Universal credit

[Callywalls]

My dh and I currently claim universal credit, as due to redundancy and ill health neither of us are currently working. This weekend my boiler broke and I need 2k to buy a new one. The only way I can access this money is by cashing in a one off taxable lump sum of 2k from a private pension account I have that is worth about 12k. As I'm 55 I believe I am allowed to cash in all or part of this private pension, not ideal as I didnt want to touch it, but needs must and I don't want to cash all of it in. I think that this one off lump sum would be classed as taxable income by HMRC and I wondered what effect it would have on my universal credit payment this month? Would I not receive any universal credit this month or would it stop completely and id have to reapply? I don't know the best way to go about this and would be grateful for any advice. Thanks

Are there any council grants available for those on uc? Or could you buy on interest free credit (British Gas do it over two years).

It will be classed as income as it is taxable.

They will not close your claim but it will obviously affect that months payment.

I would advise you put it on your journal and explain what the new income is for and that its a 1 off payment.

I think you should look into getting this on credit. I don't know if the government still do emergency loans. Usually I'd say try to avoid cashing in any of your pension. But a £12K pension pot is only going to provide a tiny pension. I'd say the amount you cashed in would be classed as savings until it was spent and not income but not totally sure.

I would say it would be classed as as capital as it's a one off payment. As long as that doesn't take you over 6k in savings/ capital it would not affect your Uc claim.
perhaps leave a journal message asking what it would be classed as.
I would also explore local schemes - my next door neighbour has just got a new boiler completely funded and they are both on good incomes, they were eligible just on the basis of their boiler being so old apparently.

Thanks for the replies. I've looked into the government boiler grant scheme but, unfortunately, because the boiler is less than 7 years old I am not eligible. Ideally I would like to purchase it on credit, but I assumed as neither of us is working that I would not be able to obtain credit. I know 12k is a small pension pot and I do have a couple of others, which I hope to add to when I can get back to work. Thanks for the suggestion about adding the information onto my journal, I hadn't thought of that, but it's a good idea. I assume I won't get any universal credit payment for the month I cash in the 2k but really wondered if the payments will go back to normal the next month? I used all my savings when my husband was first ill and was only receiving ssp of approx 90 per week, before I started to claim benefits, so cashing in part of the pension seems to be my only option.

You really probably shouldn't do this.

If you cash in a pension pot worth over £10000 you will be limited to a maximum contribution of £4000 per year (including tax relief and employers' contribution) into any future pension you decide to pay in to.

Get a loan or access cheap credit plus any grants available.

It's less than 7 years old and needs replacing? Are you sure it can't be fixed?

If you look on the Which website, there is a page on getting a free boiler or a grant. There is even a 'rental' scheme. The options seems to fit your predicament.

Good luck!

Just wondering OP if the illness is longterm or is now a disability are you claiming PIP?

I'm not sure of my ground here but I have a feeling that both capital and notional income from that pension will be taken into consideration although.I think its based on the premise that, if you have a lump sum to access you can also access income (most people don't as income is taxable).

Journal your work coach or ring the UC helpline on 08003285644 for advice. .

Thanks everyone for your replies. I'll look into the Which website advice to see if we are eligible. The boiler is 5 years old and we have only lived here a year so inherited it. Whenever I've checked government grants they have been for boilers of over 7 years old as far as I can tell. My dh receives the standard rate of Pip but I don't know if that makes any difference to my situation. I thought of using 2k of my private pension as I believed it was the only way to get hold of some money, not ideal I know. Thanks again

If he receives PIP and you are not working and care for him for at least 35 hours ( this doesn't just mean you have to do everything for him) You can claim carers allowance. This is deducted from UC pound for pound however you can also claim the carers element of UC. This is around £162 pm in your UC award.

@Beenaboutabit

You really probably shouldn't do this.

If you cash in a pension pot worth over £10000 you will be limited to a maximum contribution of £4000 per year (including tax relief and employers' contribution) into any future pension you decide to pay in to.

Get a loan or access cheap credit plus any grants available.

If OP is just taking the 25% tax free option then this doesn't apply. The second you take more than the 25% then this does apply.

Thanks so much to all of you for taking the time to reply.

If OP is just taking the 25% tax free option then this doesn't apply. The second you take more than the 25% then this does apply.

Not true. The current rules are that the size of the pot is the key factor not the amount of drawdown with respect to future pension contributions.

The amount of drawdown can impact UC and can have tax implications but is less relevant to future pension contributions. Apologies for dragging the discussion away from OP's question but it's essential to understand the wider implications of pension release before taking a single pound from one pension pot.

I agree with @Buggerthebotox - I think the draw down would be treated as earnings in the Assessment Period you receive it, plus could result in surplus earnings being carried forward to the next Assessment Period[s].

It's a really hard one to advise on and I doubt DWP will be able to give a truly definitive answer as it depends on how it's reported to HMRC.

Occupational Pensions "show" on the RTI feed but don't "pull across" to the UC system (hence why you get asked about "Other Income" not from Wages or Benefits when you make the claim) whereas "normal" Wages and some taxable lump sum payments show up and "pull across" automatically.

I would see if your County Council have any kind of assistance scheme - there should be an online application to fill in for discretionary support.