Move from tax credit to UC nearly £2k worse off

[randomname7208633]

My DW and I recently moved from tax credits to universal credit. Our circumstances are exactly the same but our award has reduced by £1,800 annually.

Is this normal? Is there anything we can do? This will make things incredibly difficult for us to manage

Is it because you perhaps have some savings?* Can you pinpoint where the loss is occurring?

*The TC system does not take savings into account, only interest earned on those savings. UC does, over £6k, at which point a taper applies.

I think it depends how much you are actually receiving and why. Lots of people are down 20% of their salaries. Why are you on uc, how much were you receiving and how much now?

why did you move? Are you sure all the elements are correct on your statement as they sometimes get missed?

It could also be because Uc works very differently to Tax credits. UC is calculated on a monthly assessment period wheras tax credits are calculated annually, so if for example one of you is paid four weekly, it could be that two pay days have fallen in the monthly assessment period. Whilst you would be unlucky for this to happen in your first month, it is possible and would only happen once a year so next months would increase. Check your statement that all elements are correct and check earnings have been correctly reported.

Are you paying off an advance?

There's also a 5 week wait (ie gap) with UC - have you asked about transitional protection, if this was a 'migration' across?

I'm on my phone so forgive me for not individually quoting but I'll try to answer everything.

Just to reiterate first, our circumstances are exactly the same as they were under tax credits.

We have no savings, just what's in the bank to pay the bills, so the amount varies on a daily basis but it isn't over 6k and never has been.

I'm not sure how I can pin point where the loss is occurring or what that means exactly. Under TC we received 13 4-weekly payments of £531; a total of £6,903. We have just received notice from UC that our award, which I understand is paid monthly, is £421; a total of £5,052. The difference to our annual budget will be a £1,851 defecit.

I will double check the info on our UC account to make sure we've not accidentally put any incorrect information in but having just had a quick phone call with one of their staff the figures they quoted back to me seemed to be correct.

We are not paying off an advance.

Pay frequency may be the issue. My DW gets paid weekly and I get paid 4-weekly, therefore there will be some months when she has a different number of pay days and one month when I have 2, so I guess that our UC payments will go up and down and my calculations, based on 12 equal payments (I've nothing else to go off), will be wrong, though the last time I got paid twice in one month was December and an extra payslip in one month of my wife's income wouldn't make too much difference I'd have thought, but I'm grasping at straws here.

Does anyone know if our claim, which we began mid Jan and have been informed of the amount we'll receive today in Feb, would have been calculated using December or January earnings?

Overall I've got the feeling that one way or another we are going to have to do some serious belt tightening, and not having a definite figure that we will receive each payment is going to make budgeting a bit trickier.

@randomname7208633

I'm on my phone so forgive me for not individually quoting but I'll try to answer everything.

Just to reiterate first, our circumstances are exactly the same as they were under tax credits.

We have no savings, just what's in the bank to pay the bills, so the amount varies on a daily basis but it isn't over 6k and never has been.

I'm not sure how I can pin point where the loss is occurring or what that means exactly. Under TC we received 13 4-weekly payments of £531; a total of £6,903. We have just received notice from UC that our award, which I understand is paid monthly, is £421; a total of £5,052. The difference to our annual budget will be a £1,851 defecit.

I will double check the info on our UC account to make sure we've not accidentally put any incorrect information in but having just had a quick phone call with one of their staff the figures they quoted back to me seemed to be correct.

We are not paying off an advance.

Pay frequency may be the issue. My DW gets paid weekly and I get paid 4-weekly, therefore there will be some months when she has a different number of pay days and one month when I have 2, so I guess that our UC payments will go up and down and my calculations, based on 12 equal payments (I've nothing else to go off), will be wrong, though the last time I got paid twice in one month was December and an extra payslip in one month of my wife's income wouldn't make too much difference I'd have thought, but I'm grasping at straws here.

Does anyone know if our claim, which we began mid Jan and have been informed of the amount we'll receive today in Feb, would have been calculated using December or January earnings?

Overall I've got the feeling that one way or another we are going to have to do some serious belt tightening, and not having a definite figure that we will receive each payment is going to make budgeting a bit trickier.

If you are paid four weekly and your wife weekly it will vary each month. UC is calculated based on your monthly assessment period and any earnings reported by HMRC in that assessment period. The UC payment you receive seven days later reflects those earnings. As said previously there will be one UC assessment period a year when you will have 2 pay days fall within it if you are paid four weekly. As your wife is paid weekly there will be some months where four paydays fall in your assessment period and some where five do. On the five week months UC will be less. Do you have kids or rent on the claim ? If so please check your first statement that all the elements are correct. It may be an idea to plot all your paydays and your UC assessment periods on a calendar so that you can track exactly when you are likely to get less so that you can budget better. So if for example you can track the month when you will be paid twice and your wife paid five times, you will no that your Uc that month is going to be significantly reduced or possibly wiped out, but on the plus side if paid four weekly you do get more Uc all the other months as your annual wage is divided by 13 pay days and there are 12 UC monthly assessment periods.

Does anyone know if our claim, which we began mid Jan and have been informed of the amount we'll receive today in Feb, would have been calculated using December or January earnings?

It will have been calculated based on whatever earnings have been reported by your employer to HMRC in your first assessment period which will have started the day you submitted the claim and end one month later. It will tell you your exact assessment period dates on your statement.

Why did you switch to UC ?

Thanks roobs (and everyone else who replied)

I've just logged on to UC (probably should have done that first but head was a bit up arse when DW texted me).

The assessment period was 15th Jan to 14th Feb which I didn't realise so I know what we are working from at least. DW had 5 pay days during that period but will only have 4 during the next one so our payment should hopefully be a bit more (though I really can't see us being anything other than worse off over the year as a whole).

I'm an excel geek so once I've got a better idea of what we can expect to receive I'll put all the figures into the annual spreadsheet.

We do claim for the 3 children who live with us but don't pay rent as we have a mortgage so I really didn't expect the overall amount to be so different to tax credits!

Why did you switch to UC ?

Long story that involves two adults behaving a little like children

this is exactly why I'm staying on tax credits as long as possible! did an online calculator exactly the same income ect and we'd be over a grand a month worse off makes no sense at all

@randomname7208633

Thanks roobs (and everyone else who replied)

I've just logged on to UC (probably should have done that first but head was a bit up arse when DW texted me).

The assessment period was 15th Jan to 14th Feb which I didn't realise so I know what we are working from at least. DW had 5 pay days during that period but will only have 4 during the next one so our payment should hopefully be a bit more (though I really can't see us being anything other than worse off over the year as a whole).

I'm an excel geek so once I've got a better idea of what we can expect to receive I'll put all the figures into the annual spreadsheet.

We do claim for the 3 children who live with us but don't pay rent as we have a mortgage so I really didn't expect the overall amount to be so different to tax credits!

Ok so yes it will be slightly more next month. It is pretty easy to work out your entitlement each month. If you know the amount of net wages you have received in your assessment period, then you take away £512 ( work allowance 0 and multiply by 0.63. This figure will be the deduction for earnings from your total UC. It should tell you your total UC on your statement - the total of your standard couples element and 3 x childrens elements. It may help you to be able to work out what you will receive so you can budget better. Please bear in mind that currently the standard couples element is about £80 a month higher than it normally is due to the covid increase. This may end at the end of the tax year depending whether the government decide to keep it on. This uplift was also applied to WTC too though.

@bg21

this is exactly why I'm staying on tax credits as long as possible! did an online calculator exactly the same income ect and we'd be over a grand a month worse off makes no sense at all

That seems extreme. Many people are a lot better off on Uc especially if working and they have kids.

So your total UC is likely to be £1346.95 ( standard couples and 3 x kids elements ).
Say joint earnings in your assessment period were £1500, it would be £1500 - 512 ( work allowance ) x 0.63 = £621.81 deduction for earnings.
£1346.95 - £621.81 would equals £725.14 payable on the payment date seven days after the end of your assessment period.

Thanks again roobs I reckon I should be able to calculate every payment we'll receive over the year using those calculations. Got a bad feeling we are still going to be quite worse off than we were on TC but at least I'll know where we stand.

I know when I put my details through a calculator I was about £2.5k a year worse off. You say you have three children - was one born after the two child cut off date?

Im on TC and I cant quite remember the exact figure but a move to UC would mean a substantial loss for me. Which never made sense as I am a lone parent to 1 child on a low income. On a full year I earn around the 14k mark. I've spent 7 months of the last year furloughed so this year will be less.
Anyway long story short it came down to me having a mortgage. However if I was renting I would actually be better off on UC. Doesn't seem fair but it's the reason I pray I get moved over to UC rather than me having to move myself.

UC is not bad at all I’m better off. The only thing that is terrible is the 6 week wait and the childcare costs you have to pay them upfront!! I have to confess I do not know how people who are single parents with 2 kids manage this until the money is backdated.

@Sumwin1

UC is not bad at all I’m better off. The only thing that is terrible is the 6 week wait and the childcare costs you have to pay them upfront!! I have to confess I do not know how people who are single parents with 2 kids manage this until the money is backdated.

For anyone in this situation trying to find upfront childcare costs, you can ask your work coach about the flexible fund, it is discretionary but they can give help.

Online calculators also say we would be a lot worse off on UC too. We qualify for tax credits do to getting the disabled child element and paying child care costs but would apparently qualify for nothing on UC so should be about £250 a month worse off. Hoping we get migrated over too rather than having to move ourselves over.