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Universal credit and furlough: what you need to know

Published on 27 April 2020

If you are claiming universal credit (UC) and are furloughed, your UC award may not be the amount you expect. It is important to be aware of this so you can plan for any changes to your finances.

The word furlough stamped on a piece of paper
(c) Shutterstock / Novikov Aleksey

UC is a monthly payment and the amount of UC you are entitled to is based on your personal circumstances and also your 'net pay' in a monthly assessment period. Your net pay information is generally taken from the RTI (Real Time Information) return that your employer must submit to HMRC each time you are paid.

Generally, your UC payments should not vary significantly from month to month if your net pay remains broadly the same. Although, if you are paid weekly for example, your monthly UC payment will vary from time to time according to whether there are 4 or 5 wages payments in the assessment period. There is some information about how different pay patterns affect UC on the GOV.UK website.

Given all the disruption and difficulties facing employers and business since the coronavirus outbreak started, there is a greater chance that there will be variations to your pay amounts, pay dates or problems with the information your employer sends to HMRC and each of these could have potential knock on effects for your UC award.

While there may not be much that you can do to prevent them happening, it is important to be aware of them so you can be ready and, if possible, plan your finances accordingly.

Here are some of the possible scenarios:

  • You have been furloughed on 80% pay. If your income drops then your UC award should adjust automatically.
  • Your employer waited to receive the Job Retention Grant before paying you, so had to wait to receive your payment. In this scenario you may receive some of your March and April pay together or at least in the same UC assessment period (albeit at 80%) – this could look to DWP as though you have higher income in that assessment period so your UC award may reduce. In some cases, you may have had a higher UC award than you were expecting in the previous month when you received less pay while your employer was waiting for the Job Retention Grant which meant less pay was taken in to account for UC.
  • Your employer shut down and processed your pay early – if your employer put the actual pay date (rather than your 'contractual' pay date) into their RTI submission, then this may cause a 'two payments in one assessment period problem.' Although there has been a recent case looking at this issue (the Johnson case) which said DWP should allocate earnings to assessment periods in which they were earned, the decision was fact specific and it is our understanding that DWP are appealing the outcome and not applying the ruling in any case. You should seek advice if this applies to you.
  • Employer submitted incorrect/late payroll information – for example, some employers may be confused about whether to report your normal levels of pay or your 80% furlough pay. If your employer has submitted incorrect payroll information, your UC award could be wrong and you should contact the UC Service Centre either online or on 0800 328 5644 to dispute your UC calculation. If you can provide proof of when/what you were actually paid, e.g. payslips or bank statements, you should be sure to let DWP know

We will shortly be publishing some guidance looking in more detail at the potential RTI and UC considerations caused by the coronavirus disruption. Please do check back to our website for any updates.

Contact: Meredith McCammond (click here to Contact Us)

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