Money Wellness
Image of someone counting coins into a purse. One in five fail to move from tax credits to universal credit and have payments stopped
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calendar icon27 Feb 2024

One in five tax credit claimants have their benefits stopped

One in five people claiming tax credits who were invited to move to universal credit failed to or chose not to according to a new report by the National Audit Office (NAO).

It was announced in 2010 that 900,000 people claiming six legacy benefits would move across to universal credit by December 2024, starting with tax credits.

By the end of last December, the Department of Work and Pensions (DWP) had written to nearly 350,000 households advising them that they needed to apply for universal credit if they want to continue receiving financial support.

It was expecting around 3% of households might choose not to move across to universal credit. However, the figure far higher – with 21% not completing the process, resulting in the DWP closing their cases and stopping payment.

The DWP now believes up to 26% of those claiming only tax credits will not switch over. It says, ‘it doesn’t fully understand why some people chose not to complete the process but finds it a cause for concern.’

Gareth Davies, head of the NAO, said: “DWP is on track to move legacy benefit claimants to universal credit. But it needs to be sure people who have not switched to universal credit are receiving the benefits to which they are entitled.”

What’s managed migration?

Managed migration is where people claiming legacy benefits have their claims transferred to universal credit.
Managed migration was due to be completed by March 2025, but this is now expected to be delayed until 2028.

The legacy benefits being replaced by universal credit are:

  • Housing benefit
  • Income related employment and support allowance (ESA)
  • Income-based jobseekers allowance (JSA)
  • Child tax credits (CTC)
  • Working tax credits (WTC)
  • Income support

People are no longer able to make a claim for any of these legacy benefits.

How do you know if you’re meant to be moving to universal credit?

The DWP will send you a letter – known as a migration notice - telling you your legacy benefits are ending, which will contain details about what you need to do.

It will also contain a deadline – usually three months – by which time you must have completed the migration process, or your payments will stop.

If your universal credit entitlement is less that what you’re currently claiming, you will get a transitional amount to top up your payments. The DWP will reduce the extra amount over time so you will eventually end up receiving what you’re entitled to on universal credit.

If the migration deadline hasn’t passed but you know you’ll struggle to be ready, you can ask the DWP for an extension. You can only ask for this before the original deadline expires.

If the deadline has passed, you can still claim universal credit, but you won’t be able to get the transitional payment.  

Check you’re claiming all you’re entitled to

£19 billion in benefits goes unclaimed every year. It’s worth checking to see if you’re missing out on support that you’re entitled to. We completed a benefit assessment for 56% of the people we helped last month and managed to find them an extra £1,000 a year on average that they didn’t know they could claim. You can do this yourself by using our free online benefit calculator.

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

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