Four specific groups of benefit claimants have been identified as getting a potential imminent payment boost - good news for some as the cost of living crisis continues to bite. The income rise applies to those moving over from their existing benefits to Universal Credit.
Guidance on how the move will impact finances has been issued by officials at the Department for Work and Pensions (DWP). As the next stage of the rollout of the migration on to Universal Credit has begun, the DWP is sending out letters to those affected by the latest update.
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The letter, called a Migration Notice, will tell people that their benefits will be ending if they are on certain benefits and that they need to move across to Universal Credit. According to Birmingham Live, the letter explains how the process will work and what they will need to do. There are six existing 'legacy benefits' that will eventually be phased out:
- Child Tax Credit
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Working Tax Credit
Other benefits, such as Personal Independence Payment (PIP), will stay the same. The letter adds that if those being informed by letter don't comply by setting up a Universal Credit account and moving across, their payments will be stopped.
It is understood that some people will get more money when forced to go on to Universal Credit, others the same amount. Anyone who would end up with less will see payments artificially kept at the same level at first under a policy called 'transitional protection' that is designed to stop people from being hit by a sudden drop in income.
The DWP says in its guidance: "On Universal Credit, most people will be entitled to the same amount they received from their previous benefits or more. If the amount you are entitled to on your existing benefits is more than you will get on Universal Credit, a top-up is available. This is called transitional protection.
"You can only get this top-up if you have received a Migration Notice letter from DWP and claim by the deadline date on your letter. If your circumstances change before you make your claim, this may affect the amount you get. You should claim as soon as possible to make sure the amount you are currently entitled to can be protected. Any transitional protection you receive as part of your Universal Credit claim may stop if you have a change in circumstances once you've made your claim."
The DWP points out that around 1.4 million (55 per cent) of the 2.6 million remaining legacy benefits claimants would get more money if on Universal Credit instead, 300,000 would see no change in their payments and approximately 900,000 households (35 per cent) would get less.
Two-thirds of those forced over to Universal Credit but getting less will be offered transitional protection to keep their benefits at the previous higher level, though this is only a temporary measure, the DWP says. Their benefits will effectively be frozen every April rather than going up - possibly for years - until they are the same as everyone else on Universal Credit.
Who might get a Universal Credit payment boost
Types of claimants who might see a higher entitlement under Universal Credit include:
- Employment and Support Allowance (ESA) Support Group who are not in receipt of the Severe Disability Premium;
- In-work households receiving Housing Benefit only or Working Tax Credit and Housing Benefit - these are likely to have higher entitlements under Universal Credit as the earnings taper rules are more generous;
- People who do not work enough hours to receive Working Tax Credit; and
- Households who have not been claiming all the legacy benefits they are entitled to
Who might see a Universal Credit payment drop
Types of claimants who might see a lower entitlement under Universal Credit (and therefore likely to be eligible for transitional protection if they are moved through the managed migration process) include:
- Households in receipt of Employment and Support Allowance (ESA) who are in receipt of the Severe Disability Premium and Enhanced Disability Premium
- Households with the lower disabled child addition on legacy benefits;
- Self-employed households who are subject to the Minimum Income Floor, after the 12-month grace period has ended.
- In-work households that worked a specific number of hours (for example, lone parent working 16 hours claiming Working Tax Credits), which discouraged progression in the labour market. This was not good for employees, but it also caused problems for employers, limiting their scope to design jobs to fit their business rather than the incentives created by the welfare system; and
- Households receiving tax credits with savings of more than £6,000 (and up to £16,000) - UC entitlement is reduced in a different calculation to tax credits (households with savings of more than £16,000 are not normally eligible for UC).
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