Universal Credit coming my way - what does this mean for disability payments?

Commanded2bwell
Commanded2bwell Community Member Posts: 112 Contributor
in Benefits and income
I just heard on local radio an advert that everyone in my area who is receiving Working Tax Credit will be transitioned onto Universal Credit by 2024.

I only recently started receiving PIP. As a self-employed sole trader I receive Working Tax Credit and thus, since getting PIP, have qualified from the disability element on top of the regular Tax Credit payment. And I felt like I could finally breath a sigh of relief, because I have something more steady to rely on than the fickle day job, which my disability makes all the more difficult...

But now Universal Credit appears on the horizon! I have heard absolutely nothing good about this system, but my last period of unemployment predates the introduction of Universal Credit, so I've never been on it and don't completely understand how it works. 

Can someone help me understand how, if at all, my Universal Credit arrangement might work given that I'm on PIP and receiving the disability element of Tax Credits? Will the disability element go away?
As a self-employed sole trader, will I even qualify for Universal Credit?


Comments

  • calcotti
    calcotti Community Member Posts: 9,999 Championing
    It's not specific to your area. That is nationwide policy. Should all have been done by 2016 under original timetable.

    PIP is completely unaffected.

    Universal Credit will replace your Tax Credits. There is no disabled worker element In UC but at the time you are required to transfer under 'managed migration' you will get at least the same amount of UC as you do Tax Credits because you will get transitional protection. However, if you have savings over £16,000 you will cease to be eligible for UC after 12 months.

    Tax Credits are worked out annually, UC is worked out monthly. On UC as a self employed person you will have to report all business income and expenditure each month. The difference will be taken as your earnings for the month an UC calculated based on this figure. After 12 months you may be subject to the Minimum Income Floor which means that if you earn less than 35 hours x NMW/week you will typically still be treated as if you have.


  • poppy123456
    poppy123456 Community Member Posts: 64,375 Championing
    Your earnings will also reduce your UC by 55% if you don't have the work allowance. If you don't have children on your claim then you won't have the work allowance. You will need to be assessed and found to have either Limited capability for work (LCW)  or Limited capability for work related activity (LCWRA).



  • Commanded2bwell
    Commanded2bwell Community Member Posts: 112 Contributor
    calcotti said:
    It's not specific to your area. That is nationwide policy. Should all have been done by 2016 under original timetable.

    PIP is completely unaffected.

    Universal Credit will replace your Tax Credits. There is no disabled worker element In UC but at the time you are required to transfer under 'managed migration' you will get at least the same amount of UC as you do Tax Credits because you will get transitional protection. However, if you have savings over £16,000 you will cease to be eligible for UC after 12 months.

    Tax Credits are worked out annually, UC is worked out monthly. On UC as a self employed person you will have to report all business income and expenditure each month. The difference will be taken as your earnings for the month an UC calculated based on this figure. After 12 months you may be subject to the Minimum Income Floor which means that if you earn less than 35 hours x NMW/week you will typically still be treated as if you have.



    Hi, thanks for your reply.

    So, I assume the transitional protection isn't permanent? Is there a time limit after which it is removed?

    The Minimum Income Floor: do you mean that if after 12 months, I earn less than the national minimum wage, I will be treated as if I actually earn up to the national minimum wage? So if I'm earning next to nothing, I'll be treated as if I'm actually okay? That doesn't make sense.
  • Commanded2bwell
    Commanded2bwell Community Member Posts: 112 Contributor
    poppy123456 said:
    Your earnings will also reduce your UC by 55% if you don't have the work allowance. If you don't have children on your claim then you won't have the work allowance. You will need to be assessed and found to have either Limited capability for work (LCW)  or Limited capability for work related activity (LCWRA).




    Hi, thank you for your explanation. I've just run the entitledto benefits calculator. It says that if I transferred to UC, I would only qualify for approximately 20% of the amount I'm receiving as working tax credit, which includes the disability element. 20%! I don't believe the current calculation is incorrect, or HMRC would have noticed by now. So why on earth is the UC entitlement so small by comparison? Or does this calculator simply not work?
  • poppy123456
    poppy123456 Community Member Posts: 64,375 Championing
    Transitional protection isn't permanent, it erodes over time so if other elements increase the TP decreases. There's no specific time limit.
    Commanded2bwell said:
    calcotti said:
    It's not specific to your area. That is nationwide policy. Should all have been done by 2016 under original timetable.

    PIP is completely unaffected.

    Universal Credit will replace your Tax Credits. There is no disabled worker element In UC but at the time you are required to transfer under 'managed migration' you will get at least the same amount of UC as you do Tax Credits because you will get transitional protection. However, if you have savings over £16,000 you will cease to be eligible for UC after 12 months.

    Tax Credits are worked out annually, UC is worked out monthly. On UC as a self employed person you will have to report all business income and expenditure each month. The difference will be taken as your earnings for the month an UC calculated based on this figure. After 12 months you may be subject to the Minimum Income Floor which means that if you earn less than 35 hours x NMW/week you will typically still be treated as if you have.


    So if I'm earning next to nothing, I'll be treated as if I'm actually okay? That doesn't make sense.
    No, that's not what it means. The MIF means if you earn less than 35xNMW you'll be treated as earning this amount (even if you're not) and your UC will be based on those earnings. See link. https://www.citizensadvice.org.uk/benefits/universal-credit/on-universal-credit/how-universal-credit-payments-work-if-youre-self-employed/


  • calcotti
    calcotti Community Member Posts: 9,999 Championing
    edited March 2022
    If when you claim UC you declare a health condition you will be referred for a Work Capability Assessment. If found to have Limited Capability for Work or Limited Capability for Work and Work Related Activity you will be exempt from the MIF. I should have said that earlier. 

    Because there is no equivalent to the disabled worker element in UC people who get the disabled worker element are one of the groups who get less on UC. Depending on your earnings I suppose it is possible that UC would only be 20% of the Tax Credits. Impossible to say without more information about your circumstances.

    As advised previously, if you transfer under managed migration you will get transitional protection to make up the difference at the time of transfer. The calculator will not include the transitional protection.

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