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Impact of universal credit on spousal maintenance

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Family Law Hub publishes updated note on universal credit and its impact on spousal maintenance.

Uuniversal credit was the welfare benefit that was introduced by the Welfare Reform Act 2012. It replaces seven of the main means-tested benefits and tax credits, including child and working tax credit. It was introduced in April 2013 for new claimants of Jobseekers Allowance in one Manchester area, was extended to other areas in the North West in July and has continued to be phased in since then with well-publicised delays. What I think might be the most recent roll out guide can be accessed here: https://www.entitledto.co.uk/help/Universal-Credit-Pilot.

Those currently on tax credits are safe until 2019, but if they come off tax credits and then later need to make a fresh benefits application it will be UC if they meet the criteria.

The main political parties remain committed to it’s principle as, despite at times serious issues with the most vulnerable being left high and dry whilst waiting for it, it is still considered to be a simpler benefits system.

The changes of most importance for family lawyers relate to the impact on tax credits of a) “unearned income”. This includes pension income from early retirement and, perhaps most importantly for family lawyers, spousal maintenance and b) surplus capital (savings). Both these are of course relevant to our client demographic.

At the moment both spousal and child maintenance are ignored for the purposes of calculating tax credits. That is of course a significant benefit that is very regularly taken into account when assessing the appropriate level of order. With UC, however, whilst child maintenance will read more

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