Claiming Universal Credit

[the tinkerman]

Hi

Was wondering if anyone could advise please, a friend of mine is due to finish work on ill health and as a result is going to get her occupational pension, she will be entitled to a 25% tax free lump sump followed by a further monthly payment,  how would this effect her Universal Credit, would she have to declare both her 25% tax free lump sum and her monthly payment or is it just taxable income that she would have to declare.

 

Tinks

[dx100uk]

you must declare both.

I would suspect either or both the lump sum or monthly pension will take her above the UC entitlement threshold.

 

try applying for PIP t..hat is not income based

[the tinkerman]

Hi  dx

 

I was under the impression that she would have to declare her monthly regular payments as they are taxable,  although doubt is she would pay any tax anyway on that as only going to be bout £450 per month, whereas her lump sump would not be taxable so she would not need to declare?

 

Just going off what it states for ESA as follows: 

Your lump sum payment from your pension will not affect either your PIP or ESA.

However, regular payments will affect your contribution-based ESA if they exceed £85 a week.

 

If your gross pension payments exceed that amount, your ESA will be reduced by half the amount they exceed it by.

[dx100uk]

esa can be contribution or income base

UC is only income based.

 

savings over £6k must be declared as must £PCM pension income

it being taxed or not is immaterial.

 

if its £450PCM then she is under the £750ish PCM threshold for total loss so should get some £PCM UC

but if her lump sum gives her more than £6k in savings, she won't get UC, try PIP.

 

in the same boat myself

[the tinkerman]

So her lump sum from her works pension is classed as savings then n if it is above 6k she won't get any UC.

[unclebulgaria67]

Lump sum pension draw down is counted as capital savings and investments.   For Capital exceeding £6000, there is a deduction from benefit of £4.35 per £250 of capital.  So say they have £10000 available, £4000 worth of savings would mean a deduction  of £69.60 from benefit award each month.  Capital £16000 or more would mean that they were not entitled to claim UC.

 

And the monthly pension is counted as other income and will be deducted £1 for every £1 received.  So £200 pension per month, would see £200 deducted from benefit award.

 

Suggest your friend reads the following website before claiming

 

https://www.understandinguniversalcredit.gov.uk/

 

Depends on whether your friend has housing costs such as rent, as to whether a UC claim is worth it.  If they cannot work, they will need a Doctors fit note and have to take part in an assessment to assess ability to work.  It is only if they were found unable to do any work activity, where there is an extra payment amount related to health.