How will universal credit affect tax credits?

Universal credit and tax credits

Universal credit was introduced in April 2013 in a small number of pilot areas. To start with, only people with straightforward circumstances living in selected postcodes were able to claim.

Since December 2018, UC has been available in all parts of the UK.

As a result, HMRC state it is no longer possible to make a brand new claim for tax credits. The only exception to this is for certain people who are granted refugee status. Existing tax credit claimants can continue with their tax credit claims. Most tax credit claimants will be affected by UC at some point. Some people may choose to claim UC because they will be better-off, others will need to claim UC due to a change of circumstances that brings their tax credits to an end. The following are examples of when tax credit claimants will move off tax credits, most to UC (or pension credit, usually if they have reached their state pension age):

• they have a change of circumstances that ends their current tax credits award and they still need to claim support
• they choose to claim universal credit instead of tax credits
• they need to claim universal credit to access help with housing costs or out of work support. This is because it is generally no longer possible to make new claims for housing benefit or income-based jobseeker’s allowance or income-related employment and support allowance because those benefits have been replaced by UC.

• they receive a migration notice from DWP inviting them to make a claim for UC by a deadline and that their tax credits award will end.

See below for more information about when existing tax credit claimants will be invited to move to UC or pension credit.

You can find out more about who can claim universal credit in our Who can make a claim for universal credit? section.

Can I claim tax credits and universal credit together?

No. The general rule is that you cannot claim tax credits (working tax credit and/or child tax credit) at the same time as universal credit.

⚠️If you are already getting tax credits and make a claim for UC, your tax credit claim will end immediately even if you are not entitled to universal credit. If you are already getting tax credits, you should get advice before claiming universal credit.

I claim tax credits now – does universal credit affect me?

If you have a change of circumstances and need to make a new claim or you need to make a new claim for support that is now covered by universal credit, then the new claim will be for universal credit (or pension credit).

Universal credit is gradually replacing tax credits and some other means-tested benefits. Eventually the tax credit system will close down completely and you will need to either claim universal credit or pension credit if you need financial support. This is being done in stages.

HMRC state that it is no longer possible for anyone to make a brand new claim for tax credits, but existing claimants can still renew their claims and add extra elements. The only exception to this is for certain people who are granted refugee status. The next stage involves DWP and HMRC starting to move (‘migrate’) people to universal credit. 

Our understanding is that most existing tax credit claimants will move to either universal credit or pension credit. The move from tax credits to UC is expected to be complete by the end of 2024.

Those who are moved to universal credit through the formal managed move to UC process may receive transitional protection if the amount of universal credit they are entitled to is less than the total of their legacy benefits at the point they move over – which is the Government’s way of helping claimants adjust to the new benefit system.

Not all tax credit claimants will move to universal credit – certain people who have reached state pension credit age will need to claim pension credit instead. A small number of others may not be invited to move to UC under the formal process, for example if they have had a nil award of tax credits for some time. The full details of which groups will not be invited to move to UC are not yet available.

If you are an existing tax credit claimant – there are three ways you could move to universal credit:

Voluntary

You can choose to claim universal credit. If you do this, your tax credits will end and you will not be able to reclaim tax credits even if you are not entitled to universal credit. Some people will be better off on universal credit than tax credits, some will get the same and others will be worse off.

If you are worse off and you have made a voluntary claim, you will not receive transitional protection. This is money paid to those who are moved from tax credits (and other benefits UC is replacing) to UC by DWP and HMRC and who find they are worse off. If you received a severe disability premium (SDP) with certain social security benefits (not tax credits), then you may qualify for a transitional SDP element in your UC award

Natural

Your circumstances may change which ends your tax credit award. You won’t be able to claim tax credits again and so if you still need support you will need to claim universal credit (or pension credit depending on your circumstances).

If your circumstances change and you need to claim additional support from another benefit that universal credit is replacing, such as housing benefit, you may need to claim universal credit. Your tax credits will end when you make a universal credit claim.

If your circumstances change so that you have to claim UC, you could receive less money than you were previously receiving. You will not receive transitional protection. This is money paid to those who are moved from tax credits (and other benefits UC is replacing) to UC by DWP and HMRC and who find they are worse off. If you received a severe disability premium (SDP) with certain social security benefits (not tax credits), then you may qualify for a transitional SDP element in your UC award.

Managed

DWP and HMRC may send you a notice (called a migration notice) telling you that you must claim universal credit if you want to continue receiving support. This is called ‘managed migration’ and is part of the government’s plan to move existing tax credit claimants to universal credit. If you move to UC in this way and your award (before deductions) is less than before, you will receive something called ‘transitional protection’ that the government say will make up the difference.

Voluntary and natural moves to universal credit have been happening for a number of years. However, DWP think that some people will be better off on universal credit than tax credits and legacy benefits. If you are getting tax credits, you may get a leaflet in your tax credit renewal pack telling you about universal credit. This is not a migration notice, it is just information. The migration notice will be more specific and addressed to you with a clear deadline of when you need to make your claim for UC.

The managed migration exercise re-started from May 2022 after a pause due to the coronavirus pandemic. Although the timeframe for completing the move of claimants from tax credits to UC ( has changed a number of times, the latest expectation is that most tax credit claimants who are below their state pension age (both, in a joint claim) and have not already moved to UC, are expected to have been invited to move to UC by the end of 2024.

⚠️ If you are already getting tax credits, speak to a welfare rights specialist before you make any claim for UC: you should first understand what universal credit might mean for you. As soon as you make a claim for universal credit, your tax credits will stop and you won’t be able to claim tax credits again even if you are not entitled to any universal credit.

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 benefits, some will be about the same and some will be worse off.

I have reached state pension credit age - does universal credit affect me?

There is a calculator on GOV.UK that tells you when you’ll reach state pension age/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 state that it is no longer possible for anyone to make a new claim for tax credits. 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. You can get a extra amounts for children in pension credit if you 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 UC 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 UC. If you are in this position, you should get some specialist advice. Our understanding is that you are not prevented from claiming UC 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 a mixed age couple who can only claim UC 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 what transitional protection may be available if you are worse off.

If you are part of a mixed age couple who is able to make a pension credit claim (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 will be able to make a claim for pension credit. Our understanding is that you are not prevented from claiming UC 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.  

You can find more detailed information on our website for advisers.

What if I want to make a new claim for tax credits?

HMRC state that it is no longer possible to make a brand new claim for tax credits. The only exception to this is for certain people who are granted refugee status. If you already get working tax credit and want to claim child tax credit or vice versa, you can do that and you are not affected by universal credit yet as this is not treated as a brand new claim to tax credits. You can contact HMRC to have the other elements added to your claim.

Similarly, if you are renewing your tax credit claim, that does not count as a brand new claim. Also, if you receive working tax credit which ends and you receive a four-week run-on payment, if you start work again or increase your working hours during that four-week period your entitlement to WTC should continue.

More information

This page gives a very brief overview of the situation regarding universal credit and tax credits. For more information, please visit the following pages:

• Universal credit
• Revenuebenefits: Universal credit