Universal Credit and bonuses
By way of background, we are a small family of three, my husband is disabled, we have a 13 year old son and I work full time.
We claim (in addition to husband's PIP) some universal credit (around £600 a month). We have a shared ownership house and pay rent and mortgage.
I have just been told I am getting a bonus at work of around £7000 (will be taxed and less than 6k). We do have big debts which could swallow this in an instant. I have told my work I don't think I can accept it - I am concerned it will come into our account, we will use it for debt repayment and then be very much worse off for months and months by cancelling our UC
Obviously I don't want to reject the chance to pay off some debts! But don't want to end up in a worse financial position!
Any advice gratefully received.
Comments
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Debt repayment is allowed while receiving UC 😊
I'd recommend paying off those debts ASAP after receiving the money.
So you are in a similar position money wise at the end of your assessment period.
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Yes paying off debt is allowed for UC purposes but as this is taxable income then it will be treated as earnings in the assessment period in which you receive it, which will reduce your UC to zero that month. It could also affect other assessment periods due to surplus earnings but that's complicated and I'm no expert on surplus earnings.
For this reason I'd advise you to get some expert advice from an agency near you. This link will help you find an advice agency local to you.
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Surplus earnings only really affects those that are self-employed.
Longer term reductions can happen if there are savings are over the threshold points, but as you will unlikely see much of the bonus you are going to be paid, as you are paying off debts then it would likely just impact the assessment period in which you received it as Poppy said.0 -
”surplus earnings really only affect those that are self employed “ I’m sorry but this is not correct. It can affect you if you are PAYE too. Please see link.
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@GGiraffe, if you know what your Universal Credit award amount is before deductions, I could help you calculate whether any of this would be counted as surplus earnings.
As @poppy123456 has correctly said, surplus earnings do not only affect self-employed people. They can affect you if you are PAYE too. They are calculated by the amount that would zero or nil your UC award, + £2500. Anything higher than that amount, would be considered surplus earnings and would be included as income in the next assessment period of UC.
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Surplus earnings is only applied when a claim is terminated and a new claim is made, if the earnings are received and calculated but do not result in the claim closing then the surplus earnings do not apply after that assessment period.
"The surplus earnings rules are most likely to apply where someone has an increase in earned income in an assessment period that reduces their UC award to nil -and- so terminates the claim" It's only upon making a new claim after that, that the surplus earnings is considered.
In the OPs situation, it is highly unlikely that a one off bonus will trigger the claim to be terminated.0 -
and on my self employed comment, maybe a poorly thought out choice of words.
I admit it would have been better to say, that the surplus earnings is more commonly seen with those who are self employed and somewhat rarely do those who are employed find themselves affected by the surplus earning rules.0 -
A claim does not need to be terminated or closed for surplus earnings to affect the next assessment period. The amount earned needs to be enough to zero or nil the UC award, plus £2500. Anything over the £2500 is then carried on to the next AP.
I agree that surplus earnings are more common for some self-employed individuals, such as those who receive payments in bulk and contract workers. However, it is not a rare occurrence for PAYE employees to find themselves in this situation, particularly with accrued holiday pay, bonuses, and pay in lieu of notice.
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You said.. “Surplus earnings is only applied when a claim is terminated and a new claim is made, if the earnings are received and calculated but do not result in the claim closing then the surplus earnings do not apply after that assessment period”
I’m sorry but again that’s not correct. Where exactly are you getting this information from?
Please see this link
If you earn £2,500 or more over your earnings limit
If you earn £2,500 or more over your limit then:
- you will get no Universal Credit
- the amount over £2,500 will be carried over and counted as earnings in the next assessment period
- you are said to have ‘surplus earnings’
This could happen if you’re self-employed or get a bonus, for example.
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Well, that information I got from the first link to told me to see :) under the "applying the surplus earnings" section.
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I can see part of what you said in the 2nd paragraph in the link I posted.
However the first paragraph isn’t in that link. If you quote something from a link please quote it word for word.
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Thank you for all the helpful information and comments. I am reading up further from the information supplied!!
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