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High Court ruling on 'double wages' in one Monthly Assessment Period

This High Court decision - [2019] EWHC 23 (Admin) - is to do with the way UC is assessed for working families - but could impact on all working claimants.
Sometimes a UC claimant's monthly award can be based on two month's wages (with the following assessment being based on no wages at all). This can happen when the claimant gets paid a wage early due to their normal payday falling at the weekend.
BUT this can mean that overall they are worse off - as only one earnings disregard (or what the DWP call work allowance*) will be applied across the two wages.

*The work allowance is the amount of earnings claimants with children or with limited capability for work is ignored before their maximum UC award is reduced at a rate of 63p per pound of net earnings.

This is a problem which has affected many working claimants and has been widely reported in the press. Not only were they losing out financially, but the fluctuations in their Universal Credit awards were also causing cash flow difficulties, leading to them falling into debt and, for some, having to choose between paying their rent or paying their childcare costs.

BUT the UC Regulations do allow the DWP to allocate a wage to a different Monthly Assessment Period.
And indeed, the Court found that, correctly interpreted, the Regulations mean the DWP can and should adjust its calculation of Universal Credit awards when “it is clear that the actual amounts received in an assessment period do not, in fact, reflect the earned income payable in respect of that period”.

Whilst we hope that this will eventually mean that wages will be allocated to the Monthly Assessment Period in which they would have normally been paid, rather than to the Monthly Assessment Period in which they were received, the 'remedy' suggested by the High Court in this case could be unworkable. Their suggestion is that the wages should be allocated to the Assessment Period within which they were earned. This would usually result in one on the wages being attributable to an older Assessment Period ie one that has already been assessed and paid - meaning that the award would need to be re-assessed and, as will usually be the case, that Assessment Period already includes an earnings payment the problem repeats itself!

So it is difficult to see that the DWP will be able to implement this decision.

In the meantime we have devised a standard letters: UC HM7 which argues that the wages used in the assessment should better reflect the actual situation! Click here for more information.


NOTE: Free School Meals........where a UC claimant's earnings in a Monthly Assessment Period have dropped below £610 - then they are able to apply for Free School Meals for their children, and once awarded, their child/ren will remain entitled to Free School Meals  up until the end of their current level of education even if the parents income increases or they come off UC altogether. Click here for more information.

NOTE: UC reclaims........where a UC claimant's award drops to nil, their UC claim should be closed down - meaning they have to make a reclaim for it to ensure payments continue. We understand that no formal system was in place to ensure this happened - but that due to recent system improvements, it will now generate a 'to do' to DWP so that these claims are closed. Meaning claimants will have to make a reclaim if they want any future entitlement they are entitled to - click here for more information.