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Where Taxpayers and Advisers Meet

Exclude tax refund for universal credit income?

Lsp54
Posts:98
Joined:Tue Sep 15, 2009 5:11 pm
Exclude tax refund for universal credit income?

Postby Lsp54 » Tue Jun 18, 2024 1:52 pm

Hi,
My self-employed client paid her first payment on account of £943.79 for 2023/2024 in September 2023. This was repaid in May 2024 as no tax was due.
In February 2024 my client was required to move from tax credits to universal credit. Tax refunds are supposed to be included as part of income, but this seems inappropriate in this case. Do refunded payments on account have to be included?

Thank you so much for reading this.

Jholm
Posts:386
Joined:Mon Mar 11, 2019 4:22 pm

Re: Exclude tax refund for universal credit income?

Postby Jholm » Tue Jun 18, 2024 4:12 pm

Tax overpayments (whether arising from payments on account or otherwise) have never been considered income and it's worrying for your client that you think this, to be truthful.

Lsp54
Posts:98
Joined:Tue Sep 15, 2009 5:11 pm

Re: Exclude tax refund for universal credit income?

Postby Lsp54 » Tue Jun 18, 2024 4:19 pm

Thank you for your reply.
Clearly tax overpayments are not income for tax purposes. But tax refunds are usually to be included as income for universal credit purposes.

My question related to the monthly universal credit declaration.
Thank you

Jholm
Posts:386
Joined:Mon Mar 11, 2019 4:22 pm

Re: Exclude tax refund for universal credit income?

Postby Jholm » Tue Jun 18, 2024 4:23 pm

My sincere apologies - neglected the UC element and I take back my previous comment.

Mmmm, I would suggest that in the absence of specific guidance, POA overpayments would likely fall under the remit of general tax repayments. However, where would you draw the line? If someone paid too much to their SA record and this was repaid, it seems wrong to consider it as income as it was a payment that wasn't due in the first place.

Lsp54
Posts:98
Joined:Tue Sep 15, 2009 5:11 pm

Re: Exclude tax refund for universal credit income?

Postby Lsp54 » Tue Jun 18, 2024 4:35 pm

Thank you, I agree it's not clear. No tax was payable for 2023/2024, so if the payment on account hadn't been paid in the first place all would have been fine
I have seen comments elsewhere about being able to leave a note when making the UC declaration. Maybe exclude and leave a note?
Anyway thank you again.


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