Brits who rely on Tax Credits are being urged to gear up for change as the Department for Work and Pensions is set to halt these payments this April, as part of the move to Universal Credit. The goal is to transfer claimants of six legacy benefits into the Universal Credit by March 2026.
Those receiving Tax Credits, the first benefit set to be fully migrated over, should have already received a migration notice from the DWP, which comes with detailed instructions and a firm deadline for lodging a Universal Credit application.
Hundreds of thousands of such notices have sailed out, but despite this, there seems to be a knowledge gap among the affected Brits.
A recent survey conducted by the DWP uncovered that although 78% of participants claimed they had some or extensive insight into Universal Credit, a staggering seven out of 10 were “unaware” of the transitional protection available – a safety net designed to ensure individuals don’t lose out financially during the crossover.
If you’re currently receiving more from the DWP on legacy benefits than you would under standard Universal Credit rules, you could be eligible for transitional protection to top up your income.
For instance, if you’re getting £800 from Tax Credits but are only entitled to £600 Universal Credit, you can receive a transitional protection of £200 to bring your total Universal Credit entitlement to £800.
However, this protection is only available if you apply by the deadline date stated in your migration notice letter. You can still switch to Universal Credit after this deadline, but you won’t get the same protections.
The survey found that the most common reasons for delaying the Universal Credit claim were frustration with having to move or wanting to stay on tax credits as long as possible.
Yet, nearly half of those surveyed ended up applying for Universal Credit once their tax credits stopped anyway, with 44% admitting it was because they needed the money.
A substantial 91% of participants had already made significant financial decisions and commitments based on their tax credits stopping.
Over half had reduced their spending, while slightly fewer had started using savings or working extra hours to make up the deficit in their budget; 28% had resorted to their credit cards and overdrafts and an additional 23% had sought financial help from family and friends.
The survey uncovered that a staggering three out of four people were not claiming Universal Credit due to their personal situations, with in-depth interviews revealing they “often self-assessed” themselves as ineligible.
Many thought they earned too much or had substantial savings that would disqualify them, yet the DWP report showed people were reaching these conclusions “without verifying this against external information sources or by making a claim”.
This suggests numerous individuals might be missing out on benefits they’re entitled to by simply presuming they don’t qualify. For more details on the managed migration process and actions to take if you receive a migration notice, visit the gov.uk website.
Other legacy benefits transitioning to Universal Credit include: Child Tax Credits, Housing Benefit, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, and Working Tax Credits.
