Welcome news for Universal Credit claimants whose monthly pay day can vary
Why has this been an issue?
Universal Credit uses fixed dates each month to assess each claimant’s income and outgoings. This can cause problems for claimants who are paid monthly by their employer. On occasion it is necessary for employers to pay their employees earlier in the month than usual, for example, due to a pay date falling on a bank holiday or a weekend. The effect of this within Universal Credit can mean that it appears that the claimant has been paid twice within the assessment period, doubling their income. Universal Credit calculates their award using that higher total figure, giving them a much reduced or zero Universal Credit payment, when in fact the claimant is not in receipt of a higher wage and his just received their usual pay earlier than normal. In the subsequent assessment period it will appear that the claimant has not received any pay from their employer, and while this may result in an increased Universal Credit payment for that period, it seldom makes up for the loss in the previous month.
The timing of wages payments from their employer is outside of the control of the claimant and, as a result, this can make it very difficult to budget when the Universal Credit payments fluctuate greatly, while actual wage income is remaining the same.
What is the change?
Due to a ruling in the Court of Appeal earlier this year, this anomaly in the way income is treated by Universal Credit is being rectified from 16 November 2020. The relevant regulations are available here.
As of 16 November, Universal Credit staff will be able to reallocate a claimant’s second payment from an employer into a different assessment period. Therefore, the claimant will not have two wages allocated as income to one assessment period.
This will be a welcome change for many families who have been affected by this in the past, and will be in place ahead of the Christmas period when the early payment of wages is a common occurrence.
It is important to note, however, there are still concerns for Universal Credit claimants in the coming weeks and months, including the reintroduction of the ‘Minimum Income Floor’ for self-employed claimants.
Our Family Benefits Advice Service can offer free advice and guidance on the financial support available to families at this challenging time, including around social security benefits, support with childcare and parental rights and entitlements. To speak to one of our advisors, Freephone 0800 028 3008.