TPE and addition of DCE (after migration date) 

I have a cl currently on CTC, WTC and PIP with £16k+ capital

Cl was working f/t but is currently on sick leave with contractual sick pay topping up to full pay for another 3month (then dropping to half pay for 6m)

Cl had a migration date of 17/6 which has been extended to 15/7

Cl was advised to make DLA for claim in April however due to personal circumstances hasn’t done this.

a few questions.

1. cl is due to use capital (from inheritance) for household repairs and a new car - am I correct in thinking it’s in her interest to have the capital at the point of the UC claim rather than not (decreasing indicative UC award therefore increasing TPE)

2. Cl is making call to start the DLA claim today - as I understand it the TPE won’t be recalculated to account for any retrospective DCE in TC, the DCE would be added from the first AP and TPE would remain unchanged (instead of reduced due to UC increase?)

To note from exploration higher rate DLA care is would be likely

3. Cl has been seriously considering leaving employment due to ill health so I need to advise about the loss of TPE when earnings drop below the AET for 3 APs in a row. If cl left employment and claimed during the WTC run on how would this impact the calculation of earned income for the indicative UC award (accounting for her ‘estimated annual earnings changing in TC from approx £22k pa to approx £5k pa) - with consideration to making the claim after the deadline date, but before the final deadline date to avoid her next ‘full pay’ falling in her first AP

You’re claiming DLA when PIP is in payment?

I assume she’s claiming DLA for her child, and she herself is on PIP.

On Tara’s points:

1. Yes, definitely. Unless you think DWP may argue that the expenditure isn’t reasonable in her circumstances, and therefore treat her as having notional capital.

2. Mark Willis (in his article in the latest CPAG Welfare Rights Bulletin) suggests notifying HMRC now that she has a DLA claim pending, so as to ensure she comes within Reg 62(1)(b) of the UC(TP) Regs. This would allow the Transitional Element to be recalculated when HMRC revise her tax credits award. In practice, it won’t be easy to do this, as HMRC will normally refuse to accept such a report of a change before a decision is made on the DLA claim. But I think if you persevere you should manage.
If you are really confident that higher rate DLA care will be awarded, then there’s no need to try and get the TE calculation revised, as it won’t be affected anyway (the rates in TC and UC for a child on HR care DLA are the same).
If the TE calculation is not revised, then I agree with you that the TE won’t be reduced once the disabled child element is added to her UC, as the extra element will be included in her first AP.

3. I think you have this slightly wrong.
The rule about earnings falling below the AET for more than 3 months is not related to the amount of earnings used for the indicative UC amount calculation, but rather on the actual earnings in the first AP.
I would be very wary of advising her to leave her employment while she still has a contractual entitlement to sick pay, as that could bring the notional earned income rules into play.
Also worth noting that claiming after the deadline day but before the final deadline does not change anything, as everything will be calculated in precisely the same way as if she had claimed on deadline day (as the UC claim is backdated).
She will want to claim UC while she still has entitlement to WTC, as that will increase any potential TE. However, that in itself does not stop her providing HMRC with a lower estimate for her 23/24 annual earnings if she will be stopping work.
But, in most cases, the TE is larger when HMRC have a higher estimate of earnings (due to the lower taper rate in tax credits).

Thanks Charles - yes, sorry should’ve clarified it was for one of the children

3. oh I would never advise she leaves employment I just wanted to be prepared for any questions she may have once I explain the AET rule

Because it’s so close to the deadline I don’t think there’s a way to avoid earnings over the AET in the first month as she’s paid monthly and would have full earnings this month and even if she ended the employment there would be owed earnings next month too

Her TPE is currently around £600 accounting for the tariff income which should be below £6k within the next few months accounting for the booked bathroom repairs and car purchase. If TPE ends, not having tariff income and the addition of the Carer Element (or potentially LCWRA) should negate some of that financial loss.

If there is a good chance her income this tax year will be lower than last year, then she should inform HMRC before making her UC application.

The optimum level to maximise her TE is likely to be an annual income of around £12.5k.

It is also normally advantageous to claim UC just before her salary is paid, as due to the way in-year finalisation of tax credits works, that could improve her tax credits entitlement (although it doesn’t affect the TP calculation). But it sounds like you have missed that option now.