A Department for Work and Pensions (DWP) letter could signal the end of payments for some claimants. HM Revenue and Customs (HMRC) tax credits will soon be ending across the country, which means those claiming them without taking action will see a hit to their income. A Migration Notice Letter sent out by the DWP will clarify that tax credits are ending on April 5, 2025.
Those affected will be given the opportunity to move their claim over to Universal Credit with extra protection to ensure they don’t lose out on cash that they were receiving from their tax credits claim. Some of the HMRC benefits being affected include:
- Child Tax Credit
- Working Tax Credit
- Income-based Jobseeker’s Allowance (JSA)
- Income Support
- Housing Benefit
- Income-related Employment and Support Allowance (ESA)
How your payments will change when moving to Universal Credit
Official guidance states that if your new Universal Credit entitlement is less than your previous tax credits or benefit, you could receive transitional protection which will help bridge the gap in what otherwise would lost. For example, if a claimant was receiving the maximum Working Tax Credit with disability element of £3,935 a year (or £327.91 a month) but their Universal Credit entitlement is initially £227 a month, they will receive a transitional protection of £100.91, bringing their total Universal Credit entitlement to £327.91.
It’s important to note that transitional protection can only be provided if the claimant has moved to Universal Credit once they received their Migration Notice letter and have applied before the date stated in said letter. Furthermore, there must be no changes to your circumstances at the time of applying.
Don’t wait to move to Universal Credit
It’s vital that all those who are sent a Migration Notice Letter do not wait to make the move to Universal Credit. This is because as long as you claim within the deadline stated on the letter, you will be exempt from some Universal Credit rules that otherwise could hold you back.
For example, generally, you cannot make a claim for Universal Credit if you have money, savings, and investments worth more than £16,000. However, if you receive tax credits and make the move in time, this rule will not apply and you can still make an initial claim for Universal Credit.
This rule in particular will only be implemented after 12 assessment periods have taken place, in which case you will no longer be eligible for Universal Credit if you still have money, savings, and investments worth more thatn £16,000.
Mixed aged couple claiming tax credits
There are special migration rules for mixed aged couples claiming tax credits. When this group receives a Migration Notice letter, they must make the application for Universal Credit exactly as directed.
If they instead try to apply a different way, they could lose their tax credit and Housing Benefit claim once the deadline passes. A claim can be made for mixed aged couples even if they are working, have renewed tax credits, and have money, savings, and investments of more than £16,000.
Further details on Migration Notices specifically for mixed aged couples can be found here.