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Pay dates and UC over Xmas (and the rest of the year?)
HMRC have made things clearer to employers in a letter today, And made some things less clear!
Update from HMRC
Dear customer,
Guidance for employers on Real Time Information reporting obligations for payments made early over the festive period
We know that some employers pay their employees earlier than usual during the festive period, this may be due to the business closing for Christmas and New Year.
If you do pay early, please report your normal payment date on your Full Payment Submission (FPS).
For example: if you pay on 21 December but your normal payment date is 31 December, please report the payment date as 31 December. In this example the FPS would need to be sent on or before the 31 December.
Doing this will protect your employees’ eligibility for Universal Credit, because an early payment could affect further entitlements.
This guidance applies only for the 2018 festive period.
Angela MacDonald
HMRC Director General, Customer Services
Surely this guidance ought to apply to all early pay dates so what do they mean by “This guidance applies only for the 2018 festive period.”?
It’s becoming a traditional Christmas new story and I think people tend to assume that UC claimants receiving an early pre-Christmas salary must be losing out, but that isn’t necessarily the case. First, the two payments need to fall in the same AP, which narrows down the number of people affected; and second, some will actually gain as a result.
Obviously the disruption to a carefully planned budget is the main issue: a person might not be entirely convinced when told “treat your early salary in the same way you would have treated your UC - in effect the salary is doing UC’s job this month and next month the roles will be reversed so that UC will do the job your salary normally would. Trust me, you’ll be better off when the dust settles”. We always seem to focus on the loss of UC for AP1 in these cases and we kind of forget that the claimant has had twice as much earnings as normal. But it does mean that there is a delay before the abnormally high UC payment is received a month later - on balance I suppose most people would choose consistency and budgeting certainty over a delayed bonus UC payment.
Been thinking through the key variables and I believe they are as follows:
- whether there is any residual UC entitlement in AP1
- whether the claimant has a work allowance
- whether the claimant earns enough to carry over the full surplus earnings disregard in AP2
I think those who do lose out will be those who retain some UC entitlement in AP1 and who do have a work allowance, because over the course of two months they have had two months’ earnings taken into account but only one work allowance deducted. The biggest gainers will be those who lose UC completely in AP1 and who have no work allowance, because (a) some of their earnings escapes being tapered in AP1and (b) the surplus earnings disregard will mean that some of the earnings carried over into AP2 are disregarded as well. Perhaps this phenomenon should be renamed the Non-dep Christmas Bonus
This just in from DfC in Northern Ireland ... re UC pay dates over Christmas:
“As is the case with DWP Universal Credit payment will not be delayed because of the Christmas and New Year bank holidays. If a claimant’s payment is due between 25 December 2018 and 1 January 2019 they may be paid earlier. We are working to ensure that payments due on 25th or 26th December will be paid on or before 24 December and for those due on 1st January that they will be paid on or before 31 December.”
It’s becoming a traditional Christmas new story and I think people tend to assume that UC claimants receiving an early pre-Christmas salary must be losing out, but that isn’t necessarily the case. First, the two payments need to fall in the same AP, which narrows down the number of people affected; and second, some will actually gain as a result.
The point of the circular is that employers should use the normal pay date in their return to RTI which should mean that UC is unchanged (outside the normal bizarre rules).
On this topic, what does anyone think about Amber Rudd’s comments in response to a question about claimants who are paid four weekly?
She says guidance has been updated - if so, it isn’t, as far as I can see, in the ADM or in any memos.
She mentions ‘appropriate adjustments’ where this occurs, but there aren’t any, are there? Does she literally mean that if you’re paid 2x in one month UC reduces accordingly? In which case, this is not a change, & doesn’t help claimants who struggle with this issue….
If they are really intending to apportion out the 4 weekly payments into a monthly equivalent, then they’d have to fiddle with reg 54 &/or the other provisions about earnings in chapter 2 of the regs. And are they doing that….?? Well not AFAIK
This looks like just another attempt to say they have dealt with a problem when they haven’t, unless I’m missing something.
Hopefully Laura Pidcock is going to put a written question in asking where the alleged guidance is! (Thanks to sarah Batty)
Was thinking that FOI request for copy of updated guidance would be good and then saw that Billy Durrant has already submitted one :)
https://www.whatdotheyknow.com/request/updated_guidance_on_2_wage_payme
Here’s the response from Alok Sharma to Laura Pidcock’s written question requesting that Amber Rudd publish the updated guidance she was referring to in her oral answer to parliament on 7 January-
‘We have worked with HMRC and employers to ensure that they are aware of the actions they need to take to reflect an employee’s earnings. Guidance was issued to employers by HMRC in December on Real Time Information reporting obligations for payments made early over the festive period.
The Department’s Universal Credit guidance for staff on earnings and the actions to take is regularly reviewed. Universal Credit guidance is published in the House of Commons Library and the Department is committed to refreshing this at regular intervals.’
Was thinking that FOI request for copy of updated guidance would be good and then saw that Billy Durrant has already submitted one :)
https://www.whatdotheyknow.com/request/updated_guidance_on_2_wage_payme
For what it’s worth (the square root of not very much), here’s the response https://www.whatdotheyknow.com/request/updated_guidance_on_2_wage_payme?nocache=incoming-1296412#incoming-1296412
So to summarise …. the issue of being a monthly paid worker paid a day or a few days early for banking/payroll reasons is in the DWP’s view an issue to be resolved by ‘employers’ … though not in the view of the Court in the recent case of four monthly paid single mums which said DWP had misinterpreted their own regulations … DWP’s response awaited ...
The issue of being paid 4 weekly is an entirely different one, which has not in fact been addressed with new guidance … it is up to the claimant to ‘be aware’ of the impact this will have one assessment period per month
It is possible that someone who is 4 weekly paid is also affected by being paid earlier than their normal pay date … so be affected by both scenarios
Is this right?
It is possible that someone who is 4 weekly paid is also affected by being paid earlier than their normal pay date … so be affected by both scenarios
Is this right?
Yes, in practice. It shouldn’t happen if the employer gives the due date, rather than the actual, date of pay to HMRC, as they ought to. A major problem is that many payroll systems don’t allow employers to submit both the dates; only the actual date of pay.
The issue of being paid 4 weekly is an entirely different one, which has not in fact been addressed with new guidance … it is up to the claimant to ‘be aware’ of the impact this will have one assessment period per month
It is possible that someone who is 4 weekly paid is also affected by being paid earlier than their normal pay date … so be affected by both scenarios
The issue highlighted in the court case by the monthly paid claimants was that because they had a UC period without earnings (the earnings having been taken ‘early’ in the previous assessment period) they lost the benefit of the Work Allowance meaning that they got less benefit overall. This is not an issue for 4 weekly paid workers so isn’t directly relevant. However the judge said that DWP should assess claims ‘on the basis’ of money received, because thats what the Regs say, not on actual money received and this could be taken to mean that a 4 weekly paid worker should have their earnings converted into a monthly amount for UC purposes. I believe the court is going to give their order at the end of February so the consequences may become clearer then.
“At the request of the Secretary of State, made after a confidential draft of this judgment had been circulated in the usual way, we will adjourn the question of remedies and any consequential applications to a further oral hearing to take place before this Court as soon as it can be arranged.”
so given what Ianb states above, and the conclusion of the case, where we have similar cases, is it best to raise a dispute now (ie by asking for mandatory recon of the calculation for the affected AP? or wait for further comments from court as stated in conclusion of case - above?
The judgment in Johnson gives a conclusion on what the law is and always has been. You do not need to wait for it to be incorporated into an Order before you can rely on it*. You could either request an MR now on the footing that it demonstrates that the DWP decision was wrong - or you could wait until everything has settled down and then ask for any time revision… Or you could wait and see if the DWP attempts to do some sort of trawl (assuming that they do not either successfully appeal or legislate the consequences away).
(*It would be a different matter if the Court had found for the claimants on discrimination rather than effectively reinterpreting the law)
[ Edited: 19 Feb 2019 at 04:54 pm by Elliot Kent ]Thank you - that is what I was debating with myself; whether to wait in the hope that there will be some clear guidance by DWP on how they will address the issue (hopefully not appeal) but amendments to DMG would be useful. If they announce a trawl, based on ongoing situation with IB to ESA and PIP (and SDP) this could take years, so I think im going to do an MR now. Thanks for clarification.
I was talking to Carla Clarke at CPAG about this yesterday - she said that advisers should put in MR requests now on basis that DWP wrongly interpreting reg 54 of the UC regs, as found by the High Court. Carla also said that CPAG would like to hear if MR requests unsuccessful.
thank you for clarification. I have appointment tomorrow to deal with my case, so will feedback on outcome
Interesting LITRG article on how problems for one of claimants in High Court assessment period case could have been avoided if employer had followed HMRC guidance on reporting wages that are paid early due to a bank holiday -
UC income calculation test case update: the Divisional Court has today refused SSWP permission to appeal to the Court of Appeal. Not yet clear whether SSWP will try to renew app to CA
According to a House of Commons Library briefing the DWP have 21 days from 26 Feb to apply for permission to appeal direct from the Court of Appeal.
I have a couple of cases where claimants have had two paydays taken into account in one AP. These are not cases paid early (as in xmas) but cases where payday falls on last thurs/friday in the month.
One of the cases doesn’t have work allowance, so it is more a budgeting question (only wages, no UC in one month, no HC paid leading to rent arrears) and no income taken into account following month leading to higher UC. No overall loss but a nightmare to balance the books.
The other case does involve a claimant with a child, so a work allowance, and therefore a financial loss.
I have asked for mandatory recon in both cases; and in both been told we cant have one! I have an appointment tomorrow with the claimant in the latter case (I havent seen exactly what was put in her JNL) and obviously will be pushing this matter again.
I just wondered if there had been any further guidance or if anyone else has had any success in this matter?
thank you
I know CPAG is keen to hear what’s happening when people ask for an MR in these cases - very interesting that being told can’t have an MR at all!
You could contact via Early Warning System -
http://www.cpag.org.uk/early-warning-system
Also, update to Daphne’s post below, CPAG has confirmed that DWP has applied direct to Court of Appeal for leave to appeal in Johnson case but no decision as yet.
Thanks Ros. I will meet with claimant tomorrow so I can see exactly what was said and then will contact EWS. Thanks for the update on the appeal too.
can anyone confirm that it is possible for employers to amend pay dates on HMRC system? (case where employer did not follow guidance on bank holiday pay and reported early pay rather than late pay)? thank you
can anyone confirm that it is possible for employers to amend pay dates on HMRC system? (case where employer did not follow guidance on bank holiday pay and reported early pay rather than late pay)? thank you
Some details of dealing with payroll errors in this LITRG update on UC and multiple payments in one assessment period - also brings together details of the Johnson case, CPAG support for bringing MRs, and tips for advising clients.
thank you Stuart. I found this last week , and have given links for employer and also used CPAG template so see how things develop. very useful information - thank you for the update