Universal Credit loophole could see thousands of Christmas payments slashed

UNIVERSAL Credit claimants must check their Christmas pay dates, or they risk having their benefits slashed.

Lots of employers pay staff early over the festive period, but this could cut your entitlement by up to 55% if it’s not reported properly.

1

The government recently closed a loophole to make sure that people who get paid twice in one assessment period won’t lose out on Universal Credit.

But the fix only works if payroll departments follow HMRC’s guidelines – and small errors in how early pay is reported can have catastrophic impacts.

For instance, accountancy firm Blick Rothenberg says claimants can still get stung if their employers use the wrong pay period.

And DWP has confirmed that despite employers getting guidance on how to report correctly from HMRC, some continue to report the wrong date to RTI, which can have an effect on the Universal Credit payment.

December is a danger spot for incorrect payment reporting, since so many companies pay their staff early due to bank holidays and Christmas closures.

Some firms will pay employees early by up to weeks before shutting up shop for the festive season.

This means your pay could be registered for the period ending December 17 instead of December 31.

According to Blick Rothenberg, up to 10,000 people could see benefits slashed by up to 55% as result.

Robert Salter, a tax service director with the firm said: “In the run-up to Christmas, it is common for employers to pay December salaries earlier than normal.

“But if they get the dates wrong on the electronic submissions they make to HMRC, it could severely impact those on Universal Credit.”

“In broad terms, reporting the wrong pay period – and thereby artificially inflating the perceived wages of an employee, could reduce their Universal Credit support from the government by as much as 55%. 

“Not exactly the type of Christmas Present that anybody would want this time of year.”

If you’re on Universal Credit and you know your company is going to pay early, it’s worth flagging the issue to payroll now, to avoid any confusion.

HMRC says that any bosses paying staff early need to report the normal pay date on the Full Payment Submission (FPS) – so this is what you need to ask payroll to do.

If it looks like you’ve had two sets of pay allocated to one assessment period, contact your work coach as soon as possible.

Otherwise, you may find your Universal Credit drops substantially.

The following month your award should be higher than normal to make up the difference – but that might be too late if you struggle to pay bills in the moth you get less.

When you flag the issue to your work coach, you can ask for one of the payments to be reallocated to the right month.

You can contact Universal Credit by ringing 0800 328 5644 or through your wok diary online.

Helplines are open Monday to Friday, 8am to 6pm and calls to 0800 numbers are usually free from a landline.

HMRC has issued guidance though to employers to remind them of the correct procedures.

The Sun has called on the government to fix errors in the system, as part of our Make Universal Credit Work campaign.

In a major win for, almost 2million Brits in work and claiming Universal Credit are now over £1,000 a year better off.

Workers lose less of what they earn as the taper rate falls from 63p for every £1 earned to 55p, and the work allowance rises by £500.

This post first appeared on thesun.co.uk