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Divorce law blog

Will Universal Credit impact on your divorce settlement?

06/09/2013   By: Joanna Grandfield

Roll out of Universal Credit, which replaces a number of means-tested benefits including Child and Working Families Tax Credit and income-based Job Seekers Allowance, is scheduled to be complete by October 2017. This is an important change for people going through divorce and separation who are or may in the future be entitled to receive means-tested benefits since, under the new regime, there will be a pound for pound reduction in Universal Credit for any spousal maintenance received. Child maintenance will be disregarded from the calculation.

It doesn't stop there. Universal Credit will not be paid at all if the claimant has surplus capital (investments excluding things like your home, business or pensions) of over £16,000, whilst capital with a value of between £6,000 and £16,000 will be assumed to provide an income of £4.35 for each £250 of the investment regardless of whether that income is actually received or not.

It is currently unclear as to which areas of the country will come under the new regime when. However, if you or your spouse either are or may become recipients of a means tested benefit, you need to take account of how a maintenance or capital award made in divorce proceedings will impact on eligibility for the new benefit.

Joanna Grandfield
Family Law Associate
Leeds


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