Sometimes the amount that has been taken off your Universal Credit looks very different from the wages you were paid. DWP or HMRC or your employer might have made a mistake, or it might be correct but is different from the amount on your wage slip because of the way Universal Credit calculates the earnings they need to deduct from your award.
How the DWP works out your wages figure
Deductions from your wages on your payslip
The amount you are paid by your employer is your net pay after various deductions have been taken off.
The wage figure the DWP will use is your wages after deductions for national insurance, tax, and payments into a pension fund – but nothing else. So if your final wage is reduced by other deductions – for example Union fees, payments to a hospital fund, repaying your employer for an advance…these will not be disregarded from your earnings.
So the wage figure used by the DWP may be higher than the wages you were actually paid.
NOTE: Tax Refunds, holiday pay, pay in lieu of notice all count as ‘earnings’.
It’s the wages you’re paid in each Assessment Period that count
The wages that are taken into account when your Universal Credit is assessed at the end of your Assessment Periods are those that you were actually paid in that period – even if they relate to a different period. Click here (How does income affect my award?)
Fiona is normally paid on 26th of each month, for the work she did that month. Her Assessment Periods run from 25th to 24th of each month, so the wages she’s paid for June’s work on 26th June would be taken into account into account as earnings for her Assessment Period that runs 26th June to 24th July.
Getting 2 sets of monthly wages in one monthly assessment period
Depending on your Assessment Periods, and the dates you’re paid, this can sometimes happen.
Although Fiona’s July wages are due to be paid on 26th July, as this is a Sunday they will actually be paid on 24th July. So when the DWP assess her Universal credit award on 24th July they will take two sets of wages into account and her Universal Credit award will drop.
NOTE: A court recently looked at this situation and decided that it is irrational that someone is seen as having two month wages in one Assessment Period where one of those wages was paid early due to a non-banking day and so the DWP will have to change the rules. If you feel you have been affected in the same way contact a Benefits Adviser.
NOTE: if your Universal Credit award drops to nil you will need to ensure your claim claims open or make a reclaim to ensure your next payment in made.
NOTE: Employers can sometimes pay early or late for other reasons. They can report to HMRC the date they should have paid, so if this has affected you and you are worse off, get advice from a Benefits Adviser.
Paid weekly or fortnightly or 4 weekly? If you’re paid 4 weekly, fortnightly or weekly, then at certain points of the year, your earnings in an certain Assessment Period may be higher than usual. This can sometimes affect people paid monthly too.
See How does UC work for workers? for more information.
When it is a mistake by DWP or HMRC
If you think the information the DWP have used about your wage is wrong, you can ask the DWP to look at the figures/dates again by asking for a ‘Mandatory Reconsideration’, as well as asking them to raise a ‘Real Time Earnings Dispute’ with HMRC – ask a Benefits Adviser for help.