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When to claim UC: moving from tax credits

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Welwyn Hatfield CAB - Adviser

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Joined: 13 May 2014

EU national has been claiming HB and WTC/CTC but now made redundant and prospect of finding work is remote. WTC entitlement will end from 28 November 2020 but final payment is made on 10 December. Can cl start UC claim on 29 November or should she wait until the final payment is in the bank?

Also did the government concession allowing tax credits to continue even where people’s earnings were reduced mean that there will be no overpayments of benefits next April?

Many thanks.

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Welfare benefits - Craven CAB, North Yorkshire

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I’m probably overlooking something, but if UC exceeds legacy, wouldn’t they better off overall by claiming UC asap after the final wages land? Assuming they can cope with the short-term budgeting problems that might arise from legacy income causing some UC overpayment that will then be recovered.

Does she actually need to claim UC at this point? CTC/HB plus NS-JSA could be possible.

HB Anorak
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Benefits consultant/trainer -, East London

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You are concerned that claiming UC before the final WTC payment is received will result in the WTC being counted as income, right?

It shouldn’t be: the definition of income other than earnings for UC purposes does not include tax credits, because they are mutually incompatible: it is impossible to be entitled to tax credits and UC at the same time so there is no need for the UC Regs to factor in tax credits as income.

There is also the “overlapping payment” rule in Reg 10 of the UC (Transitional Provisions) Regs 2014 which treats tax credit overpaid after the start of a UC award as income for UC purposes.  But that rule only applies where the tax credit is an overpayment to which the claimant is not entitled.  In this case the claimant is entitled to any tax credit paid in arrears after the UC claim in respect of a period before that claim.

It’s worth claiming UC because of the £20 a week bonus on the standard element plus the two-week HB run-on.