AET for Light Touch £1437 net or gross

michaels

NedS said:

As others have stated above, the Workgroup decision is made automatically by the system based on the information received on the RTI feed. There is not normally any human interaction (although see below for an exception!) If the system is getting the decision wrong (i.e, not in accord with the legislation) then this is a coding error (bug) in the UC platform and needs to be fixed. Without access to the code, or lots of examples to try to confirm what the system is actually doing, it's hard to know exactly what is happening, and why.

Complaining at the jobcentre level will most likely simply result in the Work Coach taking manual intervention to override the system Workgroup based on the claimant's earnings. It may resolve the issue for the claimant, but does not address nor fix the wider issue.

Recently I saw another issue whereby a claimant transferred from Tax Credits to UC under managed migration and received Transitional Protection because they had capital exceeding £16k. They pay most of their salary into a SIPP (Relief at Source) each month bringing their gross taxable earnings well under the AET. The mechanism by which DWP adjust the earnings for SIPP pension contributions is to manually update the RTI feed (exactly what they update I do not know but I suspect they simply reduce the overall earnings figure for calculating the UC award by the amount of the pension contribution, oblivious that this can have other consequences). For our claimant in question, this had the effect of bringing their earnings for UC under the AET, and because their earnings dropped below the AET for 3 months in a row, their Transitional Protection ended (see guidance below), and because their Transitional Protection ended, their claim was closed due to capital exceeding £16k - probably not the outcome the claimant was expecting!

https://www.gov.uk/guidance/transitional-protection-if-you-receive-a-migration-notice-letter#changes-that-end-transitional-protection

Changes that end transitional protection 

Significant changes to your circumstances will end your transitional protection. The following are considered as significant changes:

• a partner moving into your household
• a different partner moving into your household
• a partner leaving your household
• your earnings drop below an agreed amount for 3 months in a row
• your Universal Credit claim ends

So this was wrong. Gross pay should be used for AET whereas post sipp pay should be used for UC amount calculation.

I am still waiting 5 months later for my first MR to actually happen for my sipp contributions 

Yamor

michaels said:

NedS said:

As others have stated above, the Workgroup decision is made automatically by the system based on the information received on the RTI feed. There is not normally any human interaction (although see below for an exception!) If the system is getting the decision wrong (i.e, not in accord with the legislation) then this is a coding error (bug) in the UC platform and needs to be fixed. Without access to the code, or lots of examples to try to confirm what the system is actually doing, it's hard to know exactly what is happening, and why.

Complaining at the jobcentre level will most likely simply result in the Work Coach taking manual intervention to override the system Workgroup based on the claimant's earnings. It may resolve the issue for the claimant, but does not address nor fix the wider issue.

Recently I saw another issue whereby a claimant transferred from Tax Credits to UC under managed migration and received Transitional Protection because they had capital exceeding £16k. They pay most of their salary into a SIPP (Relief at Source) each month bringing their gross taxable earnings well under the AET. The mechanism by which DWP adjust the earnings for SIPP pension contributions is to manually update the RTI feed (exactly what they update I do not know but I suspect they simply reduce the overall earnings figure for calculating the UC award by the amount of the pension contribution, oblivious that this can have other consequences). For our claimant in question, this had the effect of bringing their earnings for UC under the AET, and because their earnings dropped below the AET for 3 months in a row, their Transitional Protection ended (see guidance below), and because their Transitional Protection ended, their claim was closed due to capital exceeding £16k - probably not the outcome the claimant was expecting!

https://www.gov.uk/guidance/transitional-protection-if-you-receive-a-migration-notice-letter#changes-that-end-transitional-protection

Changes that end transitional protection 

Significant changes to your circumstances will end your transitional protection. The following are considered as significant changes:

• a partner moving into your household
• a different partner moving into your household
• a partner leaving your household
• your earnings drop below an agreed amount for 3 months in a row
• your Universal Credit claim ends

So this was wrong. Gross pay should be used for AET whereas post sipp pay should be used for UC amount calculation.

I am still waiting 5 months later for my first MR to actually happen for my sipp contributions 

I actually don't think it's wrong, which is why I asked what happened in the end in that case.

Although for AET/CET purposes they are supposed to use gross earnings, for the rule about ending transitional protection they are supposed to use net earnings.

The decision in that case was only wrong if even in the first AP of the award the claimant had made pension contributions which brought their earned income below the AET level.

the_pink_panther_2

Yamor said:

Although for AET/CET purposes they are supposed to use gross earnings, for the rule about ending transitional protection they are supposed to use net earnings.

The decision in that case was only wrong if even in the first AP of the award the claimant had made pension contributions which brought their earned income below the AET level.

Is that definitely the case?  I found this about TP ending, point 39 says "The circumstances in which a person can lose their entitlement to transitional protection are: • a sustained (3 months) earnings drop below the administrative earnings threshold (AET), where the claimant has moved into a more intensive conditionality regime as a result."  So if the work conditionality is based on gross, then the claimant never moved into a more intensive work category as a result, based on gross she/he was always above AET.  In which case it shouldn't have ended.

Universal Credit: managed migration (parliament.uk)

Yamor

I agree that the reasoning behind the rule is due to the change in conditionality, however the regulations don't reflect that fully, and refer to net earnings rather than gross earnings.

See Reg 56(2) of the UC (TP) Regs, along with the definition of "earned income" in Reg 2(1) of those Regulations.

I think it would be difficult to convince a tribunal that the stated intention of the government should override the plain reading of the regs.

kaMelo

Yamor said:

NedS said:

Recently I saw another issue whereby a claimant transferred from Tax Credits to UC under managed migration and received Transitional Protection because they had capital exceeding £16k. They pay most of their salary into a SIPP (Relief at Source) each month bringing their gross taxable earnings well under the AET. The mechanism by which DWP adjust the earnings for SIPP pension contributions is to manually update the RTI feed (exactly what they update I do not know but I suspect they simply reduce the overall earnings figure for calculating the UC award by the amount of the pension contribution, oblivious that this can have other consequences). For our claimant in question, this had the effect of bringing their earnings for UC under the AET, and because their earnings dropped below the AET for 3 months in a row, their Transitional Protection ended (see guidance below), and because their Transitional Protection ended, their claim was closed due to capital exceeding £16k - probably not the outcome the claimant was expecting!

Interesting case, thanks for sharing! What happened in the end with this?

For those interested in some more technical details about this whole issue, here are some links:

Complete list of RTI data items sent by HMRC to DWP:
https://www.whatdotheyknow.com/request/information_sharing_between_dwp/response/1654918/attach/3/Data Items from HMRC to DWP RTE.PDF.pdf

RTI data items actually used by the UC computer system (see para. 13):
https://ico.org.uk/media/action-weve-taken/decision-notices/2024/4030663/ic-292952-w8w6.pdf

Confirmation that only RAS pension deductions are left in the earnings figure for AET purposes, not NPA pension deductions:
https://www.whatdotheyknow.com/request/universal_credit_income_for_the/response/2734835/attach/3/Response FOI2024 56938.pdf

Current FOI request about the whole issue:
https://www.whatdotheyknow.com/request/earnings_information_taken_from#outgoing-1727066

Thank you for that list of information which confirms that RTI Data Item 61 "Value of employee pension contributions paid under “net pay arrangements” in pay period" Is shared by HMRC with DWP.

RTI Data Items used by UC computer system. Paragraph 13 states:

13. The DWP explained that RTI does not calculate net earnings for Universal Credit (UC). It provides the following calculated amounts that are used in UC net earnings calculations within UC.• Taxable-Pay• Tax• NI-Contributions • Pension-Under-Net-Pay
• Pension-Contribution-Relief-At-Source
• Benefit-In-Kind-Amount.
The detail of the Universal Credit earnings calculation are set out in regulation 55 and 61 of the Universal Credit Regulations 2013.

So when calculating net earnings, NPA pension contributions are included in the calculation.


The last one, as you say is a work in progress at the moment although the question asked seems more aimed at payroll giving rather than pensions.

Finally, and hopefully you can shed some light here for me, on the link in bold (and subsequent links), I'm struggling to see where it states that only RAS pension contributions are included and NPA pension contributions are not included in AET calculations. What am I missing or where am I missing it?

Yamor

You are right that it isn't explicit, but it does state "This figure used in relation to labour market regimes includes tax, National Insurance and relief at source pension contributions deducted by employers", which strongly implies that ONLY RAS pension contributions are included, but not NPA pension contributions.

I don't see why the last FOI request (still in progress) is about payroll giving?

Regarding the point that the NPA pension contributions are provided to DWP: that is of course correct, but I don't think it is actually used by the UC computer system when calculating net earnings for the UC award calculation. The "Taxable-Pay" figure will already have deducted the NPA pension contributions.

kaMelo

Working backwards;

Yamor said:

Regarding the point that the NPA pension contributions are provided to DWP: that is of course correct, but I don't think it is actually used by the UC computer system when calculating net earnings for the UC award calculation. The "Taxable-Pay" figure will already have deducted the NPA pension contributions.

That makes perfect sense and it should end up with the same net earnings figure. My only concern here would be that if they took no notice of NPA pension deductions, the NI deduction reported via RTI would not calculate correctly against the 'taxable pay' figure. Whether they actually do such a calculation or just take the NI figure 'as is' I have no idea.

Yamor said:

I don't see why the last FOI request (still in progress) is about payroll giving?

I confused myself I think. I read question 3 here; this:https://www.whatdotheyknow.com/request/universal_credit_income_for_the/response/2734835/attach/3/Response FOI2024 56938.pdf
and then read:
https://www.whatdotheyknow.com/request/earnings_information_taken_from#outgoing-1727066
Noticed the name and assumed they were the same question from the same person. My mistake 

Yamor said:

You are right that it isn't explicit, but it does state "This figure used in relation to labour market regimes includes tax, National Insurance and relief at source pension contributions deducted by employers", which strongly implies that ONLY RAS pension contributions are included, but not NPA pension contributions.

In calculating earnings against the AET the reply explicitly includes RAS contributions, it also explicitly excludes payroll giving. The lack of any mention of NPA pension contributions could certainly imply, and it's a strong implication, that they are excluded, one could also argue that without an explicit "yes or no" it's unclear either way.

NedS

Yamor said:

NedS said:

Recently I saw another issue whereby a claimant transferred from Tax Credits to UC under managed migration and received Transitional Protection because they had capital exceeding £16k. They pay most of their salary into a SIPP (Relief at Source) each month bringing their gross taxable earnings well under the AET. The mechanism by which DWP adjust the earnings for SIPP pension contributions is to manually update the RTI feed (exactly what they update I do not know but I suspect they simply reduce the overall earnings figure for calculating the UC award by the amount of the pension contribution, oblivious that this can have other consequences). For our claimant in question, this had the effect of bringing their earnings for UC under the AET, and because their earnings dropped below the AET for 3 months in a row, their Transitional Protection ended (see guidance below), and because their Transitional Protection ended, their claim was closed due to capital exceeding £16k - probably not the outcome the claimant was expecting!

Interesting case, thanks for sharing! What happened in the end with this?

At the moment the claim is closed. I do not know if the claimant intends to request an MR or appeal the decision to close the claim. As an example, I just think it illustrates the whole area is a minefield.

NedS

the_pink_panther_2 said:

Yamor said:

Although for AET/CET purposes they are supposed to use gross earnings, for the rule about ending transitional protection they are supposed to use net earnings.

The decision in that case was only wrong if even in the first AP of the award the claimant had made pension contributions which brought their earned income below the AET level.

Is that definitely the case?  I found this about TP ending, point 39 says "The circumstances in which a person can lose their entitlement to transitional protection are: • a sustained (3 months) earnings drop below the administrative earnings threshold (AET), where the claimant has moved into a more intensive conditionality regime as a result."  So if the work conditionality is based on gross, then the claimant never moved into a more intensive work category as a result, based on gross she/he was always above AET.  In which case it shouldn't have ended.

Universal Credit: managed migration (parliament.uk)

I think the key is that their earnings have dropped from what? Is it the earnings in the first AP, or is it the indicative earnings from their Tax Credits claim from which they migrated?

alchemist777

''In calculating earnings against the AET the reply explicitly includes RAS contributions, it also explicitly excludes payroll giving. The lack of any mention of NPA pension contributions could certainly imply, and it's a strong implication, that they are excluded, one could also argue that without an explicit "yes or no" it's unclear either way''

NPA and RAS must be treated equally, as both are relievable pensions..to do otherwise would discriminate against those under NPA contributions.