've recently made a new claim for UC. So far I've done everything online that they've asked, I've been down the job centre and produced my 3 forms of ID. My to do list on the website is empty, and the 'what happens next' bit of the website says that in about 3 weeks they'll tell me how much I'm going to get, and then it'll be paid about a week later.

I told them my gross income during the application process, but I believe UC is calculated on my net income? Do UC get that figure automatically from my HMRC (my PAYE information)? Or will I have to submit the details myself from my last payslip(s) at the end of the assessment period?

Am I likely to have to jump through any more hoops? I was on tax credits previously, but they were stopped under managed migration before I claimed UC. Unfortunately I was slow getting my UC claim in, so lost rights to Transitional Protection (although the benefits calculators suggest I'll get a similar amount). Slightly odd, but I've received no correspondence from HMRC/tax credits to say they've ended my TC claim or finalised it, they just stopped making payments. When I login to the TC website it just says my account can't be managed online.

Does it trigger something with TC to finalise it after claiming UC, or will nothing happen there until after the end of the current tax year? As far as I know my TC payments for this (partial) year were correct, but at present I've no way to tell. Presumably the TC entitlement is worked out pro rata to when they ceased my payments, based on my year to date income at that point? Changed to my circumstances after they stopped paying TC should be irrelevant to it?

Yamor

1. UC is calculated based on net income, and they will get the info straight from HMRC, so you won't need to do anything. The process does sometimes fail, in which case you would self-report, but it's unusual.

2. If you claim UC within approximately one month of the deadline in your migration letter then they will backdate the UC claim to the date on the letter, and you would get transitional protection (if relevant).

3. Your tax credits will have definitely ended. Now that you have made a UC claim, they should carry out the in-year finalisation process and you should receive a letter from HMRC about this. Your tax credits will be finalised based on your income actually received in the part year up until the day before the date on your migration letter.

This can lead to some funny results. One example is if you get paid on the last day of the month, but your tax credits ended the day before, say on the 30th July. You would then get almost 4 months of tax credits, but based on 3 months of wages, meaning you'd be likely to get more than you'd have expected.

If you wouldn't have claimed UC, then the in-year finalisation process wouldn't take place, and your tax credits would only be finalised after the end of the tax year, as normal. They would have then calculated your entitlement based on your income from the entire year, pro-rated down to the period of entitlement.

And that also explains why you haven't heard from HMRC yet - because you delayed making your UC claim.

ElwoodBlues

Thanks, that's pretty well what I thought. Unfortunately I'm about 4 months past the deadline they gave me, so don't think they'll backdate or give transitional protection. As long as they calculate my TC entitlement to the date they ceased it and not later when I made the UC claim that should be correct.

Newcad

Yamor said:

If you wouldn't have claimed UC, then the in-year finalisation process wouldn't take place, and your tax credits would only be finalised after the end of the tax year, as normal. They would have then calculated your entitlement based on your income from the entire year, pro-rated down to the period of entitlement.

And that also explains why you haven't heard from HMRC yet - because you delayed making your UC claim.

Is that correct though?

The Migration Notice is actually notice that your income related benefit is ending - by law - and so if you want to keep recieving an income related benefit then you should claim UC instead.
Tax Credits cannot continue for the rest of the year once you have had that Notice which ends them.

Whether you claim UC or not the Tax Credits will end, it's just that the date when that end will be depends whether you claim UC or just let the 3 months notice expire.

Yamor

Correct, either way the tax credits will end. However, there is a difference in how the award is finalised depending on whether a claim for UC is made or not.

If a UC claim is made, then the "in-year finalisation" procedure will be used, in which case only income actually received in the period of the award will count.

If no claim for UC is made, then the regular finalisation process will be used, which means income for the entire year will be included, but pro-rated down according to the length of the award.

Newcad

That seems an odd way of doing it - to me if the TC claim has been ended then it's ended, and it should be finalised there and then.

I guess it's just another oddity in how HMRC do things their own way.

ElwoodBlues

Looks like I'm going to miss out on both the next Cost of Living Support payment and the Warm Home Discount, as the qualifying date for both of those is around August-Sept. My tax credits were stopped before then and my UC claim didn't start until after, so don't think I qualify for either?

poppy12345

ElwoodBlues said:

Looks like I'm going to miss out on both the next Cost of Living Support payment and the Warm Home Discount, as the qualifying date for both of those is around August-Sept. My tax credits were stopped before then and my UC claim didn't start until after, so don't think I qualify for either?

For the CoL payments. For Tax credits you must have received a payment for any day in the period 18th Aug to 17th Sept. For UC you must have been entitled to a payment or later became entitled to a payment for an assessment period that ended between 18th Aug to 17th Sept. Going by the information you provided you won't be entitled to the next payment. https://www.gov.uk/guidance/cost-of-living-payment#low-income-benefits-and-tax-credits-cost-of-living-payment-eligibility

For WHD the qualifying date is 13th Agust and you must been in receipt of a qualifying means tested benefit. (alongside all the other crtieria) assuming you're not living in Scotland.

kekestano

I'm a single dad with four children, all under the age of 17. Recently, I received a letter from the DWP (Department for Work and Pensions) urging me to switch to Universal Credit (UC) before the deadline of September 23, 2023. At that time, I didn't think I'd be eligible for UC, so I didn't make the switch.

Let me share a bit about my financial situation. I'm self-employed and pay myself a salary from my company, resulting in an annual income of £30,242. In addition to my primary income, I've managed to secure a buy-to-let property, which I've been renting out to a tenant, and I receive £650 in monthly rent from them. However, I've encountered some financial challenges recently due to an increase in interest rates, and I'm now paying £310 in interest on the money I borrowed from the bank for this property.

Now, I'm considering switching to UC, but I'm concerned because the deadline has already passed. I'm also unsure whether my application would be accepted considering my income and the fact that I have a rented property. I want to ensure the financial well-being of my family, and I'm seeking advice on how to proceed from here. If you have any guidance or information on whether I can still apply for UC and what factors might affect my eligibility, I would greatly appreciate it.

FIREDreamer

kekestano said:

I'm a single dad with four children, all under the age of 17. Recently, I received a letter from the DWP (Department for Work and Pensions) urging me to switch to Universal Credit (UC) before the deadline of September 23, 2023. At that time, I didn't think I'd be eligible for UC, so I didn't make the switch.

Let me share a bit about my financial situation. I'm self-employed and pay myself a salary from my company, resulting in an annual income of £30,242. In addition to my primary income, I've managed to secure a buy-to-let property, which I've been renting out to a tenant, and I receive £650 in monthly rent from them. However, I've encountered some financial challenges recently due to an increase in interest rates, and I'm now paying £310 in interest on the money I borrowed from the bank for this property.

Now, I'm considering switching to UC, but I'm concerned because the deadline has already passed. I'm also unsure whether my application would be accepted considering my income and the fact that I have a rented property. I want to ensure the financial well-being of my family, and I'm seeking advice on how to proceed from here. If you have any guidance or information on whether I can still apply for UC and what factors might affect my eligibility, I would greatly appreciate it.

Would the ownership of a rental property, presumably worth well in excess of £16k, exclude you from getting any universal credit?

Transitional protection will probably give you something but that only lasts 12 months.

ElwoodBlues

If you mean you've had notice to migrate from tax credits by 23rd September, then yes your opportunity to get transitional protection has passed. They usually give an extra month of grace, but that would be up to today? So you just might be ok, if you're quick and claim right now (it's online and doesn't take that much effort to get it started).

If you haven't been on tax credits and aren't migrating to UC, then you are unlikely to be eligible if you have equity in your BTL - total capital over 16k would make you ineligible for UC (except that if you're migrating from tax credit they'll give you 12 months to get your capital assets below 16k).

As you're self employed/ltd company owner, then you have the added complication of submitting monthly accounts to DWP and your entire business income being treated as your own personal income. Between your salary and rental income I'm not sure your UC entitlement will be worth the hassle of claiming.