Universal Credit - incoming payment

[Worried74]

We receive universal credit and my husband is probably about to be retired due to ill health. At present we have about £2k in savings and the ill health retirement package will be about £10k.
This payout will come direct from his employer and is partially taxed. Once it hits our account it will be used to payoff outstanding debt to enable us to survive on UC and my wage. My husband will not be able to work due to his health and the caring needs of our child.
My question is how will this affect our UC payments. Can we explain what the money will be used for, that it will not go into savings and provide proof.
Sorry if this is a daft question but this is all very new to us. Thank you

One of two things will happen...either...

Your DH's employer will report it all correctly and the final Wage taken into account in the Assessment Period it's paid in will just be last Wages / PILON etc. This will mean you can report the other ill health retirement lump sum under Capital, Savings and Investments (and obviously update as it reduces).

Your DH's employer won't report it correctly, and it'll come through looking like a huge Wage in the Assessment Period in which it's paid (with potential Surplus Earnings applied to future Assessment Periods).

If this happens, you need to raise an RTI Dispute via your Journal and provide a breakdown of the final Wages / Lump Sum etc. This will be corrected by the RTI Disputes team, who will remove the lump sum aspect and only use the final Wage / PILON instead (with any Surplus Earnings removed too). Usually after this is done they'll prompt you to update Capital, Savings and Investments as applicable at this point.

I've not got much experience of using the Personal Tax accounts to look at Wage information etc but I understand this can be helpful to identify if it's potentially going to go the wrong way? So might give DH a head start to get HR / Payroll to check and correct.

UC aren't able to do anything until AFTER it's done wrong though - they can't pre-empt whether the Employer will do it correctly etc.

This is the thing I mean...

www.gov.uk/personal-tax-account

A lot of people with "flaky" employers who are a bit lax with payroll (reporting late etc) often use this as an early warning system for any potential issues.

Its's fine to pay off debts. I would just keep a record/ invoices of where the money has gone as anything over 6k should be reported and there would be a small deduction on your monthly Uc amount.

@Babyroobs and @8dayweek thank you for your help