The Universal Credit (Earned Income) Amendment Regulations 2020

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Universal Credit Regulations 2013 by substituting a new regulation 61. They implement the judgment of the Court of Appeal in Secretary of State v Johnson & others [2020] EWCA Civ 778.

Regulation 61 makes provision for the way information, in particular information reported to HMRC by Real Time Information Employers (“RTI information”), is to be used in calculating a person’s earned income. The substituted regulation broadly replicates the previous regulation with additional provision allowing for reallocation of payments to different assessment periods.

Paragraph (1) restates the requirement for claimants to provide such information at such time as the Secretary of State requires, except where paragraph (2) applies. Paragraph (2) also restates the requirement for the calculation of employed earnings to be based on the RTI information received by the Secretary of State from HMRC (or to be taken as nil in the absence of such information) in each assessment period. These paragraphs have the effect that RTI information is taken at face value unless certain exceptions apply. The requirement for claimants to provide information is therefore mainly applicable to cases where those exceptions apply or where the claimant is self-employed or does not have a Real Time Information employer.

The exceptions are set out in paragraph (3). The first is where the Secretary of State considers that the information provided by the employer is unlikely to be sufficiently accurate or timely. The second exception is where the information about a particular payment appears to be inaccurate. The third is where the absence of RTI information in an assessment period is likely to be due to failure to report, rather than the claimant having not received a payment of earnings. In such cases the Secretary of State will determine the earnings in relation to the affected assessment period (or, in relation to the first exception, for each assessment period while the person is in that employment), using such information as the Secretary of State considers appropriate.

Paragraphs (5) and (6) are new provisions that allow the Secretary of State to reallocate a payment reported in one assessment period to another assessment period. Paragraph (5) allows a payment that has been reported late, or otherwise in the wrong assessment period, to be treated as employed earnings in the assessment period in which it was received. Paragraph (6) relates to calendar monthly paid employees who receive more than one payment in a single assessment period. The Secretary of State may, in order to maintain a regular payment pattern, treat one of those payments as employed earnings in a different assessment period. These new powers take effect in accordance with paragraph 32 of Schedule 1 to the Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decision and Appeals) Regulations 2013 (S.I. 2013/381).

Paragraph (7) widens and simplifies a provision in the previous regulation. It allows the Secretary of State to make consequential adjustments to avoid duplication or maintain a regular payment pattern where the Secretary of State has reallocated a payment or applied one of the exceptions referred to in paragraph (3).

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, public or voluntary sectors is foreseen.