To think UC guidelines regarding savings are unfair

[dancinguser]

Prepared to get flamed for this and apologies if it's been done before but here goes.

So it's looking likely that DP will be made redundant within the next few weeks due to there not being enough work coming in to justify bringing back all of the staff that were working pre-lockdown.

I had a look into universal credit should this happen to see if we're able to get any support until he can find another job and we meet all of the criteria except "you and your partner have £16,000 or less in savings between you." We have been saving for a house deposit for 2 years and have just over £16k between us. Pre-lockdown we were viewing houses and have been waiting for the right one to make an offer on.

Now before the obvious is stated that we wouldn't receive support as we have money that others don't which could pay for the rent, bills etc. I've put an example below to explain why I think it's unfair -

Person A earns £30k per year, their outgoings total £10k leaving them with £20k. They spend a little of the money but put over £16k into savings for a house.

Person B earns £30k per year, their outgoings total £10k leaving them with £20k. They spend this money on luxuries such as a new car, designer clothes, a new sofa, the latest iPhone.

Both Person A & B lose their job. Person B receives UC to help pay their rent and bills, whilst sitting on their new sofa in their designer clothes with a nice car sitting in the driveway. Person A must burn through their own savings before being eligible for support, all whilst having 0 luxuries.

So whilst at face value it makes sense that people with savings pay using them, I find it ridiculous that two people who have had the exact same money coming in wouldn't receive the same support based on whether they are good at saving their money or not. Why are people who choose to save their money being penalised against someone who may have spent their money frivolously? IMO if two people both have had the same income they should be eligible the same support, AIBU?

[quote Quietheart]@Babyroobs I agree that sometimes the monthly payment looks a lot especially if includes their housing costs. However people with PIP are one of the groups who are worse off on UC than on legacy benefits.[/quote]
Carers element is paid too for a partner even if they work and earn too much for carers allowance. Once the LCWRA element is granted, a couple will get a work allowance if one of them is working meaning if one is claiming SSP there is no deduction. I had a couple last week where one was getting SSp and had been awarded PIP, they had a mortgage and their PIP claim along with Uc came to nearly 2k. I do not think this is a poor amount. Like I say the group of people I deal with are usually sick and I know Uc is very little for an unemployed single person. I'm not saying it is great for everyone but for some it is ok. I don't have too much experience with legacy benefits but I'm guessing that if this couple had had to claim tax credits they wouldn't have qualified for help at all as they probably would have earned too much in the tax year or whatever and would have taken ages to get any money ??

If they claim UC their rent is paid by UC, hundreds of pounds a month. If they owned their own house then their mortgage would quite likely have been paid off by then and their housing would cost the government nothing. Pensioners who go into retirement years will get their rent paid for potentially 25 years by the government if on a low pension. So thinking longer term it would cost the government less to treat savings for a mortgage deposit differently.

The government don't actually want to save money. If they did, what you said would be policy. It's much better for the very wealthy if people find it harder to buy houses, so that they rent instead. Housing benefit goes from the government into the pockets of those that already own assets. The government aren't bothered by this at all. Taxes are used to make people who have assets more wealthy. People who are in the middle and pay tax and can afford their own home are encouraged to look down on people that claim benefits, not look up and see who the system really supports. If the government wanted to they could support more building or buying of properties for council housing. Again this would save the government money long term as they'd be the ones collecting the rent. And again those in the middle that pay plenty of tax and can afford to buy or rent their own nicer home are encouraged to look down on those that rent council properties, and think those people are getting something for nothing, rather than look up and see that the government does not want to make savings.

Suspect the same thing will happen with the NHS. It'll still be free at the point of service but rather than being government owned, your taxes will be paying for companies to make a nice profit for private individuals.

As a poster put it above, people are fighting over the shit in the road while the people with horses ride past.

On legacy benefits they could not have claimed ESA until all SSP was exhausted., yet now they can claim help relatively quickly once they drop to SSP ?

I don't have too much experience with legacy benefits but I'm guessing that if this couple had had to claim tax credits they wouldn't have qualified for help at all as they probably would have earned too much in the tax year or whatever and would have taken ages to get any money ??

If you don't have experience with the legacy benefits how can you argue that people would be better off?

Sick and disabled people have been disproportionately affected by UC, and would have been more so had court cases not prevented those on legacy benefits who were entitled to premiums that no longer exist being shunted over without protection.

And anyone who thinks that the extra £100 maximum for 1 child and £200 maximum that can be claimed for childcare on UC over tax credits won't be changed to the 70% once everyone is on UC is mad.

@Babyroobs

On legacy benefits they could not have claimed ESA until all SSP was exhausted., yet now they can claim help relatively quickly once they drop to SSP ?

ESA would have gone into payment once their SSP ran out, but housing benefits and the likes could have been claimed whilst on SSP if they qualified.

Also if they have a spouse/partner who works and they were entitled to be in the Support Group they could have claimed ESA without any impact of their partner/spouse's salary

If they had ended up with their partner or spouse caring for them they'd also have got much better help with their mortgage.

Someone who was not entitled to HB because they have a mortgage would have had to live off just SSP for 28 weeks then? what help would there have been for them?

@AnotherEmma

Quietheart

If someone will be significantly better off on UC, this can be the case even when you factor in an advance payment to cover the 5 week wait. With HB there is a 2 week run on (which obviously only covers 2 weeks, not 5, but it's better than nothing). As for tax credits overpayments - actually one of the biggest problems with tax credits is the tendency to significant overpayments or underpayments, due to the weird way tax credits are calculated, and this is less of a problem with UC since the calculation is based on actual monthly income.

Correct me if I'm wrong but I believe the benefit cap applies to legacy benefits as well as UC; the benefit cap is a controversial policy that predates UC.

SMP is treated as earnings whereas Maternity Allowance is not (similar to SSP v nsESA) and yes that is unfair to women who qualify for MA but not SSP.

You are right to point out the numerous problems with UC (and I did acknowledge that they exist in my earlier post) but it is not particularly balanced to list the problems without also considering that UC does have some advantages for some - dare I say many - people.

I would welcome examples of someone who is significantly better off on UC to the extent that it would negate the 5 week wait. Genuinely.

The 2 week HB run on was a challenge that took a long time to win and yes its better than nothing but still puts you in 3 weeks rent arrears.

I agree that Tax Credits create problems by the nature that they are paid annually. But this overpayment is specific to the change over when the UC claim is made. Even if the annual Tax Credit award was correct HMRC cannot stop the last payment in time and nor can housing benefit.

Re the benefit cap yes it applies to legacy and although the cap predates UC the calculation does not. On legacy the condition is that you work 16 hours a week NMW. On UC it is that you make the minimum income threshold which is 16 (hrs) x NMW x 52 /12 currently that is £604.58 and you can't make that if you are paid 16 hours NMW weekly, fortnightly or 4 weekly. (unless it's the month where you get 5 payslips) so the cap is applied where it is not to a legacy claimant.

SMP the first £100 a week is ignored for Tax Credits and Maternity Allowance is ignored altogether. This is not the case on UC as UC count every penny. This means that women on legacy could receive a top up of income while on maternity and sometimes the maternity grant, child care costs were also available to more women returning to work on legacy due to the income disregard.

I didn't mention SSP but now that you do people on SSP are often better off on legacy as they can still receive Working Tax credits for 6 months on the sick.

I think my list is not particularly balanced because it reflects that UC is not balanced towards the claimant, however I am genuinely open to learning the advantages of UC and would be happy to see the advantages of UC outweigh the disadvantages.

Quietheart - Presumably someone who had already earned over the WTC threshold in the tax year and then has the misfortune to drop to SSP would not qualify for any WTC ? On Uc they would get help straight away ??

"I would welcome examples of someone who is significantly better off on UC to the extent that it would negate the 5 week wait. Genuinely."

You'll just have to take my word for it because I'm not going to dig out every single one of the "better off" calculations I've done (or checked) and give you examples

As a general rule, though, if someone is entitled to HB and isn't claiming it, they'll be better off on UC getting the housing element.

There are other situations, too, but that's the most common one. I suppose you're not comparing like for like; a more direct comparison would be someone already getting all the legacy benefits they're entitled to v claiming UC.

And you are right about SMP & MA, I'd completely forgotten but it is true that they were disregarded (mostly/fully) for tax credits as you say. So yes women claiming benefits on mat leave are definitely worse off on UC

I have done better off calculations for people on SSP and in some cases it is better for them to switch to UC immediately (rather than staying on WTC) - usually because they're not on HB but they'd get the housing element of UC if they claimed.

@Babyroobs I bet your couple on 2k would have been better off on legacy benefits. On legacy they could have had Working Tax Credits and likely a disability element. Tax Credits can be based on current year income not only last year so they may not have earned too much. Tax Credits was paid within weeks and backdated so they wouldn't have been hanging around waiting. @lyralalala has already explained the advantages of ESA over UC.

It's tough shit. If you have that money then you should live on it.

[quote Quietheart]**@Babyroobs* I bet your couple on 2k would have been better off on legacy benefits. On legacy they could have had Working Tax Credits and likely a disability element. Tax Credits can be based on current year income not only last year so they may not have earned too much. Tax Credits was paid within weeks and backdated so they wouldn't have been hanging around waiting. @lyralalala* has already explained the advantages of ESA over UC.[/quote]
Maybe, but then tax credits would have ended after 28 weeks of SSP leaving them just on income based ESA and carers allowance ? I will do a check to see how it compares when I have a minute.

"Tax Credits can be based on current year income not only last year"

No tax credits are based on current year income plus £2500 (if current year's income is more than £2500 less than previous year's income).

Tax credits do not immediately adapt to changes is income as you imply. They are not uniformly better than UC for everyone.

In my job we give debt advice as well as benefit advice. One of the many things we do is to help people sort out the utter mess caused by over/under payments of tax credits.

@AnotherEmma

You'll just have to take my word for it because I'm not going to dig out every single one of the "better off" calculations I've done (or checked) and give you examples

As a general rule, though, if someone is entitled to HB and isn't claiming it, they'll be better off on UC getting the housing element.

There are other situations, too, but that's the most common one. I suppose you're not comparing like for like; a more direct comparison would be someone already getting all the legacy benefits they're entitled to v claiming UC.

Haha no way would I expect that, I don't mean £ for £ , as I said people could be better off on calculation and without a doubt if they are not receiving housing benefit and would be entitled then they could claim UC. But that is not a level playing field so yes I am talking about legacy entitlement v UC entitlement.

The changes for women on maternity leave particularly grieves me. The benefit cap one is also likely to affect women more as it is mostly female single parents who are working those 16 hours a week. But you don't actually hear much in the media about how working women having babies have been shafted by UC.

@AnotherEmma

"Tax Credits can be based on current year income not only last year"

No tax credits are based on current year income plus £2500 (if current year's income is more than £2500 less than previous year's income).

Tax credits do not immediately adapt to changes is income as you imply. They are not uniformly better than UC for everyone.

In my job we give debt advice as well as benefit advice. One of the many things we do is to help people sort out the utter mess caused by over/under payments of tax credits.

Exactly. I helped a couple a few weeks ago with 12k of tax credits overpayments, it causes so much worry and stress. The client had a relationship breakdown and had to switch to Uc and would not even take an advance with 5 kids because the tax credit overpayment had caused her so much fear and upset.

Maybe, but then tax credits would have ended after 28 weeks of SSP leaving them just on income based ESA and carers allowance ? I will do a check to see how it compares when I have a minute.

They'd be on Contribution based ESA after SSP, not income based. If the partner stayed working they'd continue on Tax Credits. If they had to give up work they'd get Carers Allowance. As a couple they'd have potentially got income-related ESA on top if they qualified.Then the disability premiums would have come into play on top of that.

‘My salary would just about cover the rent and bills but wouldn't cover food, petrol etc. so if he does lose his job then yes we will have to dip into our savings.‘

Why can’t he take a temporary job to cover these things? Anything is better than nothing?

Dh was made redundant in March. He’s working in a supermarket to pay bills. I’m doing overtime. It’s not ideal but it’s not forever.

@lyralalala

Maybe, but then tax credits would have ended after 28 weeks of SSP leaving them just on income based ESA and carers allowance ? I will do a check to see how it compares when I have a minute.

They'd be on Contribution based ESA after SSP, not income based. If the partner stayed working they'd continue on Tax Credits. If they had to give up work they'd get Carers Allowance. As a couple they'd have potentially got income-related ESA on top if they qualified.Then the disability premiums would have come into play on top of that.

Not everyone is entitled to contributions based ESA, maybe earning too little or sporadic earnings.

The tax credit computer system is primarily to blame for the shit that comes from that.

To bring in a new system with a cobbled together system that was actually designed to calculate tax was a disgrace. The fact no government, of either kind, has bothered to fix it is also a disgrace.

Even now they are finding that making changes cause problems for years worth of awards.

One good aspect of UC is that a young person living at home will not cause a non dependent rent deduction on thier parents Uc until they are 21, as opposed to 18 on legacy benefits.

@Babyroobs

One good aspect of UC is that a young person living at home will not cause a non dependent rent deduction on thier parents Uc until they are 21, as opposed to 18 on legacy benefits.

Sorry should have said when they leave education rather than aged 18.

@AnotherEmma

"Tax Credits can be based on current year income not only last year"

No tax credits are based on current year income plus £2500 (if current year's income is more than £2500 less than previous year's income).

Tax credits do not immediately adapt to changes is income as you imply. They are not uniformly better than UC for everyone.

In my job we give debt advice as well as benefit advice. One of the many things we do is to help people sort out the utter mess caused by over/under payments of tax credits.

Actually they can be based on this years income without the £2500, if current years income is less than previous years income and that was what I was referring to in the scenario where someone moved on to SSP. No HMRC do not immediately adapt to changes in income unless you tell them.

However at any time during the year a person can ring HMRC and say I am on the sick for the next 6 months I expect my income will be ... add that to the current years earnings and use that figure to calculate my award. It is likely that the current year will be significantly less if someone is ill with cancer which is what babyroobs referred to (unless its near the end of the tax year) and the Tax Credits would recalculate and up the award.

I agree that much of your work will be sorting out the mess of tax credits, it is a nightmare for people who are in and out of work, don't update HMRC, don't fill in their annual assessment etc. UC and RTI will be more efficient with that process.

@Babyroobs

AnnaBanana - Yet people on the tax credits system can have over 16k savings and still get tax credits of hundreds of pounds a month if they are on a low income? It needs to be the same rules for all.

So that means you are not allowed to save money even if you are in low income? That’s you should spend every last penny to prove you need the state’s help?

If I had even just 14k of savings no way would I claim UC. Absolutely not worth the trouble and hassle it causes, there is going to be a uproar in April 2021 when most people get a bill through the door and have to pay it all back in a lump sum because they are now working and not entitled to it anymore come end of year.

Happened to me in 2015 and I had to pay back 5k because I earnt a extra 3k and I paid tax on that 3k, never again I would touch that system if I had a choice. My mum used to say the benefits system was designed to keep you poor as it’s such a struggle to get out of it, I raised a eyebrow and thought what nonsense.....but she was right!

This thread has been so interesting to read. I'm on old style tax credits and it's a pain in the ass. My husband and I are both self employed and I was employed for 20 and sail closely to the line of whether we qualify. One year we were over paid 2k and then had to pay it all back. A few years later we were told we didnt qualify, had the tightest year ever, money was such a worry then suddenly they told us we had qualified all along and gave us 3k. I find the whole thing so stressful. I've been made redundant so this applying again this year will be another faff. This thread has reminded me I need to do it