To try and help our clients, we have been listening to a webinar with Victoria Todd from the Low Incomes Tax Reform Group and have noted below the information imparted by Victoria Todd with regard to Universal Credits.

The Chancellor said that every self employed person can now access Universal Credit but this may be an over- simplification of the rules.

The benefit system is quite complex and so it is always a good idea to seek specialist welfare rights advice before claiming benefits because mistakes can be costly.

There are lots of things to consider before looking to claim Universal Credits (UC). There are other non-means tested benefits that are worth exploring such as employment and support allowance, child benefits, disability allowances that depend on the circumstances of the person and their household.

The government currently has two systems running alongside one another – the legacy benefits, such as Child Tax Credits and Working Tax credits, and the Universal Credit system.

Universal Credit is a means tested benefit brought in in 2013 to replace “legacy benefits” which still has quite a few million people who are still claiming these legacy benefits.

This is important because it you are still getting legacy benefits, such as tax credits, these will terminate if you make a claim for Universal Credits, so it is important to seek specialist advice first to make sure UC is the best option and not everyone is financially better off on UC.

Universal Credits take into account circumstances of the claimant and their partner, if they have one.

Universal Credit is for those of working age and UC has a capital limit of £16,000. There do not appeaer to be any plans to reduce the capital limit in the current COVID-19 situation. Any savings between £,6000 and £16,000 is effectively turned into a tariff income which is counted as income for the calculation when claiming the Universal Credit. This is very different to tax credits where capital is not taken into account in the same way.

Universal Credit is usually claimed online and then via face to face by way of visits to the Job Centre, but currently just online with a callback from the Job Centre to do the relevant UC checks.

UC is based around monthly assessment periods, running from the date of claim. If you claim on 20th of the month, your assessment period runs from the 20th of one month to 19th of the next and it runs on from there.

Payments are made usually seven days after the assessment period which means that people have to wait at least five weeks before receiving a payment, if that payment is made on time. DWP is working hard to ensure that payments are made on time, but even if they are on time it is still five weeks to wait.

There is something called an “advance” which you can ask for when you make the claim and DWP will calculate what they think you may be entitled too and will offer you that as an advance when you first claim. Be aware that this is effectively an interest free loan and it will have to be repaid usually be reducing future UC payments.

For the self employed, if there are still earnings from self employment, these should be reported within 14 days of each assessment period ending. UC works on a cash basis and there is also specific rules about allowable expenses.

The most controversial part of UC is the minimum income floor, which has been temporarily suspended since 6th April 2020 as one of the COVID-19 support measures.

For SEISS, the payments are coming in June and the LITRG has confirmed that these payments made under the SEISS will be treated as income for UC claims but it will be treated as income in the period it has received.

Directors of limited companies are treated as self employed for Universal Credits.

Victoria Todd’s advice and support can be accessed via this link