Sometimes a UC claimant's monthly award can be based on two months' wages (with the following assessment being based on no wages at all). This can happen regularly throughout the year when the claimant gets paid a wage early due to their normal payday falling at the weekend - click here
, or just because of the way their pay day works with their Monthly Assessment Period.
NOTE: If it is a "one-off" due to the employer reporting late - see this page
and use letter UC HM4 (link on the page).
This can 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).
*The work allowance is the amount of earnings claimants with children or with limited capability for work is ignored before their maximum UC award is reduced at a rate of 63p per pound of net earnings - click here
What if the claimant is worse off?
This is a problem which has affected many working claimants and has been widely reported in the press. Not only were they losing out financially, but the fluctuations in their Universal Credit awards were also causing cash flow difficulties, leading to them falling into debt and, for some, having to choose between paying their rent or paying their childcare costs.
BUT the UC Regulations do allow the DWP to allocate a wage to a different Monthly Assessment Period.
And we have two standard letters that you can use depending on the reason why two wages have been taken in one Assessment Period:
if it's because one wage was paid early as due to be paid on a non-banking day - click here
for more information
UC HM7 if it's just because the way the claimant's wages and assessment periods fall.
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.
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.
Can the claimant end their UC award and re-claim with new Monthly Assessment Periods?
A claimant has every right to end their claim for UC and then make a new claim - but Regulation 21 of the UC Regs 2013 has been amended to say that a new claim within 6 months of a previous one will keep the same Monthly Assessment Periods.
: That this regulation (21(3C)) says this applies where "the claimant was previously entitled to an award of universal credit the last day of which fell within the 6 months preceding the date on which the claim
", so if they have have made a new claim for UC and have not yet been paid, then there has been no award and any new claim should start a new assessment date.NOTE:
Despite this regulation, we have come across some people who have successfully reclaimed with new assessment dates, even though they had had an award of UC within the previous 6 months. They will not lose out by trying UNLESS:
They have a current LCW Element as this break in the award will mean it cannot be paid again.
They have a Transitional SDP payment
, which will end end if the award ends.
(and it is likely that they will need to set up a new email address to make another claim).
Can a claimant ever be better off when two monthly wages fall in one Monthly Assessment Period?
Yes! Some claimants can gain financially when this happens.
This will generally apply to claimants whose work allowance is £0 and who normally receive a relatively small amount of Universal Credit to top up their wages.
Barry is 58, he lives alone in a one bedroom rented flat. He works on a zero hours contract and normally earns around £950 per month. His payday from work is the last day of the month.
His UC monthly assessment periods (MAPs) run from 29th to 28th of the month.
His UC assessment includes his standard allowance £317.82 and his housing cost element £400.18 – so his ‘maximum UC’ figure is £718.00.
In MAPs when £950 of earnings are counted, the calculation works as follows: net earnings £950 minus work allowance of £0 x 63% = £598.50. This amount is taken off his ‘maximum UC’ amount – giving a UC award of £119.50.
At Christmas his employer paid him early – on 24th December instead of 31st.
This meant that he was not entitled to any Universal Credit for the monthly assessment period 29th November to 28th December, because the assessment included the 2 monthly wages received on 30th November and 24th December (ie he lost out on the usual £119.50 UC).
However, Barry makes a ‘rapid reclaim’, and in the MAP 29th December to 28th January, no wages are taken into account (his December wages have already been taken into account in the previous MAP and his next payday from work is not until 31st January – ie not in the current MAP).
So he is entitled to UC of £718.00!
Therefore, overall, he is better off by £598.50!
This situation will arise again for the MAPs 29th January – 28th February (when 2 monthly wages paid on 31 January and 28 February will be taken into account – ie nil UC) and then for the MAP 1st March – 28th March (when no wages will be included – so maximum UC will be awarded – so long as Barry has made a rapid reclaim).
I thought there was a High Court decision that meant the DWP couldn't take two wages into account in one Assessment Period any more?
And indeed, the Court found that, correctly interpreted, the Regulations mean the DWP can and should adjust its calculation of Universal Credit awards when “it is clear that the actual amounts received in an assessment period do not, in fact, reflect the earned income payable in respect of that period”.
Whilst we hope that this will eventually mean that wages will be allocated to the Monthly Assessment Period in which they would have normally been paid, rather than to the Monthly Assessment Period in which they were received, the 'remedy' suggested by the High Court in this case could be unworkable. Their suggestion is that the wages should be allocated to the Assessment Period within which they were earned. This would usually result in one of the wages being attributable to a previous Assessment Period ie one that has already been assessed and paid - meaning that the award would need to be re-assessed. The problem is that usually that Assessment Period already includes an earnings payment - so attributing another wage into the previous Assessment Period means the problem repeats itself!
So it is difficult to see how the DWP would be able to implement this decision.
In fact, the DWP has been granted permission to appeal the High Court's decision in the Court of Appeal. In the meantime, the DWP has said that it is relying on powers in social security law which allow it to continue to apply the law as it stood before the High Court gave its ruling on 11 January, until the case is finally concluded. See Parliamentary Research Briefing.
In the meantime please use one of the letters above and bear in mind that the decision might not be made until the outcome of the DWP's appeal is known