Existing tax credit claimants
Universal credit is gradually replacing working tax credit and child tax credit as well as a number of other means-tested benefits. Most existing tax credit claimants will eventually move to either universal credit or pension credit. This page explains you are affected by the move to universal credit (or pension credit) if you are getting tax credits.
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Universal credit and tax credits
Under the Government’s welfare reform plans, tax credits are ending. Most existing tax credit claimants will be expected to claim universal credit or pension credit, depending on their age.
Universal credit is not a like for like replacement for tax credits. Some people will be better off claiming universal credit than their current tax credits and/or other benefits, some will be about the same and some will be worse off.
The general rule is that you cannot claim tax credits (working tax credit or child tax credit) at the same time as universal credit. Where someone already getting tax credits makes a claim for universal credit, their tax credit claim will end immediately even if they are not entitled to universal credit.
If you are already getting tax credits, it is very important to check carefully and get advice before making a claim for universal credit. Some people may be financially better off getting universal credit, others will be worse off and in that case, it is likely to be better to wait for the formal migration exercise as they may qualify for transitional protection.
Not all tax credit claimants will move to universal credit. People who have reached their state pension credit age (both claimants in a joint claim) will need to claim pension credit instead. We explain more about this below.
A small number of people may not be invited to move to universal credit or pension credit under the formal process. They will remain in the tax credit system until it closes down. The full details of which groups will not be invited to move to universal credit are not yet available.
Voluntary and natural migration to universal credit
Existing tax credit claimants can make a claim for universal credit whenever they choose. There is no need to wait for the formal migration exercise.
It is important to check that this is the best option for you because once you make your claim for universal credit, your tax credits end and you cannot go back to tax credits.
Voluntary and natural migration to universal credit is outside of the formal managed exercise and it happens if you are currently getting tax credits and you:
- choose to make a universal credit claim because you believe you will be better off (or simply prefer to claim universal credit rather than tax credits)
- have a change in circumstances that ends your current tax credit claim but you still need to claim support, for example a change from joint to single household.
- need to make a claim for another benefit that has been replaced by universal credit. For example, a tax credit claimant who needs to make a claim for help with their rent would have claimed housing benefit previously. However, in most cases housing benefit has been replaced by universal credit. So for help with rent they need to make a universal credit claim which in turn will end their tax credits claim.
- don’t renew your tax credits in time and your tax credit claim can’t be reinstated so you need to make a fresh claim for support.
If you start to claim universal credit under voluntary or natural migration you will not qualify for the transitional protection which is only part of the managed migration exercise. That is why it is important to get some advice before you choose to make a claim for universal credit if you are already getting tax credits.
However, if you received a severe disability premium (SDP) with certain social security benefits (not tax credits), you may qualify for a transitional SDP element in your universal credit award. There is more information about this on our website for advisers, Revenuebenefits.
Managed migration to universal credit
DWP and HMRC are currently running a managed migration exercise. Although it is called managed migration, it is important to understand you will not be automatically moved over and you will be expected to make a claim for universal credit yourself once you receive a migration notice from DWP. Making the universal credit claim under the formal exercise carries some financial protection in certain cases as well as some important instructions and deadlines.
Under this exercise, DWP send a letter to tax credit claimants (as well as to people claiming other benefits universal credit is replacing) which is called a migration notice. This is a formal notice which invites you to make a claim for universal credit by a certain deadline date and also tells you that your tax credits (and other legacy benefits) will end if you do not make a claim by the date in the letter.
There is more information in our managed migration section.
State pension credit qualifying age
There is a calculator on GOV.UK that tells you when you will reach your state pension age and state pension credit qualifying age.
Universal credit is a working age benefit. If you have reached your state pension credit age, you are not entitled to universal credit. If you are part of a couple and you have both reached state pension credit age you are not entitled to universal credit. Instead, you may be entitled to pension credit.
At present, it is possible to claim pension credit and tax credits at the same time. However, now that universal credit has been introduced, HMRC say they are no longer accepting new tax credit claims. The only exception to this is for certain people who are granted refugee status. If you are not already getting tax credits, you will need to claim pension credit if you require financial support. Pension credit is different to tax credits – there is no working tax credit equivalent in pension credit, nor any support for childcare costs. There are extra amounts for children in pension credit for people who are not already getting child tax credit.
If you are part of a mixed age couple – where one person has reached their state pension credit age and the other is below their state pension credit age – then the rules are slightly more complicated. Most people who are part of a mixed age couple are only able to claim universal credit and cannot claim pension credit, although there is one exception to this. If you are part of a mixed couple who were claiming housing benefit under pension age rules on 14 May 2019 and that claim has continued you may be able to make a new claim for pension credit instead of universal credit.
If you are in this position, you should get some specialist advice. Our understanding is that you are not prevented from claiming universal credit but if you do, you will not be able to claim pension credit and you may receive more money via pension credit than universal credit. A welfare rights specialist can help you decide which benefit is best to claim.
If you are a mixed age couple who can only claim universal credit and you currently get tax credits, see above for when you may be affected by universal credit.
If you have reached state pension credit age (or are part of a couple where both have reached state pension credit age) and currently get tax credits then:
- If you have a change of circumstances that ends your tax credits award, you will not be able to make a new claim for tax credits and instead will have to claim pension credit if you require financial support. The rules for pension credit are different to tax credits so whether you qualify for any payments depends on your circumstances including any savings you have.
- If your circumstances don’t change, our understanding is that eventually DWP/HMRC will move you across to pension credit. However there are no details available about this yet nor any confirmation of whether transitional protection may be available.
If you are part of a mixed age couple who is able to make a new claim for pension credit due to the exception explained above and you currently get tax credits then:
- If you have a change of circumstances that ends your tax credits award, you will not be able to make a new claim for tax credits. You may be able to make a claim for pension credit. Our understanding is that you are not prevented from claiming universal credit but if you do, you will not be able to claim pension credit and you may receive more money via pension credit than universal credit. If you are in this situation you should get specialist welfare rights advice before claiming either pension credit or universal credit.
- If your circumstances don’t change, it is not yet clear whether you will be moved to pension credit or universal credit as no details have been given by DWP/HMRC.