PILON payment and exsisting universal credit claim

TJ77

I am currently on an unpaid carer break and giving my job up to care for my daughter. I am currently sorting a settlement agreement which is going to be paid as a PILON payment (3 months wage equivalent). I already recieve universal credit and have the carers element on it. 

My PILON payment will be around £7000. This will be paid as one payment. 

How will this affect my universal credit claim?

Obviously the month I recieve it I won't be eligible to any as the deductions (alongside my husbands deductions) will be more than we awarded. 

But, what happens after that month? As the PILON payment is for equivalent of 3 months pay will I be penalised for 3 months? Or will whatever is left then be classed as capital and savings after the deduction the first month when the PILON payment is made? Am I then just deducted the capital and savings amount for being over £6000. 

Will I be sanctioned at all for any of this? The payment or giving up my job? I assume not as I have the carers element.

Also, I haven't earned this year so still have my full tax allowance for the year. So the PILON payment would not reach the tax threshold (it is about £11500 before tax). Am I corrsct in thinking when I am paid the PILON payment I will pay the tax and then recieve it back at the end of the tax year? If this is the case how does this affect Universal credit when I get the tax back?

Thanks for the help

Spoonie_Turtle

No sanctions because you're a carer, correct.

There is a rule about 'surplus earnings': https://www.turn2us.org.uk/get-support/information-for-your-situation/surplus-earnings-rule
It's about the amount you receive rather than the time period it's for, and will probably affect the next month's UC.  Possibly the following month too, but you'd have to work out the maximum you can earn between you before nilling your UC claim in order to know for sure.  Or if you're not sure how to work it out, tell us your maximum UC entitlement, whether you claim help for housing costs, whether you have a dependant child, and any deductions for anything other than earned income, and we can work it out for you.

(I don't know about the tax question, sorry.)

TJ77

Thank you for that. Would you be able to work it out? This is this month's statement, it is usually the same each month

TJ77

This is what we are entitled to

TJ77

These are the deductions

8dayweek

Surplus Earnings are carried forward when you receive Earnings that are more than £2.5k above the point where your UC would reduce to nil. 

Hmmm…

UC before Deductions x 0.55 + Work Allowance should be point where UC is reduced to £0. 

So that figure would be £4903.53… so £2.5k over this would be £7403.53

7k PILON + Partner’s wage = £8508.80

I’m thinking £1105.27 is likely to be carried forward as Surplus Earnings. 

 

8dayweek

So I think, with that in mind:

AP in which you receive PILON = Partner’s Wage + PILON results in £0 UC Award. 

Following AP = Partner’s Wage £1508.80 + carried forward Surplus Earnings £1105.27 (£2614.07 minus Work Allowance £404, less taper rate 0.55) = £1215.84 deduction for Wages.

AP after that = Wage deduction just for Partner’s Wage (back to “normal”).

I think…

TJ77

Thank you, much appreciated. It's so scary giving up such a stable good wage and not knowing how money will be effected. Having never been on benefits I haven't got a clue!