Transitional protection is designed to ease the transition for claimants moving from tax credits and other legacy benefits to universal credit under the formal managed migration exercise.
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The Government have said that where people move over to universal credit under the formal exercise managed by DWP from their existing legacy benefits (working tax credit; child tax credit; income support; income-based jobseekers allowance; income-related employment support allowance; housing benefit) and have no changes of circumstances, they will not be financially worse off at the point they move over. To meet this commitment transitional protection will be in place with the aim of maintaining benefit entitlement at the point they move.
Qualifying for transitional protection
Transitional protection only applies to you if you make a ‘qualifying claim’ for universal credit. A qualifying claim is a claim for universal credit by a single claimant who has been issued with a migration notice or by joint claimants who have both been issued with a migration notice and you must make the claim on or before the final deadline.
The final deadline is the day that would be the last day of the first assessment period in relation to an award commencing on the deadline day. Deadline day is the day quoted in the migration notice by which a universal credit claim must be made. If you do not make your universal credit claim by that date, legacy benefits will terminate. This rule allows someone who misses their deadline date, who has their legacy benefits terminated, to make a universal credit claim within a month of the deadline day and retain entitlement to transitional protection.
Transitional protection is made up of:
- a transitional capital disregard for tax credit claimants
- a transitional element
- protections for claimants who are full-time students.
Transitional protection does not apply if you claim universal credit outside of the formal migration exercise. The only exception is if you have a severe disability premium in legacy benefits which means you may qualify for a transitional SDP element if you claim universal credit.
If you have a change from being single to joint and vice versa after your migration notice is issued you will not qualify for a transitional element when you make your new universal credit claim but you can still be covered by the capital disregard and the protection for full-time students.
Protection for full-time students
One of the basic conditions for entitlement to universal credit is that the person is not receiving education (with some exceptions).
If you are currently receiving a legacy benefit, you are on a course of full-time education and you receive a migration notice, the rule that you must not be receiving education does not apply to you for as long as you continue undertaking the course you are on. If you finish that course and then later start a new course, the normal universal credit education conditions will apply.
This protection comes to an end under the same circumstances that would also end the transitional element or the transitional capital disregard, see below. In addition, the protection can continue if a claim ends and a re-claim is made if, had you been entitled to it, the transitional element or transitional capital disregard could be applied on the re-claim. You may still fall into one of the normal exception categories which allow some students to claim universal credit.
Transitional capital disregard
Normally, anyone with capital over £16,000 is not entitled to universal credit but there is no corresponding rule in tax credits and so it is entirely possible that some tax credit claimants may have capital over £16,000. There is more information about capital in our capital and universal credit section.
Tax credit claimants under managed migration are protected from the upper capital limit in universal credit for up to 12 assessment periods from the date of their universal credit claim. The disregard only applies if you are entitled to an award of tax credits and have capital exceeding £16,000 on the migration day. Migration day is the day before the first day on which you are entitled to universal credit in connection with your universal credit claim.
This means that you may need to think carefully about your capital in between getting your migration notice and making your universal credit claim. For example, if you have £18,000 of capital when you received your migration notice but need to access £6,000 on a short term basis (bringing your capital to £12,000) – if you put the money back in your savings after the migration day so your capital goes above £16000 again, you will lose the transitional capital disregard and would lose your entitlement to universal credit.
The transitional capital disregard means any capital over £16,000 is disregarded for up to 12 assessment periods both in determining whether the financial conditions for universal credit are met and in calculating the amount of the award. However, any capital between £6,000 and £16,000 is not disregarded will still attract tariff income. The disregard also applies when calculating the indicative universal credit amount for the purposes of whether a transitional element is to be included. However, any capital between £6,000 and £16,000 is not disregarded and will still attract tariff income.
If you have a joint tax credit claim but under the universal credit couple rules each of you are required to make single universal credit claims, the transitional capital disregard can be applied to each universal credit single claimant.
Where the capital disregard has been applied, and you have a universal credit assessment period where your capital drops below £16,000, the disregard ends and will no longer apply to subsequent assessment periods (even if your capital increases again).
After the end of the 12 assessment periods, the normal capital rules apply, so that if capital continues to exceed £16,000 universal credit entitlement ends.
The transitional capital disregard will end under the same circumstances that would also end the transitional element as explained below.
Usually where a claim is terminated or there is no entitlement so the claim is effectively closed, the transitional capital disregard ends even if you subsequently re-claim. However, there is an exception to this where the claim is closed due to an increase in earnings before the twelve assessment periods pass and you re-claim within a certain period. The period is three months beginning with the last day of the month that would have been the final assessment period of the previous award had it not terminated (This is four months from the end of the assessment period for which universal credit was actually awarded).
The transitional element is an extra element that can be added to the universal credit maximum award. To work out the whether a transitional element applies and how much, DWP compare the amount you receive through your legacy benefits with broadly amount you would receive from universal credit if it were calculated by reference to your circumstances on migration day following some assumptions set out in the legislation. However the way that the transitional element is calculated is complex. The exercise uses a ‘total legacy amount’ ‘and an ‘indicative universal credit amount’ in the calculation of the transitional element. These amounts may or may not be the same as you actually receive in legacy benefits and/or will receive in universal credit.
The way it works is that if the amount from the ‘total legacy amount’ is more than the ‘indicative universal credit amount’ the difference is calculated. This is called the transitional element and it is included as an element when calculating the maximum amount of your universal credit in the first assessment period of the universal credit award (before the deduction of any income). In subsequent assessment periods, the transitional element may be eroded as explained below.
You are not entitled to an amount of transitional element that would take you above the benefit cap rules.
There is more detailed information in our calculating the transitional element section.
Erosion of the transitional element
There is no actual time limit to how long a transitional element can be included with a universal credit award but it does reduce, or erode, over time as other elements are added to the universal credit award because of changes in circumstances (apart from the childcare element) or as the other elements increase in value due to annual updating increases.
How it works
In the second assessment period, the transitional element amount is reduced by the sum of any relevant increases in that assessment period.
For the third and subsequent assessment periods, the amount that was included for the previous assessment period as the transitional element is reduced by the sum of any relevant increases.
Once it gets to nil, it does not apply in any future assessment periods.
A relevant increase is basically increases in any of the elements that make up an award, including any of those amounts that are included for the first time apart from the childcare element and annual uprating (or other increases) to all of the usual universal credit elements.
An increase in earnings does not erode the transitional element but under normal universal credit calculation rules any increase in earnings will (subject to the work allowances) decrease the overall universal credit award (which includes the transitional element). However the way the transitional element is calculated ensures that it takes account of the earnings taper.
The transitional element is not increased by annual uprating and once it is fully eroded it cannot be re-instated except where there has been a recalculation or successful appeal.
The only other variation to this concerns the LCW and the LCWRA elements. Where there is a change and a LCW element is replaced with a LCWRA element, the relevant increase to the universal credit award – for the purposes of transitional element, is the difference between the LCWRA element and the LCW element.
Once the transitional element is reduced to nil, no further transitional element will be included in subsequent awards.
Revising the transitional element
The rules allow DWP to revise their transitional element calculations where they believe the information on migration day was wrong or incomplete, the claimant misrepresented facts, the claimant failed to report something that they should have reported, there was official error or, after migration day, an appeal outcome or supersession/revision decision changes the decisions on any of the awards that were used in the transitional element calculations.
When transitional protection ends
The transitional capital disregard, the transitional protection for full-time students and the transitional element will each end in the following situations:
- You stop work or your earnings drop below a minimum level in each of three assessment periods, where you were previously earning at least your single administrative threshold. In joint claims, the couple administrative threshold applies.
(This does not apply if the you have the minimum income floor applied or would if they were not in their start-up period).
- You separate from your partner or form a couple with a new partner
Change to household, that is joint claimants stop being a couple or become members of a different couple, or, in the case of a single claimant, where they become a member of a couple (unless they have an ineligible partner and so are entitled to still claim as a single person)
- Transitional protection in subsequent assessment periods
If a universal credit award is terminated or there is no entitlement, transitional protection will not apply to subsequent awards. The only exception to this rule is if there was no universal credit entitlement because you had excess income in that assessment period and you become entitled again within three months. If this happens, the new award is effectively treated as if it is a continuation of the previous award for the purposes of the transitional element and capital disregard.
No transitional protection
Not everyone will receive transitional protection - that includes the transitional element, the transitional capital disregard and the protection for full-time students. The main situations where you won’t get transitional protection are where you start to claim universal credit outside the formal migration exercise. If you currently claim tax credits, this will apply to you if you:
- Claim universal credit for any reason, without receiving a migration notice, or
- you miss the deadline day and the final deadline day on your migration notice and make your claim for universal credit at a later date, or
There are other situations where you will not be entitled to transitional protection. These are where:
- you are a couple for tax credit purposes but not a couple for universal credit purposes (and vice versa). This means although both joint claimants will be issued with a migration notice, universal credit rules mean each must make separate single claims. Note, this does not include the scenarios where you are still accepted as a couple under universal credit rules and can make a joint universal credit claim but one of you is ineligible so the claim is processed as a single claim).
- you are a couple at the point you are issued with a migration notice but you have a change in circumstances and your joint household ends before you make your universal credit claim. Each will need to make a fresh claim in your new single (or, if you have joined another household, your ‘new’ couple) capacity.