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Coronavirus: When to claim UC?
When to claim UC?
KEY FACTS:

  • When someone needs to claim Universal Credit they should normally do so as quickly as possible.

  • BUT there are several situations where a claimant could be better off if they actually delay making their claim for Universal Credit. But they should seek advice before doing so to ensure this is the right decision for them.

  • Some people would be worse off if they claimed Universal Credit so ideally they should find out if claiming UC is their best option.

  • Some claimants finishing work may be better delaying making the claim where they are due some final earnings/holiday pay etc. shortly after finishing work - see below.

  • Other claimants may actually be better off if they make the claim for Universal Credit prior to finishing work if they are able to do so.

  • The key issue is that any earnings received during a Monthly Assessment Period will be taken into account even where the claimant's employment has been terminated, and regardless of how long after it is paid.

When someone stops work and claims Universal Credit, their final earnings could affect the amount of UC they are entitled to depending on when it is paid.

What counts as final earnings?

Holiday Pay
Holiday pay counts as earnings under UC rules – and will be taken into account as such for the Monthly Assessment Period in which it is paid – whenever this may be.

Payments in lieu of notice
Any pay in lieu of notice counts as earnings under UC rules – and will be taken into account as such for the Monthly Assessment Period in which it is paid – whenever this may be.

Wages paid after termination of employment
Any wages paid after the claimant has finished work will count as earnings under the UC rules – and will be taken into account as such for the Monthly Assessment Period in which it is paid – whenever this may be.

So is it ever worth a claimant delaying in making a claim for UC on finishing work?


Yes, it could be. If the claimant is aware that they are due some pay from work soon after finishing work it could be worth them delaying claiming Universal Credit until after they have received this – they should seek advice.

So two calculations should be done - how much UC would be awarded if the claimant made the claim as soon as they were able to - and how much would be awarded if they waited to ensure these earnings were not taken into account ie to ensure these earnings were not taken into account in their first Monthly Assessment Period. BUT they must also take into account the UC they have missed out on by delaying making the claim.


Example:

Amina has finished work and is expecting a further payment for holiday pay that she is due.  She finishes work on the 1st of the month and was going to claim on the same day but decides to wait until she receives her holiday pay, which would significantly reduce her first UC award.  Her holiday pay arrives on the 8th and she claims Universal Credit on the 9th, meaning her holiday pay is not counted toward her first UC award.

She had worked out that by waiting 8 days to claim she lost out on £245 UC, but that the difference between the amount of UC she would have got had the assessment included her holiday pay and the amount she did actually get was £367. 

Had she only be due a small amount of holiday pay it would probably not have been worth delaying the claim.

 

Note on Redundancy Payments
Statutory and contractual redundancy payments, whether paid as a lump sum or over a given period, count as capital for UC purposes and not as earnings. So if a redundancy payment takes a claimant’s savings over £16,000, they would not be entitled to UC.


Frequently Asked Questions

I’ve just been laid off and I’m due some holiday pay - when can I claim Universal Credit?

You can claim immediately, but depending how much holiday pay you are due, and when, you may be better off delaying your claim until you receive it. If you are due a significant amount of holiday pay in the next few days / couple of weeks, then it is more likely that it would be better to delay the claim until after you receive this payment. This is because this payment from your employer will reduce your UC award.
If you are entitled to a work allowance and the amount of holiday pay (and any wages you are still due) is less than this allowance, then you should claim immediately. This is because the payment from your employer will be totally disregarded and so not affect your UC award.
If you are not sure what you are best doing, contact a Benefits Adviser.

My hours are reducing at work and I’ve been advised to claim Universal Credit, but I have been told that, because I am paid monthly, the date I claim can make a big difference – can you explain this?

Universal Credit is a monthly benefit. It is assessed and paid in chunks of a month called Assessment Periods. Your date of claim determines when your Assessment Periods start and end. So, for instance, if you claim UC on 25th March, your first Assessment Period would be 25th March to 24th April, and all following Assessment Periods would run from 25th of one month to 24th of the next.

When the DWP work out how much UC you are entitled to, they take into account the wages you’ve received during that Assessment Period.

If you are paid monthly, then depending on your pay date and Assessment Periods you can sometimes find that two wages are paid within one Assessment Period.

Let’s say you get your wages paid on 26th of the month. Then in July, because 26th falls at the weekend, your employer will pay you early – on Friday 24th July. This means that when your UC award is assessed on 24th July it will include two monthly wages – the one paid on 26th June as well as the one paid on 24th July. This will mean that your UC award for that Assessment Period drops dramatically – which may make it difficult for you financially as your wage amount hasn’t actually changed. Your next UC payment would then be higher than normal as no wages will be taken into account in your next UC Assessment Period ie for 25th July – 24th August, but overall this can leave you worse off (although those with small UC awards can sometimes be better off).

So if the date you are looking to claim Universal Credit is on or just before your normal pay date from work, you may be better delaying your claim by a few days. Seek advice from a Benefits Adviser.


My partner has Coronavirus so the whole family has to self-isolate. We’re getting Tax Credits to top up her income, but no Housing Benefit as our earnings are too high. We’re waiting to see if anyone else comes down with Coronavirus but, because our only income is now Statutory Sick Pay and Tax Credits, we are going to struggle to pay the rent. She doesn’t think her employer will be entitled to pay her under the Job Retention Scheme as her job is not under threat. We don’t want to claim UC and would rather stay on Tax Credits if we can. If we delay claiming UC to see what happens (as this could just be a short term thing) - but then decide to claim UC - will we be able to get the claim backdated? 

Unfortunately, delaying claiming UC for these reasons wouldn’t fall under the rules that would allow a claim for UC to be backdated. 

In the short term, as your partner is receiving Statutory Sick Pay (SSP) she is still treated as being in work for Tax Credit purposes, and so your Tax Credits can continue. If she is likely to be off longer than a few weeks then HMRC may be willing to reassess your entitlement.

You may also wish to contact a Benefit Adviser to do a benefit check to compare any potential UC award with your current Tax Credit entitlement and then make an informed decision.


Also, let your landlord know about your current situation.


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