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Pension aged person can still withdraw UC?
We are currently advising a working age person who is working and about to turn pension age. She is currently better off claiming UC as she cannot claim WTC. She wants to defer her state pension.
Can I confirm that it is currently possible for pension-aged people to withdraw their UC claims and make fresh PC/HB claims.
Many thanks
If she is single, she cannot be entitled to UC as soon as she reaches pension age - she fails s4(1) of the Welfare Reform Act. Not only can she claim HB and SPC, that’s all she can claim. UC should stop automatically.
There have been threads on here showing that it isn’t that simple in practice: the UC system amazingly does not seem to have this basic validation. Perhaps that was just the old “live service” lash-up though.
Is there any point in deferring her state pension if she’s going to be claiming PC?
Sorry, wasn’t thinking properly. She will continue to work for the forseeable future so won’t get PC.
So basically UC should stop automatically and she’ll only get HB and tax credits are just a total loss.
Is she ineligible for PC because of the amount of her earnings? That would make sense if she was only getting UC because of the housing element, but otherwise she can still claim PC as far as I know.
The thing about tax credits is interesting - in principle if a person for whom HB has been abolished is able to claim HB again once they hit PC age and are no longer under the UC system, they should be able to do the same thing for tax credits. This might be a case of LAs being more sensible than HMRC, but I’d be interested to hear the take of someone who’s better versed in the regulations.
New Tax Credit claims for pensioners have been abolished from 1 February by the No 32 Commencement Order
Sorry, wasn’t thinking properly. She will continue to work for the forseeable future so won’t get PC.
So basically UC should stop automatically and she’ll only get HB and tax credits are just a total loss.
New Tax Credit claims for pensioners have been abolished from 1 February by the No 32 Commencement Order
I believe she can actually make a claim for tax credits upon turning pension-age. My reasoning is as follows:
1. The provisions in the No. 21 and No. 23 Commencement Orders disallowing claims for tax credits depend on the date the claim is actually made (not the date it is treated as made under tax credit legislation). She will be making the claim after turning pension-age, so a TC claim would be allowed.
2. The provision in the No. 32 Commencement Order abolishing tax credits has a saving for a case where the claimant is under pension-age on the date of the claim for TCs. For this, the date of claim is the date it is treated as made under tax credit legislation.
3. As long as an advance claim for PC is not made (see below), her entitlement to UC will end at the start of the AP in which she turns pension-age. She can therefore make the claim for TCs AFTER turning pension-age, with entitlement beginning BEFORE she turned pension-age. Under tax credit legislation such a claim is treated as made on that earlier date.
You may however struggle to get HMRC to agree to this!
If you do not try the above (or if there is anyway no entitlement to TCs for some other reason), I would suggest that she make an advance claim for PC despite the fact she will continue working and won’t actually be entitled to PC. Doing this will protect her UC entitlement for the part-AP leading up to the date she turns pension-age.
The reason for this is that although normally UC is only paid for a complete AP, there is specific provision for those making an advance claim for PC to receive UC for the part-AP leading up to them turning pension-age.
The less-valuable alternative would be not to make an advance claim for PC, allow the UC award to end at the beginning of the AP in which she turns pension-age, and ask for her HB award to be backdated to that date.
[ Edited: 26 Mar 2019 at 05:53 am by Charles ]This is why we needed him on Rightsnet! Genius.
I believe you are right Charles: Reg 7 of the Tax Credits (Claims and Notifications) Regs treats a claim as if it was made on a date up to three months ago (assuming there would be entitlement … and if there wouldn’t, well there isn’t much point claiming at all so let’s assume there would be entitlement). Getting a TC claim treated as made under that Reg on a date when the claimant was still working age would seem to allow this claimant to get Tax Credits.
As it stands today the claimant is currently working age and on UC. The TC claim cannot be physically made yet because (1) Article 7 of the No 23 Order generally blocks that and (2) Reg 6 of the UC Transitional provisions Regs prevents the claimant from “taking action” to claim Tax Credits while still entitled to UC.
But once UC has ended, Reg 6 no longer applies; and once the claimant has reached SPC age, Article 7 no longer applies. Article 7(8) is clear: it does not matter that the TC claim will be treated as made on an earlier date, for the purpose of Article 7 there is no barrier to a TC claim by a person who is, on the day s/he “takes action”, over SPC age.
There is still Reg 5 of the UC Transitional provisions Regs to get round: the TC award cannot start on a date when the claimant is also entitled to UC. But this is where the saving in the No 32 Commencement Order comes into play, in conjunction with the rules on UC changes of circumstance: there is a window of opportunity in which the claimant is still working age (therefore TC not abolished yet) and no longer entitled to UC (because of the change of circs going back to the start of the month - para 26 of Schedule 1 to the D&A Regs does not apply where there has been no SPC claim). Under Reg 7 of the TC(C&N) Regs the Tax Credit claim can be backdated to a date in that window.
The more income the claimant has, the better this route to TC will be for him/her. If the claimant has some older children and wants the advantage of the Tax Credit earnings taper as they work beyond pension age, the gains by comparison with SPC will be quite significant.
Thank you!
The one exception I can think of is if the claimant turns pension-age on Day 1 of her AP.
The way out in such a case would be to terminate the UC claim manually during the last AP before turning pension-age.