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A bit of everything! IS run on, HB run on, new job blah blah blah
Hi everyone
A single parent on IS, CA, H B/CTR is starting a job tomorrow. 18 hrs a week @ living wage so this will end all but CTR & they will need to claim UC. They are very anxious especially about being without funds over Christmas so my questions are:
1) Next payment of IS will be on Fri and CA, Monday. Job starts tomorrow (Thurs) so bearing in mind the IS 2-week run on and assessment periods, when is the best date to submit the UC claim? They will be paid monthly but they don’t know the payment date for December.
2) They have the option of being paid 2 weekly or monthly - is one better than the other?
3) They are owed £2000 from a one-off art job, they had to borrow money from friends (£550) to get the equipment needed so how would this be treated by UC?
Many thanks
1) Given that they are inevitably going to have some wages included in the first UC assessment period I can’t see any advantage in delaying claiming UC.
If starting the job ends IS entitlement I am not sure the two week run on applies or whether the run on relies on still meeting the qualifying conditions for the legacy benefit. There was a discussion before about this but I can’t recall what the conclusion was.
2) Two weekly may assist their cashflow but will result in some months having three payments and the UC for that AP being suppressed which may confuse them Regular monthly payments (assuming it is monthly and not four weekly) will result in regular UC amounts.
3) Is this a sort of self employment? I think they will have to declare the money when received as s/e income. Not sure if she can declare the loan repayments as s/e expenses to offset the income, provided she pays them back in the same AP, or whether there is a different treatment for a loan.
Thanks Ian. Gov.uk states
“Run-on payments
From 22 July 2020, if you are receiving income-based JSA, income-related ESA or Income Support, and either:
choose to claim Universal Credit, or
a change in your circumstances means you need to claim Universal Credit instead
you may receive up to an additional 2 weeks’ worth of those payments.
This is a one-time payment and does not have to be paid back”.
As there’s been a change and she needs to claim UC instead that would surely mean that she can get the run on?
She wants to set up a business in the future; her job is not in the same field.
‘May’ be entitled.
I think the question is whether the run on is an additional payment of the entitlement immediately prior to claiming UC or whether the two week run on is a delay to the normal termination of the legacy benefit resulting from the UC claim. If the latter then if the legacy benefit has ended for another reason the run on would not apply.
As said before this has been discussed in another thread but I can’t recall if there was a definite conclusion (and I can’t find the thread).
[ Edited: 2 Dec 2020 at 09:30 pm by Ianb ]The IS run-on issue was discussed here. The ADM is clear that IS would stop if entitlement ends - see para 4 of the Memo linked to on that thread.
The UC Regs use tax terminology for self-employed income (“trade, profession or vocation”). In tax law, even an isolated transaction is included within the meaning of “trade” as long as it’s a “venture in the nature of trade” (ITA 2007 s. 989 - see here for example). Whether that should apply to UC is extremely questionable.
However, if it isn’t included within the meaning of “trade”, it would still count as “other paid work” (UC Regs r. 52(a)(iii)). The problem is that the regs are silent on how such income should be calculated, so you could possibly argue they shouldn’t use the “cash basis” used for regular s/e earnings.
It is very likely DWP will want to use the cash basis, and therefore include the £2000 as income in the AP it is paid. Unfortunately it would count as income in full with no deduction for the equipment, even if the loan is paid back in the same AP.
It is very likely DWP will want to use the cash basis, and therefore include the £2000 as income in the AP it is paid. Unfortunately it would count as income in full with no deduction for the equipment, even if the loan is paid back in the same AP.
Does it matter that the £550 came from a loan? Could it not just be put down as a business expense?
It can be a business expense, but only in the period in which it was spent, which won’t help her!
I just mentioned the loan to point out that the repayment of the loan isn’t an expense.
Aha, yes I was just editing my response to say about both having to fall into the same AP.
Suppose UC is much a system that punishes people with any type of irregular income (and expense).
EDIT: Heck, any benefits system. This has been a big issue in Norway during Covid too.
Another discussion about the IS run on:
https://www.rightsnet.org.uk/forums/viewthread/16616/
Cheers
Alex
Just a thought but if she is in receipt of Child Tax Credit, may be worth exploring the option of adding Working Tax Credit as an alternative option to UC if only to weigh up the pros and cons of either or either.
deleted - double post (technical glitch!)
[ Edited: 3 Dec 2020 at 01:19 pm by Ianb ]The IS run-on issue was discussed here. The ADM is clear that IS would stop if entitlement ends - see para 4 of the Memo linked to on that thread.
Charles, thanks for finding that previous thread. I simply couldn’t remember where I’d seen it. I can see that the conclusion was as I remembered - which seems to be that it’s not entirely clear despite what the ADM says.
Just a thought but if she is in receipt of Child Tax Credit, may be worth exploring the option of adding Working Tax Credit as an alternative option to UC if only to weigh up the pros and cons of either or either.
This is an excellent point. Obviously it’ll depend on the circumstances, but often when someone starts working in the middle of a tax year, their WTC will be relatively high that first year due to income being calculated over the whole tax year. She will more likely than not be better off on WTC - at least for now.
Thank you everyone!
(BTW the cared for is 23 so no tax credits). Will check that IS previous thread now.
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