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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

Universal Credit and SMP paid in lump sum

JoW
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Financial inclusion manager - Wythenshawe Community Housing

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Joined: 7 September 2012

Claimant is on a zero hour contact and has just finished work as has had a baby. She was paid a lump sum of around £4k which her employer says is her SMP for the next 39 weeks. UC have therefore said nil UC entitlement.  I would have assumed that it would have been apportioned over the next 39 weeks. Presumably she will therefore get full UC in next 8 months based on nil SMP.

Has anyone come across this before?

WillH
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Locum adviser - CPAG in Scotland

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As far as I know UC just look at the income paid in the assessment period, regardless of what period it covers (and indeed the first UC caselaw was about this).

So it sounds correct. If she is in a gateway area, then she doesn’t have to claim again once she’s in an AP with nil earnings, she just informs DWP to revive her UC. If she’s in the full service, she does have to reclaim but I understand that this is fairly straightforward as her details will have been retained (be good to have feedback on whether this is as simple as it’s made out!)

JoW
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Financial inclusion manager - Wythenshawe Community Housing

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Thanks. I have been trying to work out whether she will be better or worse off for having been paid her SMP as a lump sum.

1) No UC (including no housing element) for 1 month but then full UC based on nil income for 8 months vs
2) UC for 9 months based on a weekly income of SMP at £140.

I think she is better off in scenario 1 but am not wholly confident in my calculations

ps as I write this we have just discovered that her employer made a mistake in their calculations so she got paid half the money on day and half the next. The second payment fell into her new AP so UC are saying she won’t get any UC for that month either.

WillH
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Locum adviser - CPAG in Scotland

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I’m afraid that sounds correct too. It’s one of the effects of how UC works and it’s a problem whenever a large amount of money falls into one AP, or more than one payment falls into one AP etc.

Even with the higher work allowance there would still be some effect of SMP on UC were SMP paid over the usual 9 months and so you may be right (I haven’t done the calculation).

HB Anorak
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Benefits consultant/trainer - hbanorak.co.uk, East London

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As the Regs stand they should be better off this way once you get to the end of the 39 weeks.  Having enough earnings to qualify for nil UC in the first couple of months means that some of that money is escaping being tapered: it only needs a certain amount to taper UC down to nil, any surplus earnings above that level are invisible to the means test, whereas spread over 39 weeks it would all be tapered.

Delays in the development of the bells and whistles for the UC system sometimes have advantageous side-effects and here is an example of one: the twice-delayed surplus earnings rule, which is designed to prevent the claimant obtaining a windfall in cases like this, is still not in force (presumably because the system is still unable to apply it).  In theory you could collude with your employer and arrange to have your annual £1m salary paid once a year, with eleven barren months in between, and qualify for full UC.