Universal Credit - Another Problem?

By Paul Hunt at 16:00

We have heard a lot in recent news about Universal Credits, mostly from the point of view of delay in implementing payments to new claimants.

Something which has had rather less publicity is the effect that the transition from Universal Credits from other forms of benefit can have upon spousal maintenance, i.e. support payments made between the adults as distinct from child support.

At the moment, spousal maintenance is not taken into account when assessing eligibility for tax credits which is a very important concession. That can lead therefore to the  receipt of tax credits to be taken into account when looking at a person’s overall total income and assessing their needs as against the ability of the other spouse to meet those needs.

However, that changes once a person is receiving Universal Credit. Spousal maintenance, if it is being received, is then deducted pound for pound from Universal Credit.

Therefore, someone going from say purely tax credits to universal credit could suddenly find that their overall income could reduce significantly if the spousal maintenance is being taken into account.

That might give rise to a change of circumstances that would justify an application to the court to increase spousal maintenance to try to make up for the loss of benefits. Obviously there will be many people who will not make a transition to Universal Credits for some time but they might be on it sooner than expected if, for example, they come off tax credits for whatever reason and then have to reapply.

It is also worth noting that the restrictions on capital for Universal Credit are different and any capital under £6,000 is not taken into account, however, anything between £6,000 and £16,000 is deemed to be an asset which produces an income of £4.35 for every £250.00 of capital whether or not an income is actually received. Therefore, having capital up to the top limit of £16,000 is treated as generating an income regardless of whether or not you actually receive it. The main residence, business assets and pensions will not count towards capital assets. Any other savings would do so.    

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Paul Hunt

Paul Hunt , Senior Associate

As a senior solicitor Paul is responsible for cases involving divorce or separation, children, financial and property issues and domestic violence.

He is member of Resolution panel for private children law, ancillary relief and domestic violence. Paul is also trained in Collaborative Law.

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