More than 85,000 Universal Credit claimants will see their payments rise from Monday onwards after the Department for Work and Pensions addressed an “unfair” loophole that’s cost people thousands of pounds.
From November 16, claimants who get paid twice in a month by their employer will not be penalised in their following payment.
Under current rules, workers who get paid twice are flagged as ‘over-earning’ on the DWP’s systems. This means their following payment is reduced – sometimes to zero – to reflect their higher income.
But in the majority of cases, they’re not over-earning at all.
Often, it’s because their employer paid them on the first or last working day or they received a late or early payment because of a bank holiday.
The flaw often leaves vulnerable families without any benefits for a whole month. In the majority of cases, a portion of the “double payment” will docked from their next payment because of the taper rate which is set at 63p for every £1.
Mum Danielle said she had experienced significant fluctuations in her benefit income because of a ‘clash’ between her monthly paydays and the DWP’s fixed monthly universal credit assessment periods.
Between them, the four mothers fell into rent arrears, defaulted on council tax, incurred bank overdraft charges, borrowed money and even become reliant on food banks to make ends meet.
The judge concluded that the “irrational and unfair” system pushed them into poverty and forced them to rely on food banks.
The DWP was ordered to fix the flaw – and has now confirmed the new rules will come into force in November.
It said that from November 16, the benefits system will only register one payment for every assessment period to stop anyone losing out.
The responsibility for manually moving the payday will still rely on Universal Credit although it is recommended that the claimant should inform their work coach in advance if possible via their online journal.
It will be based on Real Time Information (RTI) from the employer as normal – meaning you won’t have to do anything extra.
The changes will come into effect on November 16 and will benefit workers over the festive season who get paid early due to the Christmas bank holidays.
But it will only apply to employees who are paid monthly, so won’t help those who are paid weekly or fortnightly.
Peter Tutton, head of policy at StepChange welcomed the change but added: “It is also important DWP continues to seek ways to stabilise payments for those who face similar problems, such as those who are paid weekly or bi-weekly or have an irregular income.”
Minister for welfare delivery, Will Quince, said: “Universal Credit is a flexible benefit, and we continue to make changes and improvements to make sure people have the best experience possible.
“This change will give stability to people if they’re paid two pay cheques in a single assessment period, by ensuring that their Universal Credit payments remain consistent.”