Universal Credit is intended to be a single benefit being introduced to replace the various different types of government financial support available. Universal Credit will gradually replace most of the means tested benefits including not only income based job seekers allowance but also tax credits and housing benefit.
With reference to the government website, claimants can check when Universal Credit will replace their current benefits. Those currently in receipt of tax credits will move to Universal Credits. The existing claim may not be affected in the meantime unless a claim is made for Universal Credit - for example if circumstances change.
Under the current system of tax credits, child and spousal maintenance payments are not taken into account when calculating tax credit entitlement.
With the new Universal Credit, child maintenance will still continue to be ignored. However, spousal maintenance will be taken into account. Any spousal maintenance will be deducted in a pound for pound way from the Universal Credit calculation.
Consideration needs to be made as to whether financial arrangements need to be reviewed with this expansion of Universal Credit, particularly when parties are in receipt of tax credits. Orders will often be made taking into account what spousal maintenance payments should be paid when supported by tax credits, however the amount of spousal maintenance may now no longer be sufficient when Universal Credit is introduced.
Universal Credit will have a significant effect on separating couples, especially those in receipt of tax credits.
For further advice on this issue and other Family Law issues, please contact a member of our Family Law team who will be happy to help.
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