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Forum Home  →  Discussion  →  Covid-19 issues  →  Thread

Coronavirus causing migration to UC

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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Joined: 27 February 2019

There are many people who may have a change of circumstances which will force them to claim UC, however I’ve got a number of in-work clients who, despite not being laid off, will be affected in an interesting way:

Those in receipt of WTC including the childcare element and also claiming HB will have a 3-4 period (when childminders/nurseries shut down) in which they will continue to receive the childcare element of tax credits (due to the childcare costs run-on), but will have lost the childcare disregard from HB. Anyone with high childcare costs or low HB award will likely lose entitlement to HB for that period. They would then have to claim UC to get help with their rent.

I’m thinking of two possible ideas to stop this happening:

1. Don’t inform the LA of the change in childcare costs until after the end of the run-on period, at which point tax credit income will already be lower, so the loss of entitlement to HB will be dealt with as a closed-period supersession. Even if the LA realise earlier that a change has happened, surely they won’t make a decision before asking the claimant to confirm what exactly changed, and when?

2. Provide a high estimate for income to tax credits to artificially deflate the tax credit award. This can be reversed a few weeks later (although HMRC will generally hold back the underpayment until the end of the year).

Any comments?

Timothy Seaside
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Housing services - Arun District Council

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Obviously there are issues with advising people not to notify changes of circumstances as they are required to, but I think we can be clear that it’s the correct thing to do morally - so I would have no problem with the first option. It’s extremely unlikely that the HB section is going to know childcare has stopped - how could they? I can’t see there being any comeback for anybody choosing to do it this way - late notifications happen all the time, and even in normal times they don’t tend to end up with any sort of fraud investigation (those are usually for people who never get around to notifying changes, rather than report them late).

I think it’s worth considering whether your clients might still be able to pay the childcare costs - they may be able to argue that they are contractually obliged to pay. I know that when my children were little you couldn’t just take them out and not pay. So, given that about 95% of the cost can be covered by tax credits and HB, wouldn’t it be better to see if the childcare business wants to keep on billing the client?

Which makes me realise I’ve never given any thought to this question; what usually happens to childcare payments and allowances if a child is off sick, but still has to pay for their place?

Jon (CANY)
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Welfare benefits - Craven CAB, North Yorkshire

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Timothy Seaside - 19 March 2020 10:58 AM

I think it’s worth considering whether your clients might still be able to pay the childcare costs - they may be able to argue that they are contractually obliged to pay. I know that when my children were little you couldn’t just take them out and not pay. So, given that about 95% of the cost can be covered by tax credits and HB, wouldn’t it be better to see if the childcare business wants to keep on billing the client?

Government is now asking nurseries to shut from Friday, so presumably there will be no contractual liability after that.