The Department for Work and Pensions (DWP) recently announced that more people on Tax Credits will start to receive letters inviting them to claim Universal Credit (UC) as the UK Government expands the migration of legacy benefit claimants to the modern welfare system.
A further update in the May edition of the LA Welfare Direct bulletin indicates that the expansion will continue into other parts of the country and that by September this year, “move to UC activity will be taking place in all regions of Great Britain”. However, no locations in Scotland have been listed to start before September.
Original estimates by the DWP suggest that of the one million people on Working Tax Credits or Child Tax Credits due to transfer as part of the managed migration process, some 700,000 will receive a higher entitlement on Universal Credit. But its data also indicates that 300,000 will receive a lower entitlement.
It's also worth noting that 100,000 Tax Credits claimants will receive transitional protection after, which means they should not see any reduction in their benefits when they transfer to Universal Credit.
HM Revenue and Customs (HMRC) administers Working Tax Credit and Child Tax Credit and has previously advised claimants that both benefits will be replaced by Universal Credit by the end of 2024.
Every person in receipt of Tax Credits will receive a letter from the DWP inviting them to make a claim for Universal Credit. It is important that people claim by the deadline shown in the letter, also referred to as a ‘Migration Notice’, in order to continue receiving financial support.
Tax Credits will end even if they decide not to claim Universal Credit. However, there is no need to wait for their transfer letter, and customers can apply to move to Universal Credit sooner, if it is right for them, but they should seek independent advice beforehand to ensure they will not be financially worse off.
HMRC is also currently issuing Tax Credits renewal packs which must be completed and returned by July 31, 2023. It’s important to be aware that any changes in circumstances could trigger a move to Universal Credit.
Migration process from legacy benefits to Universal Credit
There are three ways people can migrate to Universal Credit, outlined in the DWP’s ‘2022-24 strategy for implementing the final phase of Universal Credit’ - you can read it in full on the GOV.UK website, here.
These are:
- Natural migration - a change of circumstances triggers a move
- Voluntary migration - claimants chooses to move
- Managed migration - DWP triggered
Who will be better or worse off on Universal Credit?
DWP estimates on who will receive higher or lower entitlements or see no change to the amount of benefit they receive are summarised below.
Higher entitlement after moving to Universal Credit
- Employment and Support Allowance (ESA) claimants: 600,000
- Tax Credits (Working and Child) claimants: 700,000
- Total, including other legacy benefits: 1.4 million
Lower entitlement after moving to Universal Credit
- ESA claimants: 500,000
- Tax Credits (Working and Child) claimants: 300,000
- Total, including other legacy benefits: 900,000
No change after moving to Universal Credit
- ESA claimants: 100,000
- Income Support: 100,000
- Total, including other legacy benefits: 300,000
Transitional protection
The DWP said that around 400,000 ESA and 100,000 Tax Credits claimants will receive transitional protection, which means they should not see any reduction in their benefits when they transfer.
However, the value of this protection will be eroded every year because, with the exception of the childcare element, any annual increase in Universal Credit will be deducted from the transitional protection.
Help to claim
People can claim Universal Credit directly online or via the dedicated Universal Credit Migration Notice helpline for free on 0800 169 0328 or by visiting your local jobcentre.
Claimants that require more time to claim can also call DWP for free on 0800 169 0328.
For those who need additional support to complete their application, Citizens Advice Scotland’s Help to Claim service provides free, confidential and impartial advice along with a step-by-step guide to the claims process.
Find out more on the website here.
To keep up to date with the latest benefits news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
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