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Transitional protection
Client has received a Migration Notice with a deadline in July. She is currently getting tax credits, including CTC for her 19 year old twins, who are in full time non-advanced education and will remain so into the next academic year.
Because of the difference between the definitions of a QYP for tax credits and for UC, when the client transfers to UC she will stop getting a CRE for the twins on 31st August 2023, whereas if she had stayed on tax credits her CTC for the twins would have continued into 2024. The potential loss is exacerbated because one of the twins is soon quite likely to be awarded PIP, thus entitling the client to an extra disabled child element/addition.
As I read the rules, the client won’t get any transitional protection in respect of the above discrepancy, because it won’t have arisen at the time she transfers, and TP is measured by reference to a snapshot of the legacy and UC entitlements as of the transfer date only.
The only possible way out I can see for the client would be to ask the DWP to cancel her Migration Notice under Reg 44(5)(c) of the UC (TP) Regulations, on the grounds that it was clearly not in her interests to migrate.
Does anyone have views about/experience of this kind of anomaly?
(Interestingly, if the migration were to take place after 31st August, when the client was still getting CTC for the twins but wouldn’t have been entitled to a CRE under UC, the anomaly would work in the opposite direction, in that she would get TP and continue to get it even after the twins had reached 20, when her CTC would have ended.)
This is a really interesting one, and a scenario I’ve thought about on a few occasions.
Current DWP guidance is not to issue migration notices to claimants who are getting CTC for a 19-year-old. See page 10 of the Case Manager Guidance document here. You could refer to this in your request for the migration notice to be cancelled.
Regarding your last point about migration after 31st August, I have a feeling that DWP will argue that under Reg. 54(2)(a) of the UC(TP) Regs they can still calculate TP based on the claimant getting the child element for those children. I have an even stronger feeling that they will do this automatically in practice, even if they do not actually make the aforementioned argument.
However, I agree with you that TP should be calculated without the 19-year-olds being included in the “indicative UC amount” calculation. The reason for this is that the Reg. 54(2)(a) refers to a “qualifying young person”, and (per Reg. 2) has the meaning given by the UC Regulations. It therefore does not include 19-year-olds after the 31st August.
Thank you Charles, that’s extremely helpful.
James
Am I right in thinking that, assuming DWP were to accept Charles’s interpretation of Reg 54(2)(a), the extra money for a QYP (or 2 QYPs in this case where the children are twins) is baked into the transitional element in perpetuity? It’s not just a case of support for the children continuing into 2024, that money stays in the UC award until it erodes in many years’ time, or something mentioned in Reg 56 happens.
If that is correct, it will be very much in the interests of such claimants to undergo managed migration in the window during which their legacy benefits include money for QYPs while the indicative UC amount does not.
Am I right in thinking that, assuming DWP were to accept Charles’s interpretation of Reg 54(2)(a), the extra money for a QYP (or 2 QYPs in this case where the children are twins) is baked into the transitional element in perpetuity? It’s not just a case of support for the children continuing into 2024, that money stays in the UC award until it erodes in many years’ time, or something mentioned in Reg 56 happens.
If that is correct, it will be very much in the interests of such claimants to undergo managed migration in the window during which their legacy benefits include money for QYPs while the indicative UC amount does not.
I think this is correct, yes. And it was why I was slightly disappointed when I saw the guidance that they weren’t going to issue migration notices to claimants with a QYP aged 19!
Another example of this sort of idea is where a claimant on Maternity Allowance at the point they claim UC. Assuming DWP do the TP calculation correctly, it could lead to an increased transitional element which could continue for many years.
With this particular example however, it appears that the process for calculating TP involves simply bringing in “other household income” from tax credits and using that as “unearned income” for the indicative UC amount calculation. If this is done, then the claimant would not get this advantage.
I think this is completely wrong, and have tried/am trying to take this up through the stakeholders forum (with thanks to Daphne!).
Update - client’s Migration Notice was cancelled, and she will stay on tax credits until her twins’ 20th birthday.
That is very good to hear James.
Charles, can I ask about your MA point.
Surely if the indicative UC treats the MA as unearned income this should lead to a transitional element, because in contrast, the total legacy amount (for tax credits only) will ignore all MA?
I think I’m missing something and/or misunderstanding! I’m concerned about this as it will affect a fair few people
Hi Will
Yes, I agree, it certainly should lead to a transitional element as you say, and that is what I said should happen in my second paragraph above.
The issue is that DWP seem to simply be carrying over the ‘other household income’ figure from tax credits, and using that as ‘unearned income’ for the indicative UC amount, instead of making their own calculation of ‘unearned income’. If they do this, then claimants will clearly lose out, as MA won’t be included in the ‘other household income’ figure held by HMRC. This is what I was mentioning in my third paragraph above.
My initial suspicion that they would be doing this came from looking at the MGP1 form, which requires HMRC to send UC their figure for ‘other household income’. My suspicion was confirmed by a reply Daphne received from DWP when she raised it with them on my behalf.
I have since noticed however that the guidance for the MGP1 form does tell HMRC staff not to include any social security benefit income in the details they pass over to UC. This therefore makes me think that perhaps social security income will in fact be calculated by UC independently, in which case this won’t be an issue.
I still think it is completely wrong for UC to use the ‘other household income’ figure from tax credits for other types of income, even if they don’t use that for social security income.
Hmm got it Charles.
So a possible problem. As you know, the TP regs are silent on where UC should get unearned income figures from, so I am hopeful that they don’t get social security income at least from HMRC (which your research on the MGP1 form & guidance would suggest they don’t), but obtain it independently as you suggest, ie from the UC claim form.
And I agree that they should not use the HMRC figures for any unearned income anyway (as otherwise that would be stipulated in reg 54) - instead, it should be unearned income as would be taken into account for the UC they would be entitled to on migration day using their circumstances then.
I was worried that you had seen cases where this hadn’t happened & indicative UC left out unearned income that would be taken into account for actual UC…do let us know if you do!
I wouldn’t actually say the Regs are silent, as they do say (Reg 54(1)) “by reference to the claimant’s circumstances on the migration day”, and also say (Reg 54(7)) “supplemented as necessary by such further information or evidence as the Secretary of State requires.”
That means UC will have to obtain the figure from the claimant, potentially via the claim form.
In one of their responses to me (via Daphne), DWP tried to justify their position by quoting Reg 54(7), which also states “The calculation of the indicative UC amount is to be based on the information that is used for the purposes of calculating the total legacy amount”.
However, I strongly believe that this doesn’t allow UC to simply bring over “other household income” from tax credits, considering how different this figure is likely to be from the real “unearned income” figure.
And as you say, if that was the intention, it should have been listed in Reg 54(2).
I haven’t seen any cases. In fact, I’ve only actually had three migration notices, one of which won’t be claiming UC (change in relationship status), and the other two haven’t made their claims yet (I think their UC entitlement will be higher anyway). So this is all still theoretical for me!
I agree Charles, I think it must be obtained from the claim form - and I certainly can’t see any justification for getting it from HMRC. The DWP response is a little worrying & suggests they don’t fully grasp your concern.
You’re right that the regs are not exactly silent, but nor do they specify as precisely as they do for earned income. But I also agree that 54(7) implies that other info needed is as required by the SSWP, so that fits with the claim form theory.
I’m glad this is theoretical so far! I don’t have any examples where unearned income has not been included in indicative UC due to being disregarded for tax credits (but we are talking just a handful of cases as yet).
If the 19yo is the last child of the family, the indicative UC amount will include the work allowance. But if the parent cannot qualify for the WA without children much of the benefit of the TP will be lost. A parent getting the disabled worker element and no PIP can’t be assessed for LCW. They would be better off with TP calculated without WA.
(Please note that I no longer work for Citizens Advice Leics - I now work for Central & East Northants in the Macmillan team.)
and as if by magic - updated :)
Thank you Daphne :)