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Forum Home  →  Discussion  →  Universal credit migration  →  Thread

UC Migration whilst on Tax Credits

Adam Evenson
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Blackpool Centre For Unemployed

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Total Posts: 324

Joined: 9 July 2020

Hi

Something which I have only just come across (I wasn’t involved in the migration process) is an Tax Credit overpayment caused when moving over the UC. I have another post about the specific client but this question is more about the practicalities of migrating over to UC.

Is there a “good date” to migrate over to UC when the client is on Tax Credits so as to avoid any overpayments or is it inevitable due to the way Tax Credits is calculated (i.e. annual amount divided by number of ‘pay days’)?

Would be grateful to hear people’s thoughts/best practice in these cases so I know in the future if I do get a tax credit migration?

Thanks

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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Total Posts: 1500

Joined: 27 February 2019

I would say that the large majority of cases I’ve seen have had some sort of overpayment after migrating. Admittedly, virtually all the cases I’ve had have been in-work claimants.

In many cases, HMRC have continued paying the client at least one payment after migration.
But even without that, the way tax credits payments are ‘profiled’ (to use HMRC’s terminology) means that whenever a recalculation is made in-year, then almost always the claimant is slightly ‘ahead’ in what they’ve received, so an overpayment is all but guaranteed.
Perhaps a UC claim date just prior to a tax credit payment date may have helped, but in that scenario, they will almost certainly still get the next tax credits payment despite the UC claim, making the situation worse!

To be honest, I’m not terribly fussed if the overpayment isn’t too large, as it just gets repaid from the ongoing UC award.