How to pay Universal Credit

How to pay Universal Credit

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I was watching The Sunday Politics and there was a part about Universal Credits.

This will affect accountants more when the monthly cash report are required but I think there's one particular point being mentioned that is very important. It would be good if the political issues didn't cloud the comments if possible.

I have read a document about Universal Credits but I must admit I am not very knowledgeable about the subject.

One point I picked up on was how the payments were going to be monthly. I would think that many people would have difficulty with that. Even weekly payments might be difficult for some people with monthly rent or mortgages. I suppose that people should be able to ask for weekly or monthly payments. I suppose a better system would be for regular payments to be paid directly by the DWP and then the balance is paid weekly. Because most people would be struggling on low income this should make it easier for them. It would also be sensible for a system of yearly notification of taxable benefits to help accountants. What do other people think of this?

Replies (8)

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By mwngiol
17th Jun 2013 16:25

Predictable

It's going to lead to a massive number of complaints from claimants that they can't get paid weekly. And the politicians will be very surprised by this because it was entirely unforeseen..

The other thing that's going to get the proverbial brown stuff hitting the fan is the minimum income floor for the self employed. Maybe another rush of incorporations, but this time very low profit sole traders getting around the minimum income rules by getting themselves into employment? Worth it if the extra tax credits compensates for the extra costs/hassle of running a Ltd Co?

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By tom123
17th Jun 2013 16:39

Charity

I am trustee of a charity in a sector heavily affected by this. It is an area of massive concern, given that many current recipients are vulnerable individuals.

Is UC definitely coming in across the UK in October, or is it being phased?

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By petersaxton
17th Jun 2013 16:46

Phased

Given how HMRC keeps changing the RTI rules I think the phasing will be very interesting.

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By Luke
17th Jun 2013 17:56

It'll be a nightmare

I went on a course recently where Rebecca Benneyworth was speaking about this.

For s/e universal credit claimants, the cash basis will be mandatory but of course not exactly the same as the new cash basis. 

From memory, if I understood it correctly, the worst part was that losses are not recognised and therefore losses from one month are not able to be carried forward to the next, so if in month 1 income was £2,000 but you spent £3,000 on stock you would be assessed as having income of £0 (ignoring for now the floor wage).  In month 2 you sold that stock and income was £4,000 you would be assessed on £4,000.  So the total assessment would be £4,000 across the two months when in reality it should be £3,000 (i.e. income of £4+2k, less expenses of £3k).

 

It all sounds like a nightmare.  Rebecca's advice was that anyone eligible to claim it was on such a low income that they couldn't afford an accountant and we should send them to the CAB.  Sounds like a plan to me...

 

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By cmacrae
21st Jun 2013 09:55

Universal Credit is paid monthly to help people budget effectively and reflect the world of work, where 75% of all employees receive wages monthly. This is to help smooth the transition into monthly paid work, encourage claimants to take personal responsibility for their finances and to budget on a monthly basis which could save households money. For example, monthly direct debits for household bills are often cheaper than more frequent billing options.

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By petersaxton
21st Jun 2013 10:09

We know

but people on lower incomes have more difficulty in budgetting and even if they were employed they would quite often be in the 25% that would be paid weekly.

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By zarathustra
21st Jun 2013 10:25

My two pennarth

They should not have tried to make this system fit self employed people as they are not suited. There can't be that many compared with the number of employees in any case. An exception should have been made, probably with the self employed individuals being required to make monthly estimates which are amended to correct figures  annually. This is only really the same as reducing payments on account.

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By petersaxton
21st Jun 2013 10:46

Fraud

This system seems to be designed to encourage fraud on a massive scale.

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