Migration from tax credits to universal credit.

jane52

Hello

Am in process of migrating over to universal credit from tax credits. Have now had a letter from tax credits saying I owe them money. I asked why and they said it was to do with some pension money I was being paid. Question: Why would this pension payment be an overpayment of tax credit money - it is not new, they have always known about it?

Then they talked of an in year finalisation letter I would be getting, which I had not heard of before. Can this be explained please. I have a feeling it will be bad news for me as beginning of April get paid by lots of people, then payments tail off. I normally pay money into pension, but paid less in recently due to wait for universal credit money that needed to cost and think that will go against me too. Understanding of in year finalisation letter would be helpful - does it influence how much universal credit I receive. I am under transitional protection in migration over from tax credits to universal credit.

Thank you for help.

Jane

poppy123456

Your in year finalisation is what needs to be completed after you've claimed UC and your TC ends. You can see information here. https://revenuebenefits.org.uk/universal-credit/guidance/existing-tax-credit-claimants/finalising-tax-credit-claims/ I would have expected you to have needed to fill that in before you receive your final Tax credits notice, which will give details of any overpayments/underpayments.

jane52

Thank you Poppy

Still waiting on tax credits in year finalising letter to arrive in post. Thank you for link you sent. It talks about "where claimants need to calculate how their self-employed income for in-year-finalisation is calculated from 6th April 2024 onwards, we recommend contacting HMRC directly until further information is available" How there has been some new legislation introduced whick affect the calculation of self employed income for in year finalisation from 6th April 2024"

Self employed so this is helpful, thankyou. Not sure I understand it, but useful to know it is happening.

poppy123456

You're welcome. Tax credits isn't my strong point and out of all the benefits it's the one with my least amount of knowledge.

jane52

Hello

Thank you for indepth information re universal credit. To make sure I am understanding transitional protection correctly in transfer from tax credits to universal credit

1)That transitional protection will ensure I am not worse off on UC on date I apply

2)That this will erode over time if other elements increase or you become entitled to other elements…..until such a time that it erodes completely. - what are these elements and

How do I ensure I keep the transitional protection in place? When claiming WTC I would having earnings, expenses and would pay 100% of gross income into my private pension. Am self employed. If I continue paying 100% of my gross income into a private pension will that keep the transitional protection in place or will it have a negative effect on it?

Will UC also look at small pension I am being paid until age 66, as that it taxable and deduct it from UC payments, or does that come under transitional protection?

Thank you for clarification of above

poppy123456

Elements of UC refer to housing, standard allowance, child element etc etc.

Yes, you will need to tell them about your pension income as this reduces your UC £1 for £1. This should be covered through TP but it will depend on the figures for your WTC.

Paying into a pension is an allowable expense when self employed but UC may not always get that right. https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/how-to-report-your-earnings-from-self-employment#how-your-self-employed-earnings-are-worked-out

Earnings do not reduce your TP as such but if earnings reduce your UC to zero and there’s no entitlement to UC for 3 months then you will lose the TP. Lots more information here. https://www.turn2us.org.uk/get-support/information-for-your-situation/universal-credit-uc-transitional-protection/when-will-my-universal-credit-uc-transitional-protection-end#:~:text=reduces%20to%20nothing.-,Your%20Universal%20Credit%20entitlement%20decreases%20to%20nothing,not%20be%20reduced%20straight%20away.

I also note from a previous thread that you have more than £16,000 in capital so you will need to report that when you claim. There will be 12 months TP for that. However, if your capital reduces to below £16,000 and then goes back above it, your TP will end, which will mean entitlement to UC ends.

jane52

"How to keep transitional Protection in Place"

Thank you for answers explaining universal credit more. Very helpful.

You state "Earnings do not reduce your TP as such but if earnings reduce your UC to
zero and there’s no entitlement to UC for 3 months then you will lose
the TP"

So question is:

How might my earnings reduce my UC to zero - what are the ways I can ensure I do not reduce my UC to zero

Thank you for help

poppy123456

Earnings received each assessment period will reduce your UC by 55% if you do not have the work allowance. Either make sure your earnings do not reduce it to zero or pay into a pension. There's lots of info in the links I provided, please have a read, if you haven't already.

jane52

Thank you

That is what I needed clarification on. I will continue paying 100% of earnings into private pension, that way it will just be private pension monies I am paid for the next year that will be considered.

Thank you for help.

poppy123456

Pay less into your pension… You will still need to report earnings, expenses and pension contributions on the last day of each AP. There's a list here of allowable expenses. https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/business-expenses-you-can-report-to-universal-credit-if-you-are-self-employed

jane52

Hello

Can you explain how disability and being unwell affects claiming universal credit. I have my first meeting at the job centre re my universal credit tomorrow. I have been unwell over last few days with a cold and temperature and being unwell has caused me to have a seizure ( I have epilepsy). I have not worked over the last few days as I recover. When claiming tax credits I would just catch up on work when feeling better. Can you explain how this works under univeral credit as I have a disability and long term illness and there will be times when I need to reduce my work as I recover. Thank you for help

poppy123456

As you're self employed at your gateway appointment if you're found to be gainfully self employed you will have the 12 month start up period and during that time you shouldn't have any commitments to look for work. For this reasons earning less shouldn't make a difference.

You maybe expected to attend appointments with a work coach every few months to talk about your self employed work.

You can also report your health condition and provide a fit note, this will start the work capability assessment process off.

I hope you're feeling a little better soon.

jane52

Thank you Poppy

Am I understanding it right that I can take a few days off when sick, without going through the work capability assessment. I set my own reasonable adjustments over the years of self employment e.g finishing work by 6pm; only so much time in front of computer; ensuring I am eating enough etc so I do not trigger seizures. If I do have a seizure I work less that day, catching up on other days. Can I just continue to do this without going through a work capability

poppy123456

I already answered your question in my previous comment.

jane52

Hello

I went to my gateway appointment and was found to be gainfully self employed and given the 12 month start up period. I was advised I would be invited back in a few months time. I am about to fill in my first income, expenses form etc and have some questions:

1)Person at jobcentre did not seem clear on payments into a private pension suggesting I log private pension money at the end of the year?. It makes more sense to me to log pension payments I make into my private pension monthly as DWP are asking for monthly earnings and expenses from me. Is there a particular place on form I need to log payment into private pension.

I also get paid a dependents pension monthly, so am assuming this needs to go on universal credit form too. It went on my tax credits form as did my private pension payments "into" pension. Is this a correct assumption? Again, is there a particular place I need to log this.

2)The person at jobcentre also advised I would need to log national insurance payments and tax payments I make on my self employed business. My tax payments I make sporadically e.g. £500 and £600 during months I can afford to make these payments. How does universal credit take these into account?

Thank you for clarification on above.

poppy123456

Any money paid into a pension, tax and NI needs to be reported when you report your earnings and expenses on the last day of each assessment period. See link https://www.gov.uk/self-employment-and-universal-credit

You should have reported the dependents pension when you claimed UC because that is treated as other income and will reduce your UC £1 for £1, same as any other pension you receive.

jane52

Thank you Poppy

That is most helpful. I have given UC the gross money I paid into my pension - do not know if that is right - I will clarify it with them. Under working tax credit it would be gross amount I had paid into my pension I would tell them about.

I will double check that they have details of my dependents pension on their system.

Thank you for your help

poppy123456

You're welcome. What date exactly did you submit your claim for UC?

jane52

Hello Poppy

I submitted UC claim on 17th May as received WTC on 16th May. My UC report is naming first assessment period as 17th May 2024 - 16th June 2024.

Details of my dependents pension are on system under tax return I did in April for tax year 2023/2024

WTC knew about it . I am pretty sure UC know about it too, but a bit concerned it was not mentioned at meeting.

I will put something in writing on portal for my UC

One further question. How do income tax payments and national insurance payments affect UC payments as this is information they ask for each month.

Thankyou

Jane

poppy123456

UC will not know about the pension unless you tell them, though they will eventually find out. It's your responsibility to tell them, which you should have done when you filled out the claim form. You will have an overpayment unless you report it.

Tax and NI are treated as expenses when self employed. All of the details are in the links I provided, have you read them? If you haven't then please take sometime to have a good read through because there's a lot of helpful information on all of those links.

jane52

That is helpful to know tax and national insurance are treated as expenses. Thankyou.

I am now being asked to give them details of my monthly earnings from May 2023 until May 2024. That seems an odd time period. It covers thirteen months, not twelve months. My self assessments and working tax credits were over a twelve month period. Is the number of months something I should query before submitting the details?

What is the information to be used for? If it is to assess my earnings do they also need to consider how much I paid into my private pension during these months

Thank you for any help with this.