How furlough affects your benefits and Universal Credit payments – The Sun
IF you've been put on furlough by your employer you may wonder what will happen to your benefits and Universal Credit payments.
The coronavirus job retention scheme opened for applications today for firms who need to pay 11million people who can’t work due to coronavirus.
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Under the scheme, businesses across the UK can claim 80 per cent of your wages – up to £2,500 a month, which it will then pay to staff.
The money is taxable and is treated as normal income from employment for tax purposes.
But how does it affect you if you're already receiving benefits? And can you apply for Universal Credit if you've been furloughed?
Below we explain all you need to know.
How does the furlough scheme work?
ANY UK organisation with employees can apply, including businesses, charities, recruitment agencies and public authorities.
It's up to your place of work to apply to the scheme, meaning you won't need to contact the government yourself.
To access the scheme, your employer must comply with the following:
- Designate employees who cannot do their jobs due to the coronavirus measures put in place by the government
- Notify those employees of their new "furloughed" status
- Submit information to HMRC about furloughed employees to set up a system for reimbursement and about existing systems that will facilitate payments
To be furloughed, you must have been on a payroll on March 19.
Although furlough leave can be backdated to March 1, the portal your employer will use to register your furloughed status only launched today.
Consequently, you will not be paid until the end of this month.
Workers can ask previous employers to rehire and furlough them, even if they left for another job, but firms don't have to do this.
Can you claim Universal Credit while you're furloughed?
Universal Credit payments are made to help support those who are on a low income, or out of work, with their living costs.
The benefit is paid in monthly installments, or twice a month for some people in Scotland.
If you currently receive Universal Credit and you've been put on furlough, you'll continue to get it.
You also don't need to inform Universal Credit that you are now furloughed.
Alternatively, if you're not yet claiming Universal Credit but your salary has been reduced as a result of furlough, you may be eligible for the benefit.
This is if you meet all of the following criteria:
- you’re on a low income or out of work
- you’re 18 or over (there are some exceptions if you’re 16 to 17)
- you’re under State Pension age (or your partner is)
- you and your partner have £16,000 or less in savings between you
- you live in the UK
Your partner’s income and savings will be taken into account, even if they are not eligible for Universal Credit.
There are other factors that might make you eligible for a claim, for instance if you care for a disabled person, you're in further education or you've recently had a child.
How does furlough affect Universal Credit payments?
If you've been furloughed, you'll receive your salary via PAYE as usual.
HMRC will also inform Universal Credit of your reduced take home pay, meaning your benefit payment will be adjusted automatically.
The first Universal Credit payments are expected around 22 April for those who applied during the first week of the stay-at-home measures.
But trying to work out how much Universal Credit you can get can be overwhelming.
What to do if you have problems claiming Universal Credit
IF you're experiencing trouble applying for your Universal Credit, or the payments just don't cover costs, here are your options:
- Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it's a loan which means the repayments will be automatically deducted from your future Universal Credit payout.
- Alternative Payment Arrangements – If you're falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you're part of a couple.
- Budgeting Advance – You may be able to get help from the Government to help with emergency household costs of up to £348 if you're single, £464 if you're part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You'll have to repay the advance through your regular Universal Credit payments. You'll still have to repay the loan, even if you stop claiming for Universal Credit.
- Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your existing ones aren't enough to cover your rent.
- Foodbanks – If you're really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussell Trust website.
The payments have also gone up twice in April.
The first increase, on April 1, was at the end of the benefit freeze and saw a 1.7 per cent rise in many benefit payouts, including Universal Credit.
On top of that, there has been an additional increase to help people during the coronavirus crisis.
This is around £1,000 a year or £80 a month. This increase will be in place for a year.
How much Universal Credit will I get?
There are so many different elements that can affect your claim that it makes the whole process even more complicated.
To calculate how much you'll get, charity Citizens Advice suggests you do the below.
Look up your standard amount
This varies by age and if you’re making a joint claim. Someone who is single and aged 25 or over, for example, will get £409.89 a month.
- Single, under 25 – £342.72 (equivalent to £4,112.64 a year)
- Single, 25 or over – £409.89 (equivalent to £4,918.68 a year)
- Couple, joint claimants both under 25 – £488.59 (equivalent to £5,863.08 a year)
- Couple, joint claimants, one or both 25 or over – £594.04 (equivalent to £7,128.48 a year)
Add any other amounts that can be claimed
These are called "elements" and include things such as housing or childcare.
How much you get will depend on your circumstances, for example a "child element" for your oldest child if they were born before 6 April 2017 is £281.25 a month.
Factor in wages and savings
You'll get less Universal Credit if you’re earning wages, have other income, or if you have more than £6,000 in savings.
For each full £1 you earn, your Universal Credit reduces by 63p.
But you may be allowed to earn a certain amount without reducing your Universal Credit payment, such as if you're responsible for a child. This is called a "work allowance".
The Sun is calling for the work allowance to be increased and the taper rate slashed from 63p to 50p in our Make Universal Credit Work campaign, in order to help at least four million families.
Take away any other reductions
This could include repaying an advance payment, which is a loan that you can ask for if you won’t have enough money to get by until your first payment.
Other deductions could include paying back debt, such as utility bills.
Check if the benefit cap applies
There is a limit on the amount of benefits you can get.
For example, if you’re single and live outside of London it’s set at £257.69 a week.
Kate Smith, senior benefits expert at Citizens Advice, said: "Understanding how much Universal Credit you’ll be paid can be very confusing, as it can fluctuate from month to month, depending on how much you’re earning.
"If you’re unsure how Universal Credit works, visit the Citizens Advice website for more information on how your payment is calculated, and you can speak to an adviser online or on the phone if you need more help."
There are also a number of other free calculators that you can use to help you get an estimate, such as Gov.uk, Citizens Advice, MoneySavingExpert, StepChange and Turn2Us.
How does furlough and coronavirus affect other benefits?
Working tax credits
If you're currently receiving other benefits, such as working tax credits, you'd also have seen your payments rise recently due to the coronavirus crisis.
The basic amount for working tax credit was up to £1,960 a year but it rose to £3,040 on April 6.
You may be entitled to extra money on top of this, depending on your circumstances and income, but it's only the basic element that received an additional boost by the government.
The entitlement to working tax credits is usually based on you working a set number of hours.
If you've been furloughed, you may be pleased to know that there will be no change to your entitlement while the support scheme is running, said Low Incomes Tax Reform Group.
If you are earning less because you've been put on furlough, you may also see your Working Tax Credit payment rise.
Similar to Universal Credit, you don't need to tell HMRC when you are furloughed temporarily.
Employment and Support Allowance
If you're self-employed and you fall sick with coronavirus, you can claim the new style Employment and Support Allowance during the coronavirus crisis.
This also applies if you're earning below the lower earnings limit of £118 per week.
The benefit will now be payable from day one of sickness, rather than day eight, if you have coronavirus or are advised to stay at home.
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