From Tax Credits to UC. Is timing important? 

I wonder is there a need to have a strategy in deciding exactly which date should be chosen for the start of the UC claim? I see that Tax Credits stop immediately the claim is made. Does this mean there is an advantage to claiming UC on the date after a Tax Credit payment is made?  I have a client whose weekly payment of Tax Credits is around £320. And of course for people who are paid 4 weekly it could be £1300.  Or is it calculated out with reference to the actual days of the year and claimed back if needs be?

I think the main advantage to claiming UC the day after the tax credits payment is received isn’t so much one of whether or not the claimant will lose money but whether they can manage financially until the first UC payment is made.  Even with a 4 weekly award of tax credits there is still a gap between what would have been the claimant’s ‘usual’ payment date and the first payment of UC but this could be as little as a week and a half in most cases if planned the way you suggest.

HMRC will recalculate on a daily basis, so as Mairi says, the main reason to claim immediately after a tax credit payment is cash flow. I should note though that we are seeing many people still being paid a week, or even two weeks, after the UC claim has been made.

There are other things to consider.

From the tax credits side, the in-year finalisation process can mean there are significant differences depending if you claim UC just before or just after you’re paid your wages.

From the UC side:

1. The “whole month approach” can mean that there are more advantageous times to claim if a change of circumstances is expected in the near future.

2. To maximise transitional protection, there can be advantages in certain claim dates. The simplest example of this is someone with capital over £16k - they should normally claim as late as possible.

3. Usually more straightforward if the UC claim is not made around the time they are paid their wages.

Thanks for comments.  Yes ,  at best we could have a 5 week gap between last tax credit payment and first UC payment. At worst it could be 9 weeks so very hard without resorting to an advance.