UNIVERSAL CREDIT & MISCELLANEOUS AMENDMENTS

Transcription

1 Memo ADM 24/14 UNIVERSAL CREDIT & MISCELLANEOUS AMENDMENTS Contents Paragraphs Introduction 1-2 Meaning of blind 3-6 Changes 7-8 Calculation of earned income Employed earnings 9 Self-employed earnings 10 Earnings information Minimum income floor Suspension of work-related requirements where a child is affected by death or violence Accounts into which payments may be made 33 Third party deductions for rent and service charges included in rent Annotations Contacts INTRODUCTION 1 This memo provides guidance on the Universal Credit and Miscellaneous Amendments (No.2) Regulations 2014 (S.I / 2888).The changes come into force on Universal Credit and Miscellaneous Amendments (No.2) Regulations 2014, reg 1(1) 2 Where the claimant has an existing award of UC and a change described in this memo applies then the change takes effect on if the claimant s assessment period begins on that day 1 or

2 2. the first day of the next assessment period for the award if 1. does not apply 2. 1 Universal Credit and Miscellaneous Amendments (No.2) Regulations 2014, reg 1(2)(a); 2 reg 1(2)(b) MEANING OF BLIND 3 The following paragraphs give guidance on amendments to the regulations relating to UC which provide that a claimant is eligible for additional amounts of benefit where they are registered as blind. 4 For UC, a claimant is entitled to the higher rate of the additional amount of the Child Element if they are responsible for a child or qualifying young person who is blind. It may also be a factor in determining whether a non-dependant deduction is to be made from the housing costs element 1. 1 UC Regs, reg 24(2)(b)(ii); reg 26(2) & Sch 4, para 15(2) 5 To be treated as blind for the purpose of calculating these additional amounts a person must be registered as blind in a register compiled by an LA. However, in 1991 the legislation was amended to exclude those aged under 18 and neither did it bind LAs into maintaining an adult register. 6 To correct the error and restore policy intention the meaning of blind is updated. Changes 7 A person will be treated as blind where they are certified as severely sight impaired or blind by a consultant opthalmologist 1. 1 UC Regs, reg 2 8 Any references in the ADM to a person being registered as blind should be taken to mean a person certified as described in paragraph 7. CALCULATION OF EARNED INCOME Employed earnings 9 ADM H3020 et seq provides guidance on calculating employed earnings in UC including certain payments which are treated as employed earnings. An actual repayment to the claimant of 1. income tax or 2. NI contributions

3 by HMRC in respect of a tax year in which a person was in paid work is treated as employed earnings 1. Where the paid work was from carrying on a trade, profession or vocation then the repayment is treated as S/E earnings 2 (see ADM H4131). Note 1: Repayments of income tax may include tax relating to other sources such as unearned income. As long as the claimant was in paid work in the tax year the repayment relates to, then the whole repayment is treated as earnings. Note 2: There is no requirement for the claimant to report changes that take place in relation to their tax code or variations in their tax reported via RTI. 1 UC Regs, reg 55(4A); 2 reg 57(1) Example Ellie receives a cheque from HMRC for 200. This relates to an overpayment of 600 income tax made in the tax year 11/12 (in which Ellie was in paid work) and an underpayment of 400 in income tax relating to the tax year 12/13. The amount that Ellie should declare as employed earnings is 200 as this is the repayment she received, not 600 which relates to the refund due in one of those years. Self-employed earnings 10 Where 1. the purchase of an asset has been deducted as an expense in any assessment period and 2. in a subsequent assessment period 2.1 the asset is sold or 2.2 ceases to be used for the purposes of the trade, profession or vocation carried on by the claimant the proceeds of sale (or if 2.2 applies, what would have been received if the asset was sold at market value) are to be treated as a receipt in that subsequent assessment period 1. Note: See ADM H4199 where an expense has been incurred for more than one purpose. 1 UC Regs, reg 57(5)

4 Example 1 Kay is gainfully S/E and in receipt of UC. She bought a laptop to manage her financial accounts and for maintaining customer records for her business. The cost of the laptop was a permitted expense in the assessment period in which the cost was incurred. Five months later, Kay decides to sell the laptop and receives 200 for it. This amount is treated as a receipt in the assessment period in which the laptop is sold. Example 2 Ken is gainfully S/E and in receipt of UC. He bought a laptop and intended to use 50% for personal use and 50% for business use. Ken could only claim 50% of the cost as an expense. Ken later sold the laptop for 200 but only 50% of the amount received (i.e. 100) can be regarded as a receipt in the assessment period in which the laptop is sold. Example 3 Joel purchased some display material for his business for 400. In the assessment period in which he paid out and declared the expense he only received 100 as cash in. The expenses declared reduced Joel s S/E earnings for that assessment period from 100 to zero. Joel sells the display material when it is no longer needed. He is required to report the entire amount of the sale as a receipt in the assessment period in which the display material is sold, not just the proportion (25%) that earlier reduced his earnings to nil. Earnings information 11 ADM H H3194 provides guidance on the information used to calculate a claimant s earnings for the purposes of UC. The guidance is now amended. 12 For claimants who are engaged in employment in respect of which their employer is not an RTI employer then they must provide such information for the purposes of calculating their earned income as the DM may require 1. 1 UC Regs, reg 61(1) 13 Where a claimant is, or has been, engaged in an employment in respect of which their employer is an RTI employer then

5 1. the amount of their employed earnings for each assessment period is to be based on the PAYE information reported to HMRC and received by the Secretary of State from HMRC in that assessment period and 2. for an assessment period in which no information is received from HMRC, the amount of earnings is taken to be nil 1. 1 UC Regs, reg 61(2) 14 However, the DM can decide that paragraph 13 does not apply when the DM considers that 1. the information from the employer is not likely to be sufficiently accurate or timely or 2. in respect of a particular assessment period where 2.1 no information is received from HMRC and that this is likely to be due to a failure to report information (including computer failure in relation to systems operated by HMRC, the employer or any other person) or 2.2 the information received from HMRC is incorrect or that the payment does not fall within the meaning of employed earnings (see H3020 et seq) 1. UC Regs, reg 61(3) 15 If the DM decides that paragraph 13 does not apply then a decision must be made as to the amount of a person s employed earnings using such information or evidence as the DM sees fit 1. A person must also provide such information for the calculation of earned income as the DM may require 2. 1 UC Regs, reg 61(4); 2 reg 61(1) 16 In cases where paragraph 13 does not apply and the DM is making a decision on the amount of the claimant s earnings in accordance with paragraph 15, the DM can 1. treat a payment of employed earnings as received in a later assessment period to the one in which the payment was actually received (for example where the DM received or would have expected to receive the information or evidence in the later period) or 2. where a payment of employed earnings has been taken into account in that decision, disregard information received from HMRC about the same payment 1.

6 This also applies where a decision is made in the situation described in A UC Regs, reg 61(5); 2 reg 61(6) Minimum income floor 17 ADM H4060 et seq provides guidance on the minimum income floor. The relevant regulations have now been amended to clarify what the minimum income floor is and how it should work. There is no change in the policy. The application of the minimum income floor means the claimant is, or joint claimants are, treated as having a certain minimum level of income for conditionality purposes so that no work-related requirements apply. 18 The minimum income floor is an amount of earnings which a person is treated as having in an assessment period. The minimum income floor applies 1 where the claimant 1. is in gainful self-employment (see ADM H4020 et seq) and 2. would normally but for the minimum income floor be subject to all work-related requirements (see paragraph 20). 1 UC Regs, reg 62(1) 19 The minimum income floor does not apply to earned income in respect of assessment periods which fall wholly within a start-up period or begin or end in a start-up period 1. ADM H provides guidance on the start-up period. 1 UC Regs, reg 62(5) 20 In order to determine whether the minimum income floor applies, the DM has to work out the claimant s individual threshold and the couple threshold converted to a monthly amount 1. This is sometimes referred to as the conditionality earnings threshold. 1 UC Regs, reg 62(4) 21 The individual threshold for a claimant is the NMW hourly rate payable to a worker of the same age, multiplied by the expected number of hours of work per week for claimants who would normally be subject to all work-related requirements 1. 1 UC Regs, reg 90(2)(b) 22 The couple threshold is 1. in the case of joint claimants, the total of their individual thresholds 1 or

7 2. in the case of a claimant who is a member of a couple (see ADM Chapter E2) but who can claim UC as a single person, the sum of 2.1 the claimant s individual threshold and 2.2 the amount a worker would be paid for 35 hours a week at the single NMW standard rate. 2 1 UC Regs, reg 90(3)(a); 2 reg 90(3)(b) 23 The claimant s individual threshold and the couple threshold have to be converted to a net monthly amount by 1 1. multiplying by 52 and dividing by 12 and 2. deducting such amount for income tax and NI contributions as the DM considers appropriate. 1 UC Regs, reg 62(4) 24 Where a single claimant s earned income is below their individual threshold in any assessment period, then the claimant is treated as having earned income equal to their individual threshold 1. This is the claimant s minimum income floor. 1 UC Regs, reg 62(2) Example Patrick is in gainful self-employment. His net monthly individual threshold is 950. This is determined by multiplying his expected hours of work by the NMW appropriate for his age. Patrick s expected hours of work are 35 and the NMW appropriate to him is 6.50 (35 X 6.50 = ). This is then converted to a monthly amount ( X 52 / 12 = ). An amount which the DM thinks is appropriate for tax and NI contributions is then deducted. In this particular case, the DM deducts to leave 975 as Patrick s individual threshold. For the purposes of UC, Patrick s earnings for the current assessment period from his self-employment are 800. The DM applies the minimum income floor and treats Patrick as having earned income in the assessment period of Where the claimant is the member of a couple then in any assessment period where 1. the claimant s earned income is less than their individual threshold and 2. the couple s combined earned income is less than the couple threshold

8 the claimant has to be treated as having earned income equal to their individual threshold minus any amount by which that amount of earned income and their partner s earned income would exceed the couple threshold 1.This is the couple s minimum income floor. 1 UC Regs, reg 62(3) Example 1 Jean-Paul and Simone are in receipt of UC as joint claimants. Jean-Paul is in gainful self-employment and for the purposes of UC his earnings for the current assessment period are 400. This is less than his individual threshold of 950. Simone has no earned income. The couple threshold for Jean-Paul and Simone is 1,900 (950 X 2). The minimum income floor applies. This is because Jean-Paul s earned income of 400 is less than his individual threshold of 950. Jean-Paul and Simone s combined earned income of 400 is less than their couple threshold of 1,900. Jean-Paul is treated as having earned income of 950 for the assessment period. Example 2 Dave and Polly are in receipt of UC as joint claimants. Both Dave and Polly are in gainful self-employment. For the purposes of UC, Dave s earned income for the current assessment period is 500 and Polly s earned income for the assessment period is 1,200. Their combined earned income is therefore 1,700. The couple threshold for Dave and Polly is 1,900 (each individual threshold of 950 X 2). The minimum income floor applies. Dave is initially treated as having earned income of 950. This gives a total earned income amount for the couple of 2,150 ( ,200) which is 250 in excess of the couple threshold. Because the combined earned income that Dave and Polly are treated as having is above their couple threshold of 1,900 then the amount of earned income that Dave is treated as having for the assessment period is reduced by the amount that the couple s income exceeds 950. Dave is treated as having earned income of 700. This means that for the assessment period Dave is treated as having earned income of 700 which when added to Polly s actual earned income of 1,200 gives a combined income of 1,900.

9 26 If the minimum income floor is applied to a claimant s earnings in accordance with paragraphs 17 to 24, then that claimant cannot be subject to any work-related requirements 1. 1 UC Regs, reg 90(5) SUSPENSION OF WORK-RELATED REQUIREMENTS WHERE A CHILD IS AFFECTED BY DEATH OR VIOLENCE 27 ADM J3180 et seq provides guidance on work-related requirements in relation to victims of domestic violence. ADM J3188 explains that where a claimant is a recent victim of domestic violence then any work-related requirement imposed on them ceases to have effect for a period of 13 consecutive weeks from the date of notification. In addition, no other work-related requirement can be imposed during that 13 week period. 28 Where the claimant 1. is subject to all work-related requirements and 2. has been a recent victim of domestic violence (as set out in ADM J3188) and 3. is the responsible carer of a child then no work search or work availability requirement can be imposed on the claimant for a further period of 13 consecutive weeks beginning on the day after the period referred to in ADM J3188 expires 1. 1 UC Regs, reg 98(1A) 29 ADM J3192 et seq provides guidance on the circumstances in which work-related requirements must not be imposed. That guidance is now expanded to include claimants who are the responsible carer of a child, where one of the circumstances set out in paragraph 30 apply. 30 Where the claimant is the responsible carer of a child and in the last 24 months there has been a significant disruption to the claimant s normal child care responsibilities due to 1 1. the death of 1.1 a person who was previously the responsible carer of that child or 1.2 a parent of that child or

10 1.3 a brother or sister of that child or 1.4 any other person who, at the time of their death, normally lived in the same accommodation as that child and was not a person who was liable to make payments on a commercial basis in respect of that accommodation or 2. the child has been the victim of, or witness to, an incident of violence or abuse and the claimant is not the perpetrator of that violence or abuse then a work search requirement must not be imposed on the claimant for the period(s) specified in paragraph 31 below. 2. Any existing requirements cease to apply 3 and the claimant also does not have to be able and willing to immediately take up work or attend an interview during and such period(s) 4. 1 UC Regs, reg 99(4A); 2 reg 99(1)(a); 3 reg 99(2); 4 reg 99(1)(b) 31 The requirements must not be imposed for more than one period of a month in each of the four consecutive periods of six months following the event 1. Each period of one month begins on the date specified by the Secretary of State after the claimant has informed the DWP of the circumstances referred to in paragraph The Secretary of State has to be satisfied that the circumstances do apply to the claimant. 1 UC Regs, reg 99(4B); 2 reg 99(4C) 32 If in the respect of the same event, the guidance at ADM J3188 or ADM J3200 or the guidance at paragraph 22 of this memo applies to the claimant, then the period of one month is to run concurrently with any other period where requirements have not been imposed 1. The requirements should not have been imposed because of the application of the guidance at ADM J3188, ADM J3200 or paragraph 22 of this guidance. 1 UC Regs, reg 99(4B) ACCOUNTS INTO WHICH PAYMENTS MAY BE MADE 33 ADM B1005 gives guidance on the arrangements for payment of UC, PIP, ESA and JSA, by DCT, into a bank or other account. With effect from this paragraph should be read as follows: B1005 Payments of UC, PIP, ESA or JSA are paid by DCT into a bank or other account nominated by 1 1. the person entitled to the benefit or

11 2. a person acting on their behalf under specified legislation 2 (see Part 5 of the Agents, Appointees, Attorneys and Deputies Guide) or 3. a person referred to in specified legislation 3 (eg. persons appointed to act under mental capacity law - see Parts 2, 3 and 4 of the Agents, Appointees, Attorneys and Deputies Guide). 1 UC, PIP, JSA & ESA (C&P) Regs, reg 46(1); 2 reg 57(1); 3 reg 57(2) THIRD PARTY DEDUCTIONS FOR RENT AND SERVICE CHARGES INCLUDED IN RENT 34 Amendments are made to TPDs which permit a deduction of between 10% and 20% of the claimant s standard allowance of UC to be made and paid directly to a claimant s landlord to cover rent and service charges included in the rent. 35 D2041 provides guidance which allows a DM to make a deduction for rent arrears and pay that amount to the landlord, even though that deduction would result in the maximum amount (40% of the standard allowance) being exceeded. The priority of such deductions is amended and allows the minimum amount, equal to 10% of the standard allowance, to be deducted. 1 UC, PIP, JSA, ESA (C&P) Regs, Sch 6, para 4(4) 36 Within the priority order for deductions, an amendment is made to the guidance within D This priority is now met where the amount of the deduction equals 10% of the standard allowance 1. 1 UC, PIP, JSA, ESA (C&P) Regs, Sch 6, para 5(2)(b) 37 D2043 is further amended to add a new priority 1 (following D ) which includes deductions for rent and services charges where the amount of the deduction exceeds the minimum amount that may be deducted at D UC, PIP, JSA, ESA (C&P) Regs, Sch 6, para 5(2)(pa) 38 D2121 is amended to provide 1 that the amount which may be deducted to pay arrears of rent is increased from 5% to an amount which is no less than 10% and no more than 20% of the standard allowance of UC. 1 UC, PIP, JSA, ESA (C&P) Regs, Sch 6, para 7(5)

12 ANNOTATIONS Please annotate the number of this memo (ADM 24/14) against the following ADM paragraphs: B1005, D2041, D2043, D2121, F1071, F1073, H3021, H3190, H4060, H4070, H4077, H4375, H5200, J3180 (heading), J3188, J3192, (heading), J3200 CONTACTS If you have any queries about this memo, please write to Decision Making and Appeals (DMA) Leeds, 1S25, Quarry House, Leeds. Existing arrangements for such referrals should be followed, as set out in Memo DMG 3/13 - Obtaining legal advice and guidance from DMA Leeds. DMA Leeds: November 2014