⚠️ Universal Credit (UC) is gradually replacing tax credits, and some other social security benefits. Universal credit is now available across the UK and HMRC state that it is no longer possible for anyone to make a brand-new claim for tax credits. Instead, people are expected to claim UC (or pension credit if appropriate). Until they start to claim UC, existing tax credit claimants can continue to renew their tax credits and/or add extra elements to their claim. See our tax credit page for more information. Existing tax credit claimants (under state pension age or in a mixed age couple) are expected to be moved across to universal credit by the end of 2024. You can find out more about this in our universal credit section. 

How will universal credit affect tax credits?

Updated on 13 April 2022

Tax credits and benefits

Universal credit (UC) is gradually replacing working tax credit and child tax credit as well as a number of other means-tested benefits. This page explains how tax credits are affected by the introduction of UC.

Illustration of a two people and a pile of coins

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. Existing tax credit claimants can continue with their tax credit claims and will not be affected for the time being unless:

  • they have a change of circumstances that ends their current tax credits claim 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.

See below for more information about when existing tax credit claimants will be moved to UC.

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?

Most existing tax credit claimants are not affected by the introduction of universal credit for the time being. HMRC and DWP plan to move all existing tax credit claimants across to UC between 2022 and end of 2024 through a managed ‘move to UC’ process.

Those who are moved to universal credit through this 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 are moved over – which is the Government’s way of ensuring there are no cash losers at the point of change without a change of circumstances.

Not all tax credit claimants will move to universal credit – if you have reached state pension credit age (or in a joint claim both of you have reached state pension credit age) you will not be able to claim universal credit. The intention is that you will claim pension credit for support, instead of tax credits.

The only way you will move to universal credit before the managed exercise begins is if:

  • You choose to make a claim for universal credit. We recommend you get advice before doing this to check whether that is the best option for you, for example whether you will be better off.
  • You have a change of circumstances that ends your tax credit award – for example you are claiming working tax credit only and lose your job and need to claim out of work support or you are single and move in with someone and need to make a new claim for support.
  • You need to make a claim for another benefit that has been replaced by universal credit – for example if you need to claim help with your rent then you will not be able to claim housing benefit and instead will have to claim universal credit. This will automatically end your tax credits award.

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. 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.

⚠️ Note: The legislation which gives effect to these rules about new tax credit claims is not clear. One interpretation of the current legislation is that some other people may be able to make new claims for tax credits. We have written some guidance for advisers on our specialist website which provides further information about this – however, it is extremely complex and should not be followed without speaking to a welfare rights specialist.

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:

Tax guides

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