The Department for Work and Pensions (DWP) has issued a critical warning to individuals receiving tax credits. As part of a significant overhaul of the benefits system, tax credits—including Housing Benefit, Income Support, Jobseeker’s Allowance, and Income-Related Employment and Support Allowance—are being phased out.
The DWP will not automatically transfer recipients to the new systems, and payments under the old system will cease by April 2025.
Universal Credit
Universal Credit and Pension Credit are replacing six discontinued benefits, but the responsibility to transition falls on claimants. Those currently receiving tax credits must apply for the new benefits to continue receiving financial support. Payments under the old system will stop entirely in April 2025 for those who fail to take action.
The DWP has already sent migration letters to tax credit recipients, outlining the steps to apply for Universal Credit. Recipients have three months from the date of the letter to act. If you do not receive a letter, no immediate action is required, but you should monitor your correspondence closely.
Steps to Take
Once you receive a migration letter, it’s essential to act promptly. According to Gov.uk, you must claim Universal Credit by the deadline date specified in the letter to avoid losing financial support.
If you are unable to apply by the deadline due to exceptional circumstances, you can contact the Universal Credit Migration Notice Helpline to request an extension.
Transitional Protection
The government has introduced “transitional protection” to help ease the financial impact for claimants moving to Universal Credit. This ensures that individuals who would receive less on Universal Credit than their old benefits will receive an additional amount to make up the difference. This extra amount will gradually decrease over time until the claimant receives the standard Universal Credit entitlement.
Specific Scenarios
- Full-time students: Typically ineligible for Universal Credit, but can claim it until the end of their course.
- Claimants with over £16,000 in savings or investments: Usually not eligible for Universal Credit, but transitional capital disregard allows them to claim for up to a year.
- Pension-age claimants: Those receiving a migration notice can apply for Universal Credit.
Exceptions to Eligibility
A small group of people will not qualify for Universal Credit or Pension Credit. These individuals will remain on tax credits until April 5, 2025, unless their circumstances change beforehand. After this date, tax credits will end entirely, and no further payments will be made.
Additional Support
Organizations like Citizen’s Advice provide guidance on the transition process, including advice on eligibility and how to maximize support. If you receive a migration letter, it’s worth investigating these resources to ensure you make a successful transition.
By taking timely action, tax credit recipients can continue to receive the financial support they need, potentially with additional protections during the transition.
SOURCE – LINK
FAQs
What benefits are being replaced?
Tax credits, including Housing Benefit and Income Support.
Do I need to apply for Universal Credit?
Yes, applications are not automatic and must be submitted.
What happens if I miss the deadline?
Your old benefits will stop, and you may lose financial support.
What is transitional protection?
Extra payments to ensure no loss in income during the transition.
Can I get help with the transition?
Yes, Citizen’s Advice and DWP helplines offer guidance.
