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Paid early at Christmas - employers encourage to report normal pay date to avoid issues with UC entitlements

When someone claims Universal Credit, this begins a Monthly Assessment Period. And their award of Universal Credit is re-assessed every month at the end of this period.

For working UC claimants it is the earnings received by the claimant during their Monthly Assessment Period that are used to work out their Universal Credit entitlement. 

Claimants who are paid by PAYE have their earnings reported to HMRC by their employer whenever they are paid. Then HMRC send it by Real Time Information (RTI) to DWP. 

At Christmas some employers pay their employees earlier than usual. This can be for a number of reasons.

This can then affect a UC claimant's entitlement to UC if it means that they receive this early payment in a different Monthly Assessment Period to normal.

As well as causing budgeting problems for the claimant, this can also mean that some claimants are:

• Worse off - as only one earnings disregard (or what the DWP call work allowance) will be applied across the two wages.

• Better off - where they are not entitled to a work allowance and only normally receive a small amount of UC (click here for an example).

DWP have always encouraged employers to use the actual pay date where employers pay early due to non-banking days ie weekends and bank holidays.

HMRC have recently confirmed that where an employer pays early over the Christmas period, they should report the normal (or contractual) payday as the payment date on their Full Payment Submission (FPS) and ensure that the FPS is submitted on or before this date, even if this is for reasons other than it being paid on a non-banking day. Click here.

For example: if they pay their employees on Friday 20th December 2019 but the normal/contractual payment date is Tuesday 31st December 2019, they can report the payment date on the FPS as 31st December and ensure the submission is sent on or before 31st December.

NOTE: Free School Meals........where a UC claimant's earnings in a Monthly Assessment Period have dropped below £616.67 (in England/Wales) / £610 (in Scotland) - then they are able to apply for Free School Meals for their children, and, once awarded, their child/ren will remain entitled to Free School Meals  up until the end of their current level of education even if the parent's income increases or they come off UC altogether. Click here for more information.

NOTE: UC reclaims........where a UC claimant's award drops to nil, their UC claim should be closed down - meaning they have to make a reclaim for it to ensure payments continue. We understand that no formal system was in place to ensure this happened - but that due to recent system improvements, it will now generate a 'to do' to DWP so that these claims are closed. This means claimants will have to make a reclaim if they want any future entitlement they are entitled to - click here for more information.