Benefit entitlement for people who’ve arrived from Ukraine

Kate Smith considers questions about benefit entitlement for people who have arrived from Ukraine. See Alice Buchanan’s article Homes for Ukraine Impact on benefits for details of how the scheme impacts on the benefit entitlement of hosts.

Our client arrived from Ukraine in May with her son, aged 16. He’s been taking classes online from his school in Ukraine. Can she claim Child Benefit for him?

Child Benefit (CB) for a child aged 16+ is dependent on showing that they are in relevant education or approved training. HMRC will decide whether the education provided to the client’s son remotely from Ukraine counts as relevant education.

CB rules have been amended to make CB immediately available to those people fleeing the war in Ukraine (Child Benefit and Tax Credit (Amendment Regulations 2022). These provide an exemption from the Habitual Residence test and the 3-month residence requirement for Child Benefit for people who:

• were in Ukraine immediately before the 1st January 2022;
• left Ukraine due to the invasion; and
• have a right to be in the UK (they have a visa)

The client will meet the residence and presence conditions, but must also show that the other conditions of entitlement are met.

CB can be paid for a child aged under 16 without any need to show that they are in education. The position for people aged 16+ is trickier as they must be a qualifying young person (QYP). The Child Benefit (General) Regulations 2006 (CB Regs) say that a QYP is a person aged 16–19 who is in relevant education or approved training, or can be treated as being in education for a period after leaving school or college.

A full-time, non-advanced course must normally be provided at a school or college and be approved by HMRC (regulation 3(2)(a)(i) CB Regs). It must be for an average of over 12 hours a week during term time.

It’s not clear how HMRC will view a child attending a school remotely in another country. If they don’t accept it as relevant education it might be possible to show that it is analogous to homeschooling. However, there’s a requirement in Regulation 3(3) of the CB) Regs for the child to have begun home education before age 16 unless they have a statement of special educational needs.

We’re waiting to see how HMRC apply the rules in relation to home education and the interpretation of ‘relevant education’ for people studying remotely in Ukraine. People refused CB on the grounds that their child is not in education should challenge the decision. Unless flexibility is allowed by HMRC in relation to the interpretation of ‘relevant education’, home schooled Ukrainian refugees might have difficulty claiming child benefit from 1 September following their 16th birthday unless they started homeschooling before age 16, or have been accepted for a course at an educational institution.

Universal Credit (UC) rules on entitlement to the child element for people aged 16–19 are similar to CB. However, the Universal Credit Regulations 2013 don’t require homeschooling to have begun before age 16. We know that DWP uses the same rules as HMRC when deciding whether to award the UC child element. If your client is refused the UC child element she should challenge the decision.

Q: My client, aged 22, arrived from Ukraine in April and is living with a host under the Homes for Ukraine scheme. She is still taking a Ukrainian university course remotely online. Can she claim universal credit (UC)?

A: Students will be refused UC unless they come within an exception. This is because anyone receiving education isn’t entitled under section 4(1)(d) of the Welfare Reform Act 2012). Exceptions to the general rule are set out in the Universal Credit Regulations 2013, for example, they include people who are responsible for a child or qualifying young person and those who receive PIP, DLA or AA and were found to have limited capability for work before beginning the course.

A client who is not a qualifying young person (QYP) is ‘receiving education’ if they are

• undertaking a full time course of ‘advanced education’, or
• another full time course for which a student grant or loan is payable.

If the course is neither the client will still be receiving education if they are on a course that isn’t compatible with their work related requirements (Regulation 12 Universal Credit Regulations 2013).

A course of advanced education means study leading to:

• a first degree or comparable qualification,
• a postgraduate degree or comparable qualification
• a diploma of higher education
• a higher national diploma
• A standard above A level, AS level, advanced GNVQ or equivalent

If your client is studying full time for a degree, the DWP could decide that she’s in advanced full time education and refuse UC.

Once a client begins a course they are treated as receiving education until they complete the course unless they abandon or are dismissed from it before the end of the course (Reg 13 UC Regulations 2013). If the DWP decides she’s ‘receiving education, she won’t get UC unless she gives up the course.

Part of the reason for excluding students from UC is that they should be supported by the student finance system instead. That’s not possible here, because the course is based in Ukraine. It’s not yet clear how the DWP will deal with applications from students who continue to study Ukrainian courses online. If your client makes a claim she must give the DWP clear information about the course including its level, whether it is full or part time and that it is taken online.

My client came to Britain from Ukraine in March. He’s working remotely for his Ukrainian employer and is paid into a Ukrainian bank account. How is this income treated for UC?

This is dependent on several factors including

• the employment relationship
• how its treated for tax
• whether the client is liable to pay UK tax on the income.

Questions about tax will need to be answered by a tax specialist.

Money paid by an employer would be earned income under Regulation 52 of the Universal Credit Regulations 2013 if it is a payment from employment, self employment or other paid work. If it’s earned income the next step is to consider whether it is taken into account as employed income under Regulation 55 Universal Credit Regulations 2013 or as income from self employment under Regulation 57 Universal Credit Regulations 2013.

Which one will depend on the client’s relationship with the person or company paying them. It’s our understanding that Ukrainian law recognises two categories of worker:,

• employees engaged under an employment agreement, which would be like employment under a contract of service in the UK
• independent contractors or ‘private entrepreneurs’ likely to be equivalent to self-employed status.

If the work is done as an employee or worker under a contract of service, Regulation 55(2) says that employed earnings comprise any amounts that are general earnings, as defined in section 7(3) of Income Tax (Earnings and Pensions) Act 2003 (ITEPA). Section 7 refers to section 62 of ITEPA, which sets out the rules on general earnings.

Section 62 ITEPA has a wide definition of earnings. It includes any salary, wages or fee, any gratuity or other profit or incidental benefit of any kind obtained by the employee if it is money or money’s worth, or anything else that constitutes an emolument of the employment. If the payments made to the client are taxable on this basis they will be earned income under Regulation 55.

If the client is classed as self employed he will report profit in the usual way and income will be worked out using Regulation 57.

Foreign income needs to be reported to HMRC via the self assessment process.

However, whether tax is payable depends on whether your client is resident in the UK for tax purposes, and then, if they are, whether they are domiciled in the UK or not. If earnings are taken into account there seems to be no provision to deduct the costs of currency conversion or any other associated costs with accessing the payments.

When the client claims UC, he should give details of his pay and explain it comes from work done remotely for a Ukrainian employer. A decision maker will then decide how to treat the income. As the income is not reported through HMRCs RTI system, he must report the earnings each month so the DWP can decide his entitlement for that assessment period.

My client came to the UK under the Homes for Ukraine scheme and is living with a host. He owns a home in Ukraine that was worth approximately £50,000. How does this affect entitlement to UC?

Capital rules in UC have not been amended for people arriving from Ukraine, but the war will have negatively affected property value. When working out entitlement to UC, the value of any capital assets owed by a claimant will be taken into account, if their value exceeds £16,000 UC will not be payable. When he claims he’ll need to declare the property and give details so the decision maker can value it.

It is the current market value of a property, or other capital assets that is taken into account (Regulation 49 UC Regulations 2013). This is the amount that a willing buyer would pay on the day in question. Although the client’s property was worth £50,000 it’s likely to be worth substantially less or nothing in the current situation.

In a written answer, David Rutley, Parliamentary under-secretary for DWP said:

“Available capital in the form of savings and investments will be taken into account in the normal way. Legislation already provides for capital assets held overseas only to be taken into account on the basis of their market value: clearly assets such as property owned in Ukraine have no market value at the current time.”

Although this isn’t a statement of law, and won’t bind the DWP, it does indicate that they are likely to value property as having nil value.

If the decision maker decided that his home was worth more than £16,000 he could request a mandatory reconsideration of the decision on the grounds that the true value at this time is impacted by the situation and that the true value is nil or negligible.

Q: My client from Ukraine is trying to apply for Pension Credit (PC). When she asked about making a claim she was told that she can’t apply without a National Insurance number (NINO) and that she can’t get a NINO unless she is working. What can she do?

A: The good news is that your client can apply for a NINO and claim PC. Under sections 1(1A), (1B) and (1C) of the Social Security Administration Act 1992, a person is not entitled to DWP benefits including Pension Credit unless they either:

a) provide their national insurance number (NINO) with the claim and evidence that it is theirs

b) provide information or evidence enabling the NINO which has been allocated to her/him to be ascertained; or

c) apply for a NINO to be allocated accompanied by information or evidence enabling a NINO to be allocated.

Your client doesn’t have a NINO so will fall under para c above. She must apply for one and supply evidence and information to enable it to be allocated.

An application for a NINO can be made at a Pension Service or Jobcentre Plus office. Making the application for benefit does not count as making an application, a separate NINO application is needed (Secretary of State for Work and Pensions v Wilson [2006] EWCA Civ 882 ((RH) 7/06).

The client must contact the Pension Service to claim PC and at the same time tell them that she has to apply for a NINO. The claim for PC should trigger the NINO allocation process. The Pension Service can issue a form and may arrange a NINO interview. This is confirmed in Chapter 2 of the Decision Makers Guide at para 02178 which says:

“If the claimant does not have a NINO (for example as a person who has recently migrated to the UK), then an application for a NINO will be initiated from within the DWP if entitlement to benefit is established.”

It is worth advising the client that current DWP policy is that a client must be allocated a NINO before benefit can be awarded, but this is subject to an ongoing Judicial review challenge by CPAG. The client needs to supply enough evidence for one to be allocated and she will then meet the condition. If benefit is refused because she hasn’t been allocated a number the client should challenge this and could also consider making a complaint or taking a Judicial review.

My client came to the UK to live with a host under the Homes for Ukraine scheme. He’s getting a state pension in Ukraine that he uses to pay the utility bills on his home there. The pension is paid into a bank account, which he can access from the UK. How will this income be treated for UC?

Income is only taken into account when working out UC entitlement if it is of a type that’s listed in the UC Regulations 2013. Income that’s not listed is ignored.

Foreign state retirement pension income is counted as unearned income under Regulation 66(1)(da) . The client must declare the payments in the claim for UC, explain how it is paid and say whether the money can be transferred to the UK, so the DWP can decide how it will affect his UC.

There are no set rules to say that the cost of transferring the money to the UK and converting to sterling can be deducted from the income so your client will need to wait for a decision from DWP to see how much they take into account. If he’s unhappy with the amount treated as income, he can ask for a mandatory reconsideration of the decision and then appeal.

Kate Smith is a Senior Benefits Expert on the Expert Advice team at Citizens Advice.

The information in this article is correct as of the date of publication.

Unfortunately, we are unable to respond to comments left on the medium site — please contact expertadvicesupport@citizensadvice.org.uk if you wish to give feedback on an article.