The Universal Credit and Miscellaneous Amendments (No.2) Regulations 2014

Universal Credit - calculation of earned income

4.—(1) The Universal Credit Regulations 2013 are amended as follows.

(2) In regulation 55 (employed earnings) after paragraph (4) insert—

“(4A) A repayment of income tax or national insurance contributions received by a person from HMRC in respect of a tax year in which the person was in paid work is to be treated as employed earnings unless it is taken into account as self-employed earnings under regulation 57(4).”.

(3) In regulation 57 (self-employed earnings) after paragraph (4) insert—

“(5) Where the purchase of an asset has been deducted as an expense in any assessment period and, in a subsequent assessment period, the asset is sold or ceases to be used for the purposes of a trade, profession or vocation carried on by the person, the proceeds of sale (or, as the case may be, the amount that would be received for the asset if it were sold at its current market value) are to be treated as a receipt in that subsequent assessment period”.

(4) For regulation 61 (information for calculating earned income) substitute—

“Information for calculating earned income - real time information etc

61.— (1) Unless paragraph (2) applies, a person must provide such information for the purposes of calculating their earned income at such times as the Secretary of State may require.

(2) Where a person is, or has been, engaged in an employment in respect of which their employer is a Real Time Information employer—

(a) the amount of the person’s employed earnings from that employment for each assessment period is to be based on the information which is reported to HMRC under the PAYE Regulations and is received by the Secretary of State from HMRC in that assessment period(1); and

(b) for an assessment period in which no information is received from HMRC, the amount of employed earnings in relation to that employment is to be taken to be nil.

(3) The Secretary of State may determine that paragraph (2) does not apply—

(a) in respect of a particular employment, where the Secretary of State considers that the information from the employer is unlikely to be sufficiently accurate or timely; or

(b) in respect of a particular assessment period where—

(i) no information is received from HMRC and the Secretary of State considers that this is likely to be because of a failure to report information (which includes the failure of a computer system operated by HMRC, the employer or any other person); or

(ii) the Secretary of State considers that the information received from HMRC is incorrect, or fails to reflect the definition of employed earnings in regulation 55, in some material respect.

(4) Where the Secretary of State determines that paragraph (2) does not apply, the Secretary of State must make a decision as to the amount of the person’s employed earnings for the assessment period in accordance with regulation 55 (employed earnings) using such information or evidence as the Secretary of State thinks fit.

(5) When the Secretary of State makes a decision in accordance with paragraph (4) the Secretary of State may—

(a) treat a payment of employed earnings received by the person in one assessment period as received in a later assessment period (for example where the Secretary of State has received the information in that later period or would, if paragraph (2) applied, have expected to receive information about that payment from HMRC in that later period); or

(b) where a payment of employed earnings has been taken into account in that decision, disregard information about the same payment which is received from HMRC.

(6) Paragraph (5) also applies where the Secretary of State makes a decision under regulation 41(3) of the Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013(2) in a case where the person disputes the information provided by HMRC.

(7) In this regulation “Real Time Information Employer” has the meaning in regulation 2A(1) of the PAYE Regulations(3).”.

(5) For regulation 62 (minimum income floor) substitute—

“Minimum income floor

62.— (1) This regulation applies to a claimant who—

(a) is in gainful self-employment (see regulation 64); and

(b) would, apart from this regulation, fall within section 22 of the Act (claimants subject to all work-related requirements).

(2) Where this regulation applies to a single claimant, for any assessment period in respect of which the claimant’s earned income is less than their individual threshold, the claimant is to be treated as having earned income equal to that threshold.

(3) Where this regulation applies to a claimant who is a member of a couple, for any assessment period in respect of which—

(a) the claimant’s earned income is less than their individual threshold; and

(b) the couple’s combined earned income is less than the couple threshold,

the claimant is to be treated as having earned income equal to their individual threshold minus any amount by which that amount of earned income combined with their partner’s earned income would exceed the couple threshold.

(4) In this regulation, references to the claimant’s individual threshold and to the couple threshold are to the amounts set out in regulation 90(2) and 90(3) respectively, converted to net monthly amounts by—

(a) multiplying by 52 and dividing by 12; and

(b) deducting such amount for income tax and national insurance contributions as the Secretary of State considers appropriate.

(5) An assessment period referred to in this regulation does not include an assessment period which falls wholly within a start-up period or begins or ends in a start-up period.”.

(6) In regulation 77(3)(c) omit the words from “in relation to” to the end.

(7) In regulation 90 (claimants subject to no work-related requirements) for paragraph (5) substitute—

“(5) A claimant falls within section 19 of the Act if they are treated as having earned income in accordance with regulation 62 (minimum income floor).”

(1)

See also regulation 41(1) of the Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decision and Appeals) Regulations 2013 (S.I 2013/381 )., which provides for an alteration in the amount of employed earnings based on information from HMRC to be prescribed for the purposes of section 159D(1)(b)(vi) of the Social Security Administration Act 1992. The effect of this is that the award may be adjusted without a decision of the Secretary of State (subject to the person having the right to request a decision by the Secretary of State where they dispute the information provided by HMRC).

(2)

S.I.2013/381.

(3)

Regulation 2A was inserted by S.I.2012/822.