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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

Do you have client on UC who’s affected by benefit cap now or who will be when it’s reduced?

Ros White
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Advice and Rights team, CPAG, London

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Hi all - looking for your help in a CPAG challenge to the legality of the reduced benefit cap - if you have client who’s on UC and already affected by the cap, or will be when it’s reduced in November, and who’d be willing to be part of our challenge, we’d really like to hear from you via our test case form -

http://www.cpag.org.uk/test-case-referrals

Thanks very much.

Ros

SarahJBatty
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Money Adviser, Thirteen, Middlesbrough

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Might come across someone in one of our LAs that goes to full UC in December, where I will be working purely on UC referrals.

Ros White
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Thanks Sarah, that would be great.

Clarkie82
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Financial Inclusion Team, New Charter Housing Trust, Tameside

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Hi Ross are you only looking for people who are affected in London?

Ros White
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No - anywhere in UK.

Clarkie82
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I have come across four this week, I will contact them and ask if they would be interested.

Ros White
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That’s brilliant - thanks!

SarahJBatty
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I’ve just thought .. UC and Benefit capped .... in our area people will generally only affected at 3 plus children (because rents lower), and if families with more than 2 children are to stay on / be diverted to tax credits until Nov 18 (as per Damian Green announcement) then the only UC cases I will come across will be anyone who has already ended up on UC somehow during ‘live service’ period? 

Tell me if I am wrong ...

Gareth Morgan
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Tell me why this will not work.

I am ‘A’ and my neighbour is ‘B’.

We are both in receipt of UC and other benefits which will be capped.

I wish to have my windows cleaned regularly and agree to pay B £435 a month to do this.

B cleans my windows regularly and to a satisfactory standard.  He / she declares those earnings to DWP and I submit details of my employers payments to HMRC.  His conditionality hours should change to reflect this.

£435 a month is £5,220 per annum.  This is below the taxable and NI amounts (LEL and thresholds) for someone with no other income than benefits.  The hours worked are such that it is above NLW.  There are no Employer NIC’s payable on this level of pay.

B’s earnings are now such that he is no longer capped.

B pays me (A) £435 a month to carry out light gardening.  The same conditions apply.

My earnings are now such that I am no longer capped.

Given that the work is genuine, and carried out, what makes this unlawful?

Pragmatically it may be better to have a triangular employment situation.

A -> B
B -> C
C -> A

Ros White
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SarahJBatty - 28 October 2016 01:57 PM

I’ve just thought .. UC and Benefit capped .... in our area people will generally only affected at 3 plus children (because rents lower), and if families with more than 2 children are to stay on / be diverted to tax credits until Nov 18 (as per Damian Green announcement) then the only UC cases I will come across will be anyone who has already ended up on UC somehow during ‘live service’ period? 

Tell me if I am wrong ...

I’m not sure but wouldn’t all that diversion to tax credits only happen after April 2017 when the two child rule comes into force? If that is right, wouldn’t all claims, including those for families with more than two children, be for UC up ‘til April 2017?

Also happy to be told I’m wrong!

Jon Blackwell
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SarahJBatty - 28 October 2016 01:57 PM

I’ve just thought .. UC and Benefit capped .... in our area people will generally only affected at 3 plus children (because rents lower), and if families with more than 2 children are to stay on / be diverted to tax credits until Nov 18 (as per Damian Green announcement) then the only UC cases I will come across will be anyone who has already ended up on UC somehow during ‘live service’ period? 

Tell me if I am wrong ...

As far as I know the diversion to legacy for 3+ children families in full service areas hasn’t yet started ( but I could be wrong because it wouldn’t necessarily require a change in the regs - see: http://www.rightsnet.org.uk/forums/viewreply/45912/  ) 

I would expect that there will be some benefits cap cases in full service areas

I think that there’d be a higher proportion of UC cap cases in NW England than other regions because the modified gateway there (  since 2014)  has meant that claimants with children (and couples) have been able to can claim UC via the live service.  (The same also applied to the handful of pathfinder areas -  I think these have since all gone over to full service anyway).

 

 

 

seand
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Gareth Morgan - 28 October 2016 02:25 PM

Tell me why this will not work.

I am ‘A’ and my neighbour is ‘B’.

We are both in receipt of UC and other benefits which will be capped.

I wish to have my windows cleaned regularly and agree to pay B £435 a month to do this.

B cleans my windows regularly and to a satisfactory standard.  He / she declares those earnings to DWP and I submit details of my employers payments to HMRC.  His conditionality hours should change to reflect this.

£435 a month is £5,220 per annum.  This is below the taxable and NI amounts (LEL and thresholds) for someone with no other income than benefits.  The hours worked are such that it is above NLW.  There are no Employer NIC’s payable on this level of pay.

B’s earnings are now such that he is no longer capped.

B pays me (A) £435 a month to carry out light gardening.  The same conditions apply.

My earnings are now such that I am no longer capped.

Given that the work is genuine, and carried out, what makes this unlawful?

Pragmatically it may be better to have a triangular employment situation.

A -> B
B -> C
C -> A

won’t they all be subject to the minimum income floor after a year as they are self employed?

MARKG
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Revenues & Benefits Manager, EK Services, Canterbury, Dover, Thanet (shared service)

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Gareth - that’s a lot of windows, do you live in the Shard?  Back in the day, this used to called ‘doing each other a favour’. How sad that things have come to this, that we have to dream up schemes to get round the welfare system. 
Not criticising you,  just a sad reflection of the times…....

Gareth Morgan
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seand - 28 October 2016 03:34 PM

won’t they all be subject to the minimum income floor after a year as they are self employed?

In this version they are employees

SarahJBatty
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Ros White - 28 October 2016 02:34 PM

I’m not sure but wouldn’t all that diversion to tax credits only happen after April 2017 when the two child rule comes into force? If that is right, wouldn’t all claims, including those for families with more than two children, be for UC up ‘til April 2017?

Also happy to be told I’m wrong!

Yes, yes of course ... April 17….. okay so a small window of ‘opportunity’ to be hit by Benefit Cap ...

Tom H
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MARKG - 28 October 2016 03:36 PM

Gareth - that’s a lot of windows, do you live in the Shard?

Lol.  A lot of “light gardening” too.  Perhaps C’s duties could be to regularly launch eggs at B’s windows and introduce litter to A’s garden.  Might be more appropriate for the characters to be H,M,P which is where they could end up if not careful.

Edit: But if it was legit and I know you wouldn’t be suggesting it in all seriousness unless it had a fair chance of being so, then I’d say that’s genius Gareth.

[ Edited: 28 Oct 2016 at 07:33 pm by Tom H ]
Cordelia
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I’m C.  What if I look after B’s children, while B is cleaning A’s windows?  If I am a registered childminder then B will be able to claim a childcare element therefore increasing his / her total UC.

Gareth Morgan
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Cordelia - 31 October 2016 03:50 PM

I’m C.  What if I look after B’s children, while B is cleaning A’s windows?  If I am a registered childminder then B will be able to claim a childcare element therefore increasing his / her total UC.

... not just an amazing baker.  Was C being capped?

lost in Granite
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forgive me for this but wouldn’t A’s earnings reduce his entitlement. (£435 - £192 X 65 %) by £157.95pm?

Gareth Morgan
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lost in Granite - 01 November 2016 03:20 PM

forgive me for this but wouldn’t A’s earnings reduce his entitlement. (£435 - £192 X 65 %) by £157.95pm?

Of course, and you’re right, I think, to assume that almost all capped cases would have kids and housing costs, giving a work allowance of £192 a month.

But, for many people that doesn’t mean this isn’t workable.

If you assume someone whose previous benefits were at the old cap level of £26,000, outside London

Previous monthly income     £2,166.67
New capped level             £1,666.67
Monthly loss                       £500.00

Payment out as employer       £435.00
Earnings in as employee       £435.00
Less taper                     (-£157.95)
Net earnings                       £277.05

Net income capped           £1,666.67
Net working                     £2,008.72

Gain over cap level                 £342.05

There is a gain from this process until the uncapped benefit level reaches £1,824.62 a month or £421.06 a week.  That’s equivalent to a cap of (unsurprisingly) £157.95 a month or £36.45 a week.