Universal Credits are set to replace a variety of existing benefits next month, with pilots running in a handful of regions. The new regime is the biggest overhaul of the benefits system in decades and is intended to streamline the benefits system.
It
is important that those divorcing and claiming the main means-tested state benefits
including tax credits understand how the new Universal Credit regime is likely
to impact on them when negotiating a financial settlement within divorce
proceedings, in particular if they are seeking to claim spousal maintenance.
Spousal
maintenance is awarded if one spouse cannot adequately support themselves
without financial support from the other spouse after the divorce. Under
the current benefits system, those receiving Tax Credits for example, would not
suffer a reduction in their Tax Credit award simply because their ex pays them
spousal maintenance; this is however all set to change under the new Universal
Credit system.
If
a wife, for example, is reliant on her Tax credits it is important that she is
aware that under the new regime, her Universal Credit award will be subject to
a pound for pound reduction by the amount of spousal maintenance she receives
from her ex. Child maintenance payments received by the wife on the other hand
will not reduce her Universal Credit award.
The
Universal Credit Regulations suggest that if a spouse receives significant
spousal periodical payments, then this may mean that he or she is unable to
receive Universal Credit or that the Universal Credit award may be claimed only
for a limited period. This must be considered when calculating an appropriate
amount of spousal maintenance where a Universal Credit award will also be
relied on. If claiming spousal maintenance and Universal Credits, there may be
the possibility of receiving greater child maintenance payments (which will not
reduce the Universal credit award) with lesser spousal periodical payments with
a view to avoiding a reduced Universal Credit award.
At
this stage there will be an element of crystal ball gazing to predict the
payments that will be received after the new regime has been implemented or
when the changes will take effect regionally, however it is important that recipients
of a means tested benefit
such as Tax Credits take account that a spousal maintenance award made in divorce proceedings will impact on their
ability to claim the new Universal Credit.
Kerry Russell
Associate
Solicitor at Gorvins.
