UC and PILON

sporrencense

Dear all,

Having been gainfully employed for 23 years I've now found myself unemployed.

I have applied for UC and my first assessment period was 5th Aug to 4th Sep. My employment officially ended on 31/07 as shown on my P45. I received a PILON payment on 15th August which was under £6000, taxed under the standard single person tax code. 

UC are saying that counts as income for the assessment period however I was saying to them it can't be because I was no longer employed as per my P45 and the payment refers to a period of employment ending 31/07. Therefore I was asking them should the money not now be treated as capital.

Can anyone advise?

Also, will my next assessment period take any of the PILON into account?

Thanks in advance.

HillStreetBlues

sporrencense said:

Dear all,

Having been gainfully employed for 23 years I've now found myself unemployed.

I have applied for UC and my first assessment period was 5th Aug to 4th Sep. My employment officially ended on 31/07 as shown on my P45. I received a PILON payment on 15th August which was under £6000, taxed under the standard single person tax code. 

UC are saying that counts as income for the assessment period however I was saying to them it can't be because I was no longer employed as per my P45 and the payment refers to a period of employment ending 31/07. Therefore I was asking them should the money not now be treated as capital.

Can anyone advise?

Also, will my next assessment period take any of the PILON into account?

Thanks in advance.

For UC it's payment (income) in an AP so yes it's counted.

Anything over £2.5k is considered ‘surplus earnings’ and is carried over to the next AP. That means on AP2 you will have £3.5k income,  on AP 3 £1k of income, it will only be on AP4 that there is no carry over (if things remained the same).
EDIT correct info below.

Yamor

I agree with @HillStreetBlues that the PILON counts as earned income in the AP in which it is received.

However, the surplus earnings rules should not apply, as they only apply if you have been entitled to UC already. In your case, as it is the first AP, you have not been entitled.

I can't promise that the UC computer system will deal with this correctly. If they do include some surplus earnings in the next AP, you should request an MR and then appeal it. You can reference the UC Regs, Reg. 54A(1)(a), and the ADM at para. H3302, point 1.

Even had the surplus earnings rules applied, the amount carried forward to AP2 would not be £3,500. They would calculate what figure of earnings would have resulted in a nil award in AP1, added £2,500 to that, and only carried the remainder forward to AP2.
So, if your 'maximum amount' is, say, £1,000, and you are entitled to the higher work allowance of £684, then it would take earnings of £684 + (£1,000 / 55%) = £2,502.18 to reduce your UC award in AP1 to nil. You then add £2,500 to that, which comes to £5,002.18, which means only £6,000 - £5,002.18 = £997.82 is carried forward to AP2.

sporrencense

Yamor said:

I agree with @HillStreetBlues that the PILON counts as earned income in the AP in which it is received.

However, the surplus earnings rules should not apply, as they only apply if you have been entitled to UC already. In your case, as it is the first AP, you have not been entitled.

I can't promise that the UC computer system will deal with this correctly. If they do include some surplus earnings in the next AP, you should request an MR and then appeal it. You can reference the UC Regs, Reg. 54A(1)(a), and the ADM at para. H3302, point 1.

Even had the surplus earnings rules applied, the amount carried forward to AP2 would not be £3,500. They would calculate what figure of earnings would have resulted in a nil award in AP1, added £2,500 to that, and only carried the remainder forward to AP2.
So, if your 'maximum amount' is, say, £1,000, and you are entitled to the higher work allowance of £684, then it would take earnings of £684 + (£1,000 / 55%) = £2,502.18 to reduce your UC award in AP1 to nil. You then add £2,500 to that, which comes to £5,002.18, which means only £6,000 - £5,002.18 = £997.82 is carried forward to AP2.

Thanks, that's very useful and much appreciated