Universal credit + backdated pay rise

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We have just been given a lump sum for a backdated payrise at work, I am currently in receipt of universal credit as well. My employer has offered people in the same position as me a letter explaining that the lump sum is not regular earnings etc as they don't want people's money messed up. Has anyone ever known something like this to work and for uc to not take it into account for the following month

It will still be classed as earnings. Earnings over £379 are deducted 55p in every £1. They won't accept the letter saying that it is a one off payment, as it is still earnings.

It will be classed as earnings. You will probably get a nil reward and then the month after it returns to normal.

Ask your employer to pay it in smaller amounts over a few months.

This is what I do with any quarterly bonus, spread it over 3 months

Or if it's a significant amount, take the nil reward hit

I've just received an extra £700 in backdated pay award. I'll get zero UC next month as they see it as income. Absolutely nothing you can do I'm afraid, I've set aside the amount I'll lose so I've got it next month.

Yep, it's earnings. We'll see 55% of the award disappear in UC deductions. Fortunately, it won't take us to a nil award, but it will still feel a bit rubbish!

what do you expect!
If your income is increased whether paid back-dated or a bonus - you are not entitled to so much benefits because you have not lost anything.
Nothing unfair about it.

I received a bonus a few years back, which I actually didn't gain anything as it wiped out my uc, that's unfair!

How is it unfair? Your UC is there to supplement low pay (an entirely separate problem); your bonus offsets your low pay this month. Why should you get UC on top?

The only way to manage back pay/lump sums - like those paid to some NHS staff - is to spread them over several months. I believe some NHS employers have offered this option.

This. It's only unfair if you lose the lot and miss out on the work allowance for that month ( if you get a work allowance).

She obviously needs the money? Of course it is unfair as her pay rise is obviously taken away.

You can ask them to split it over a few months so your Uc doesn’t reduce as much but a lot of employers won’t do this if their payroll is rigid.
it evens it out so you will still get a reduced amount in Uc but not in one big go.

There is an unfairness, at least one of perception.

My employer,a charity, couldn't afford an annual pay increase but gave us all a one off lump sum - £700. After Tax/NI I got all of it.

My colleague who is a single Mum with a disabled kid and getting UC lost 55p of benefit for every net £1.

put it straight into your pension if you want to keep uc the same

I can see how the example @Bromptotoo gave can feel unfair. But that's the problem with benefits becoming de facto salary. It's all an unholy mess.

This thread is no different to the one from a few days ago where someone’s small bonus sent them over £100k, resulting in them losing the childcare assistance and many posters were up in arms about OP being insensitive and not reading the room. Interesting to see how the responses differ here.

Those people who are saying it isn't 'unfair' because it's just reducing the burden on the State are correct. If your salary goes up, Universal Credit goes down. However, there is a perceived unfairness because this pay rise was backdated to April 2023 and lots of people are thinking that they are getting £1925, but by the time 12% goes for NI, 6% goes for pension, 20% goes for tax, then 55% of the rest:

£1925
-£231 NI (12%)
-£115.5 pension (6%)
-£361.90 tax (20%)

=1216.60
-£669.13 UC (55%)

Total received £547.47

That reduces the bonus to 28%, so a 72% deduction rate. Even someone on a £500,000 salary gets to keep 55% of their salary after deductions.

The payrise would still have been taken away if it had been given months ago increasing her monthly earnings though. Benefits reduce at the same rate however they are paid.

annoyingly i wasn't on UC when this the 1925 was on the table but the unions fighting took it until nov to accept and now i am so i'll see no benefit but i understand it's all earnings. If it'd been accepted when first offered, i'd have got to keep it

This angers me! As a single mum of 3 kids, 2 in full time education and 1 in nursery doing 3 hours per day. I work 2 hours per day (the only free time I have) and have been backpaid. If this amount was spread out over the months it's actually been backdated to, i wouldn't be losing out because i still don't earn over the threshold. But because it's been paid in a lump sum, me and my kids have to go without our UC payment for the upcoming month (right ontop of xmas) because it looks as though i've worked more hours than i actually have! this is an absolute joke. And people like this idiot, that don't realise how it can affect people need to pipe down unless they know the facts!!

I don’t see how you are at a loss…you still have money…just not UC money no!?

My council is giving us the opportunity to spread out the back pay so that people on UC can avoid this trap. Can you ask yours to do the same?

I think with UC it can feel like you can’t earn more. Pay tax and NI so down to about 70p in the £1 then your UC will be reduced by 55% so down to 32.5p. Then they take off student loan about 9p Per extra £1 from your pay so for every additional £1 I earn I’m about 23.5p better off. I don’t get massive amounts of UC (work full time) but it makes the difference between skint and managing and skint and fucked as can’t keep car on road for work type stuff.

I did cheekily ask for my tax rebate the month my back pay came in rather than get two nil award months.