Universal Credit is a hot topic of discussion in the media at the moment as it becomes more widely introduced, with the management of its introduction and the difficult financial position that it may leave claimants in, being criticised.
Although Universal Credit has been in existence since 2013 when it was first piloted, it is only expected to be introduced as a full service in West Berkshire in December 2017.
Universal Credit will replace the following benefits:
- Child Tax Credit
- Housing Benefit
- Income Support
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Working Tax Credit
Why is spousal maintenance relevant to Universal Credit?
The position of state received benefits and spousal maintenance and child maintenance has previously been clear – neither spousal nor child maintenance are included when calculating entitlement.
With the introduction of Universal Credit, that position has changed! Although child maintenance will still be disregarded for calculation of entitlement purposes, any spousal maintenance that you are in receipt of will be included in the calculation and your entitlement will be reduced on a pound for pound basis, e.g. if you are entitled to receive £300 per month in Universal Credits and you also receive £300 per month in spousal maintenance, then your entitlement to Universal Credit will be reduced to £0 and you will only receive the spousal maintenance. Under the old rules, you would have received £600[1].
What to do if you think that this change will impact you
If you are currently receiving both spousal maintenance and any of the benefit categories set out above, with the introduction of universal credit it will have a significant impact upon your income.
Universal Credit will automatically apply to new claimants of benefits once introduced in the West Berkshire area in December 2017. Those already receiving tax credits will continue to do so until such time as Universal Credit is rolled out to existing claimants; we do not yet know when this will be.
At such time when your benefits are changed over to Universal Credit, it is important to note that spousal maintenance is variable upwards or downwards and it is possible to seek a variation if your financial circumstances change significantly and the introduction of Universal credit may be the trigger for this. However, the success of any such variation will depend on your specific circumstances and it does not necessarily mean that your spousal maintenance payments will increase to reflect the loss of benefits in their entirety unless the paying party has sufficient income to meet the increase; it will be a negotiation based both on needs and available income.
We strongly advise anyone in this position or anyone in the process of agreeing financial settlement arising out of divorce to seek legal advice to assess their position in light of the introduction of Universal Credit.
[1] Please note that these figures are used for indicative purposes only and have no actual reflection of any entitlement under universal credit.