Universal Credit and RSUs (stock)

paddyposh

Hi all.

So for my job we have some stock benefit called RSUs. They become available every few months, to either keep or sell. I have sold some and the sale and taxation of the shares is all handled indepentantly of wages. By that I mean the shares vest, I sell them, I get a wire transfer a few days later.

They are however recorded as line items on my wageslip, and I believe this is causing an issue with the UC claim.

For example, late November I sold some shares and came out of it with approx £700 net. I was then paid early with it being Christmas, and my net pay was around £2900. However, on my UC statement today it said earnings reported by employer was about £4300 - way above and obviously not what I got. I have raised on the journal and so far I received this response - "As its a third party deduction through your wages we will take it into account im afraid so your wages have been applied correctly." and then that I could take evidence i.e. wageslip to my local office for a decision maker to look at.

So my question is, should anything like RSUs and stock sales be counted towards your "wage", as it's listed on the payslip despite not being a part of your actual pay day wage?

Or should they be classed as savings, as it states that the first £6,000 of your money, savings and investments does not affect your payment.

This has happened a couple of times now and I am confused by it.

I understand the months where I get a bonus is different, as that does affect my wage and my net pay is obviously higher. But this seems to be out by quite a bit with the above.

We rarely get payments now, but did get some money in August and November, but my pay hasn't changed and according to the entitledto website we should be getting quite a bit more and consistently (other than perhaps months I get a bonus as mentioned)

Would be great to get some advice 

tomtom256

I imagine it would be classed as unearned income. Same as like a profit scheme or a bonus.

Yamor

I think the taxable income you are treated as having when the RSU's vest do not count as income for UC. You should therefore apply for a Mandatory Reconsideration and if necessary take it to appeal.

When the RSU's vest, they are taxable, and as 'readily convertible assets', are taxed under PAYE. It is for this reason the taxable income has been passed through to UC.
However, not everything taxed under PAYE counts as earnings for UC. See Reg.55(2) of the UC Regs 2013, and note that the RSU's are not taxed as 'general earnings' (as defined in s.7 ITEPA 2003), but as 'specific employment income'.

paddyposh

Yamor said:

I think the taxable income you are treated as having when the RSU's vest do not count as income for UC. You should therefore apply for a Mandatory Reconsideration and if necessary take it to appeal.

When the RSU's vest, they are taxable, and as 'readily convertible assets', are taxed under PAYE. It is for this reason the taxable income has been passed through to UC.
However, not everything taxed under PAYE counts as earnings for UC. See Reg.55(2) of the UC Regs 2013, and note that the RSU's are not taxed as 'general earnings' (as defined in s.7 ITEPA 2003), but as 'specific employment income'.

Ok thanks for that, much appreciated. 

After this post yesterday I had some to someone else on the journal and they raised an RTI dispute where I had to give them my gross pay, net pay, deductions so hopefully they can sort this out. 

paddyposh

How long do they usually take for a dispute? Could I be waiting weeks?

paddyposh

Yamor said:

I think the taxable income you are treated as having when the RSU's vest do not count as income for UC. You should therefore apply for a Mandatory Reconsideration and if necessary take it to appeal.

When the RSU's vest, they are taxable, and as 'readily convertible assets', are taxed under PAYE. It is for this reason the taxable income has been passed through to UC.
However, not everything taxed under PAYE counts as earnings for UC. See Reg.55(2) of the UC Regs 2013, and note that the RSU's are not taxed as 'general earnings' (as defined in s.7 ITEPA 2003), but as 'specific employment income'.

Hi @yamor after several weeks they finally got back to me, mandatory reconsideration was rejected and they said it will stay as is. Here is what they said:

Looking at the evidence you have provided through journal message, the information matches what department record systems have reported. Therefore, this confirms that the earnings have been reported correctly and no adjustments are required. Any reported amount would be considered for Universal credit purpose is subject to Tax and NI. The amount of, £1,652.60 has been reported to HM Revenue & Customs as subject to Tax and NI. Therefore, during assessment period 8 December 2023 to 7 January 2024, your earnings have correctly been considered for Universal Credit purposes. Though I understand your take home pay from your employer was £2,964.85 for assessment period 8 December 2023 to 7 January 2024. However, there are third party deduction which would be considered when calculating your Universal Credit payments. The deductions of £875.87 for RSU Advance and £391.00 for Student Loans are non- allowable third-party deduction. Therefore, Universal Credit would consider £4,231.72 as earnings, which includes your Net payment of, £2,964.85 and third-party deduction of £875.87 and £391.00.

I am happy to appeal this, as after doing some research on the bits posted above I feel they are wrong here. I know student loans doesn't apply but the RSUs should not be included.

Any advice here from anyone on how to proceed with this appeal and what to include? I notice the appeal goes to the social security and child support tribunal, which they say is independant from DWP

BingoBongoVango

paddyposh said:

Yamor said:

I think the taxable income you are treated as having when the RSU's vest do not count as income for UC. You should therefore apply for a Mandatory Reconsideration and if necessary take it to appeal.

When the RSU's vest, they are taxable, and as 'readily convertible assets', are taxed under PAYE. It is for this reason the taxable income has been passed through to UC.
However, not everything taxed under PAYE counts as earnings for UC. See Reg.55(2) of the UC Regs 2013, and note that the RSU's are not taxed as 'general earnings' (as defined in s.7 ITEPA 2003), but as 'specific employment income'.

Hi @yamor after several weeks they finally got back to me, mandatory reconsideration was rejected and they said it will stay as is. Here is what they said:

Looking at the evidence you have provided through journal message, the information matches what department record systems have reported. Therefore, this confirms that the earnings have been reported correctly and no adjustments are required. Any reported amount would be considered for Universal credit purpose is subject to Tax and NI. The amount of, £1,652.60 has been reported to HM Revenue & Customs as subject to Tax and NI. Therefore, during assessment period 8 December 2023 to 7 January 2024, your earnings have correctly been considered for Universal Credit purposes. Though I understand your take home pay from your employer was £2,964.85 for assessment period 8 December 2023 to 7 January 2024. However, there are third party deduction which would be considered when calculating your Universal Credit payments. The deductions of £875.87 for RSU Advance and £391.00 for Student Loans are non- allowable third-party deduction. Therefore, Universal Credit would consider £4,231.72 as earnings, which includes your Net payment of, £2,964.85 and third-party deduction of £875.87 and £391.00.

I am happy to appeal this, as after doing some research on the bits posted above I feel they are wrong here. I know student loans doesn't apply but the RSUs should not be included.

Any advice here from anyone on how to proceed with this appeal and what to include? I notice the appeal goes to the social security and child support tribunal, which they say is independant from DWP

Hi Paddyposh

Can I ask if you did go onto appeal this decision and how you got on please?

I've had a similar deduction with UC after selling shares given to me through my employer.

paddyposh

BingoBongoVango said:

paddyposh said:

Yamor said:

I think the taxable income you are treated as having when the RSU's vest do not count as income for UC. You should therefore apply for a Mandatory Reconsideration and if necessary take it to appeal.

When the RSU's vest, they are taxable, and as 'readily convertible assets', are taxed under PAYE. It is for this reason the taxable income has been passed through to UC.
However, not everything taxed under PAYE counts as earnings for UC. See Reg.55(2) of the UC Regs 2013, and note that the RSU's are not taxed as 'general earnings' (as defined in s.7 ITEPA 2003), but as 'specific employment income'.

Hi @yamor after several weeks they finally got back to me, mandatory reconsideration was rejected and they said it will stay as is. Here is what they said:

Looking at the evidence you have provided through journal message, the information matches what department record systems have reported. Therefore, this confirms that the earnings have been reported correctly and no adjustments are required. Any reported amount would be considered for Universal credit purpose is subject to Tax and NI. The amount of, £1,652.60 has been reported to HM Revenue & Customs as subject to Tax and NI. Therefore, during assessment period 8 December 2023 to 7 January 2024, your earnings have correctly been considered for Universal Credit purposes. Though I understand your take home pay from your employer was £2,964.85 for assessment period 8 December 2023 to 7 January 2024. However, there are third party deduction which would be considered when calculating your Universal Credit payments. The deductions of £875.87 for RSU Advance and £391.00 for Student Loans are non- allowable third-party deduction. Therefore, Universal Credit would consider £4,231.72 as earnings, which includes your Net payment of, £2,964.85 and third-party deduction of £875.87 and £391.00.

I am happy to appeal this, as after doing some research on the bits posted above I feel they are wrong here. I know student loans doesn't apply but the RSUs should not be included.

Any advice here from anyone on how to proceed with this appeal and what to include? I notice the appeal goes to the social security and child support tribunal, which they say is independant from DWP

Hi Paddyposh

Can I ask if you did go onto appeal this decision and how you got on please?

I've had a similar deduction with UC after selling shares given to me through my employer.

Yes I did sorry just seen this. A few appeals to mandatory reconsiderations being rejected and won it at tribunal. Keep persisting 

Yamor

paddyposh said:

BingoBongoVango said:

paddyposh said:

Yamor said:

I think the taxable income you are treated as having when the RSU's vest do not count as income for UC. You should therefore apply for a Mandatory Reconsideration and if necessary take it to appeal.

When the RSU's vest, they are taxable, and as 'readily convertible assets', are taxed under PAYE. It is for this reason the taxable income has been passed through to UC.
However, not everything taxed under PAYE counts as earnings for UC. See Reg.55(2) of the UC Regs 2013, and note that the RSU's are not taxed as 'general earnings' (as defined in s.7 ITEPA 2003), but as 'specific employment income'.

Hi @yamor after several weeks they finally got back to me, mandatory reconsideration was rejected and they said it will stay as is. Here is what they said:

Looking at the evidence you have provided through journal message, the information matches what department record systems have reported. Therefore, this confirms that the earnings have been reported correctly and no adjustments are required. Any reported amount would be considered for Universal credit purpose is subject to Tax and NI. The amount of, £1,652.60 has been reported to HM Revenue & Customs as subject to Tax and NI. Therefore, during assessment period 8 December 2023 to 7 January 2024, your earnings have correctly been considered for Universal Credit purposes. Though I understand your take home pay from your employer was £2,964.85 for assessment period 8 December 2023 to 7 January 2024. However, there are third party deduction which would be considered when calculating your Universal Credit payments. The deductions of £875.87 for RSU Advance and £391.00 for Student Loans are non- allowable third-party deduction. Therefore, Universal Credit would consider £4,231.72 as earnings, which includes your Net payment of, £2,964.85 and third-party deduction of £875.87 and £391.00.

I am happy to appeal this, as after doing some research on the bits posted above I feel they are wrong here. I know student loans doesn't apply but the RSUs should not be included.

Any advice here from anyone on how to proceed with this appeal and what to include? I notice the appeal goes to the social security and child support tribunal, which they say is independant from DWP

Hi Paddyposh

Can I ask if you did go onto appeal this decision and how you got on please?

I've had a similar deduction with UC after selling shares given to me through my employer.

Yes I did sorry just seen this. A few appeals to mandatory reconsiderations being rejected and won it at tribunal. Keep persisting 

Interesting. Can I ask on what grounds you won it on appeal?

BingoBongoVango

@paddyposh Thank you for your reply, I'd be interested in what grounds you won the appeal too. 

I've had my query about my deduction with DWP sent to a decision maker and await the outcome for now.