DWP warning as Universal Credit could be cut to zero by Christmas pay error

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Universal Credit will be particularly important to millions, especially over the expensive festive season. However, claimants could see their pay impacted due to a mistake which has arisen in the past at Christmastime. Those who should pay particular attention are individuals who are receiving their wages early over the festive period.

In the run up to Christmas, it will be common for employers to pay December salaries earlier than normal.

However, even the slightest error on dates submitted to HMRC could impact those who claim the benefit.

A failure to consider the right dates could drastically impact how the DWP views the money a person receives.

Pay errors could mean the DWP wrongly believes a person has had a double payday within the course of one month.

Two payslips falling into one assessment period could seriously impact finances.

Consequently, a person’s next payment could be cut drastically, or even to zero. 

The issue was raised in a court case in 2019, with the Court of Appeal deeming the rule which was then in place to be “irrational”.

It was rectified by the DWP, which now ensures those effectively receiving two pay packets in one assessment period can have their second payment moved to another assessment period.

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The system now automatically identifies when a claimant has received a second wage within one assessment period.

However, because of weekends or bank holidays, this relies on employers providing the correct information.

As a result, it is vital to check if a person is receiving earlier payment over the festive period.

Robert Salter, a tax service director at Blick Rothenberg, provided further insight into the matter.

He said: “Employers may pay the salary for the month ended December 31 on, say, the December 17 rather than the traditional last working day of the month, because of office closures and to assist employees from a cashflow perspective.

“This is a nice gesture, but it could go wrong.

“Such seasonal payroll arrangements are well established and perfectly legitimate.

“But it is important for payroll providers to get the electronic payroll submission – known as an FPS – to correctly record the period that the pay relates to.

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“If, for example, using the above dates, the FPS said the earnings were purely for the period ended December 17 rather than the correct date of December 31, this could impact the Universal Credit entitlement.”

Universal Credit is paid monthly in most circumstances, but for some people in Scotland, it is issued twice a month.

Payments will be made into a person’s bank, building society or credit union account. 

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