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Thread: WTC with Disability Element - Change of Circumstances - Universal Credit

  1. #1

    WTC with Disability Element - Change of Circumstances - Universal Credit

    Hello

    Help and advice required please ….. I'm currently employed, work 21 hours per week at a little over minimum wage, and receive WTC with disability element (because of mental health limitations). Live alone in private rented and also receive a small amount of housing benefit under legacy system. Same situation and benefits for last few years.

    Have been signed off sick since start of April and been receiving SSP only from employer. My understanding is that SSP gets paid for 28 weeks and should I still be sick after 28 weeks, I'd then have one month to tell the Tax Credits office. I haven't needed to tell the Tax Credits Office anything yet and have been receiving my WTC with disability element, monthly, and in the normal way.

    Due to the nature of my current job, I don't think I'll be well enough to return once the 28 weeks are up, but do think I could run a self-employed business working 21 hours per week from home. I have read all the stricter rules for self-employment, the need to make profits of at least 21 hours x minimum wage rate, etc etc. Thinking is that this would allow me to keep my WTC because all the calculations I've done say I'd be quite a bit worse off under UC.

    Having read the notification rules for change of circumstances, it doesn't actually say I'd need to tell the Tax Credits Office if I moved from being employed to self-employed, so long as my overall income for the tax year remained within the income estimate range for 2019/20 as specified on my Tax Credits Annual Review from a few months ago. I think it would. To my mind I'd simply report my total income for 2019/20 (mix of employed and then self-employed) next May/June time in the normal way at the time of my next scheduled Annual Review.

    So my questions are:

    1) Could I move from being employed to self-employed and not notify Tax Credits office?

    2) If it's thought I would have to notify, would I be transferred / migrated somehow to UC and thus be worse off?

    Thanks

  2. #2
    You'll need to notify HMRC if you take up self-employment so Tax Credits will find out from them if you don't tell them yourself. I'm not sure whether you must notify them, but IMO it#'s better to be safe than sorry. This should not trigger a change to UC in any case as it's not a new claim.

  3. #3
    Quote Originally Posted by noisynoodle View Post
    You'll need to notify HMRC if you take up self-employment so Tax Credits will find out from them if you don't tell them yourself. I'm not sure whether you must notify them, but IMO it#'s better to be safe than sorry. This should not trigger a change to UC in any case as it's not a new claim.
    Thank you for that advice noisynoodle and sorry for delay in replying, I've been ill.

    I have another question - if I don't go back to my employment after 28 weeks of SSP and don't feel well enough to set up as self-employed, my understanding is that I'd claim New Style ESA and my housing benefit would continue as an existing claim under the legacy system. In other words, I wouldn't enter the UC system?

    And in that scenario how would they finalise my WTCs? For 2019/20 so far these have been based on 2018/19 employment income (approx. £8,000). But since I have been on mostly SSP in 2019/20, my employment income from 6th April 2019 to now is only about £2,700.

    Assuming I will not work again in 2019/20 and be receiving New Style ESA from now on, will Tax Credits office re-calculate my WTCs for 2019/20 based on the approx £2,700 of income because is it is more than £2,500 less than my 2018/19 income?

    In other words, my entitlement to WTCs from 6th April 2019 to now will be more than I've actually been paid and I will receive a lump sum on finalisation and ending of my claim?

  4. #4
    I think you're correct that you wouldclaim New Style ESA and retain HB so not need to move to UC, but someone will correct me if I'm in error.

    As far as WTC is concerned, when you close your claim they will recalculate based on this year's actual income. Whether you will be owed anyting depends on how much your income has fallen. This is an extract from the Benefits and Work web site explaining how it works:

    "For drops in income:
    if your 2019/20 income falls by more than £2,500, from your 2018/19 income, your final tax credit award will be calculated using your 2019/20 income plus £2,500,
    if your 2019/20 income falls by less than £2,500, your final tax credit award will be calculated using your 2018/19 income.
    For example, if in 2018/19 your income was £10,000 and in 2019/20 your income is £5,000, the fall is more than £2,500. Therefore, your 2019/20 final tax credit award would be calculated based on your 2019/20 income plus £2,500, so an income of £7,500."

  5. #5
    Senior Member nukecad's Avatar
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    If you have paid sufficent NI contributions in the last 2-3 years the you would be able to claim NS ESA instead of UC.

    Be aware that if you contact them to ask for an application form they will try to push/badger you into claiming UC anyway, it's endemic in the system.

    So you have to be clear and insistent that it's New Style CB ESA that you want to claim and not UC.

    It's probably better to download the application form yourself, complete it, and then contact the Jobcentre+ to make a new claim appointment and take the completed form with you.
    See this to download the application form: https://www.gov.uk/government/public...esa-claim-form
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  6. #6
    Thanks noisynoodle, very useful. Also led me to the advice below from the RevenueBenefits website which explains what was also puzzling me ie. if they finalised my 2019/20 tax credits claim, say, later this month, what would happen if I suddenly was able to work again in, say, January. Answer is that without a claim for UC, they'd wait until after 5th April 2020 to finalise as it says here:

    "Claims finishing mid-year (no UC claim)

    Claims can also end mid way through a tax year for a variety of reasons. Once a person’s entitlement ceases, their claim will end. For example, their claim will end if their working hours fall below the required number, if they move in with a partner or if they are no longer responsible for a child or qualifying young person.
    In some cases, claims can continue for a period of time after the change. This is called the ‘four week run-on’. The four week run-on was introduced in its original form from 6 April 2007.
    When a claim ends mid-year, payments will cease (subject to the four-week run-on) but the claimant will still go through the ‘renewals’ process. This will take place following the end of the tax year. In cases where a claim has already ended during the tax year, provided the claimant does not claim UC in the same tax year, there won’t be a renewal as such (although it is still referred to as the renewals process) but they will receive the same forms in order to finalise their claim for the period of the their claim in the tax year just ended. So if a claim ends in September 2018, the claimant will receive forms between April and June 2019 which ask them to confirm their income for the 2018/19 tax year so that HMRC can issue a final award notice for the period April – September 2018."


    And thanks nukecad - I've definitely paid enough NICs or have enough credits while on SSP to claim New Style ESA. If I do go down that route, I'll follow your advice about the process. Have previously claimed ESA up to about 2015, been in the WRAG and done Permitted Work, so have some feel for what a nightmare the processes can be. I've also been reading some of your other posts about New Style ESA which again are essential reading and no doubt I'll have more questions should I go down that route.


    Thanks again.

  7. #7
    Small point but have you checked your tenancy agreement to see if you are allowed to run a business from there?
    I know some housing associations don't like you doing so, so it might be worth checking just in case, you don't want to end up being evicted for breaching your agreement.

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