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Universal Credit migration

The UK Government has announced that they will move all claimants from legacy benefits to Universal Credit (UC) by the end of 2024.

The plan originally was for all legacy benefit claimants (people currently claiming Income Support, income-related Employment and Support Allowance, income-based Jobseeker's Allowance, Child Tax Credit, Working Tax Credit and working age Housing Benefit) to have migrated to UC by the end of 2017. The numbers affected by managed migration will be slow at first, but if this target of the end of 2024 is to be met this will have to be significantly scaled up over the next two and half years.  

Managed migration has now started in Bolton and Medway, with 500 'migration notices' due to be issued for legacy benefit claimants across the two locations. We do not know yet the date when Swansea will be affected by managed migration.

The DWP has said that the 'migration notice', will include a dedicated helpline number for claimants to ring if they require support to make their claim. Claimants who are sent a managed migration notice will be told their legacy benefits will end and they will have three months to make their UC claim.

The government's strategy is to also encourage people to make a voluntary move to UC, stating that they believe around 1.4 million households could be better off if they moved to UC straightaway. The total number of households on legacy benefits to be moved to UC through natural, managed or voluntary migration is approximately 2.6 million households.

See the government's policy paper 'Completing the move to Universal Credit' for more details of their plan: Completing the move to Universal Credit (GOV.UK)
As part of the DWP's campaign to encourage people to make a voluntary move to UC, information on claiming UC is being included with this year's tax credit renewal forms: Tax credits are ending (Universal Credit)

It is important to note that although the DWP have stated that two thirds of claimants on tax credits will be better off on UC, the DWP's analysis of these figures do not include people who also receive means-tested ESA, IS or JSA as well as tax credits to avoid them being double counted (most people with children on ESA, IS or JSA will also be in receipt of Child Tax Credit). But they will also receive the information on moving to UC.

The DWP are also using social media channels as part of their campaign to 'suggest' people move to UC voluntarily.

Therefore it is important to consider the following issues if you are considering a move to UC.

Who is likely to be worse off on UC and should wait until managed migration?

Anyone who will be worse off on UC and does not have a change of circumstances that means they need to claim UC should wait until managed migration (always check, a change of circumstances does not necessarily mean a new claim).

Managed migration includes transitional protection, which means that you are not worse off at the point of claiming UC. Transitional protection is an amount added to the UC claim as part of managed migration, meaning the amount received is not less than you received on legacy benefits. 

This protection will be lost or reduced if your maximum UC amount (the amount you are entitled to before it is reduced by your income) increases (except for an increase in childcare costs) - the transitional protection amount is reduced by the same amount of money as your increase in UC would be, until it is all gone. This includes when your UC increases in April as part of the annual uprating of benefits and if your UC housing costs element increases due to rent rises (this will affect you if you have a council or housing association tenancy, people with private rented tenancies will only be affected if the amount of the local housing allowance increases, which is currently frozen at 2020/21 rates).

If you are considering a voluntary move to UC, it will be a good idea to read through this guidance first: Universal Credit and you (GOV.UK)

Anyone who is thinking of voluntarily moving to UC should get a benefit check and independent advice first:

Groups most likely to be worse off on UC

We are not saying that all people included in the circumstances below will be worse off on UC. We know that a lot of this advice is complicated and this is why we urge you to get a comprehensive benefit check and advice before a move is made - you cannot return to legacy benefits after claiming UC.

Mixed-age couples

There is no pensioner premium in UC, couples where the younger member of the couple is claiming income-related ESA, income-based JSA or IS will usually be better off remaining on legacy benefits.    

When the older member of a couple reaches 66, it will usually not be possible to remain on legacy benefits and advice should be sought.  Unfortunately many people in this situation may need to naturally migrate to UC and receive no increase to account for one member of the couple no longer being working age. The rules around mixed age couples are complicated and advice should be sought.

Capital over £16,000 and between £6,000 to £16,000

This will usually affect claimants on tax credits where is no capital limit and only the taxable income from capital is taken into account. If you are in receipt of tax credits and have capital (savings, investments, property they do not live in, yachts) over £16,000, you will not be entitled to UC and should not make a claim which will prevent you from returning to tax credits. If you wait until managed migration, your capital over £16,000 will be disregarded for 12 months meaning you will be initially entitled to UC.

Tax Credit claimants who have capital between £6,000 and £16,000 need to take into account tariff income in deciding whether they will be better off on UC. The tariff income reduces the amount of UC entitlement at a much higher rate than the taxable income from interest on savings reduces the amount of tax credits. UC entitlement is reduced by £4.35 per month for every £250 or part of, of capital over £6,000 (if capital is £6,251, UC will be reduced by £8.70 per month). This is equivalent to the weekly tariff income of £1 per £250 for income-related ESA, income-based JSA, IS and HB and therefore it is claimants who are currently receiving only tax credits who will be affected.

In receipt of the disability premium in Income Support or JSA

There are no disability premiums in UC. If you are receiving the work related activity or support component in ESA this can be carried over as the limited capability for work or limited capability for work related activity element in UC on a voluntary move to UC (this does not always happen correctly, seek advice if the element is not paid).  

If you are getting a disability premium you will have to submit sick notes and then be assessed under the Work Capability Assessment in order to receive extra UC due to your disability or health problems. As this is a different test to the disability benefits that allow a disability premium to be paid, not all will qualify and you will have to serve a three month waiting period before it is paid if you do.

In receipt of the severe disability premium in ESA, IS or JSA

People who receive the severe disability premium in legacy benefits can be paid the Transitional SDP Element if you are entitled at the point of voluntary migration to UC, this extra element of UC does not increase when benefits are uprated in April. This is an effective real cut in benefit entitlement and will be especially important in April 2023 when the uprating is likely to be at least 7 to 8%.  

The amount of the Transitional SDP Element also decreases if the amount of UC you receive increases, eg you become entitled to another element of UC or your rent increases, meaning the Transitional SDP Element is eroded away. In addition the Transitional SDP Element does not include an amount for the enhanced disability premium, meaning you can still lose money.

Therefore despite being able to get the Transitional SDP Element, if you are entitled to the SDP in legacy benefits you will still lose out if you chose to make a voluntary move to UC before you have to.

Working Tax Credit claimants in receipt of the Disabled Worker Element

There is no equivalent of this element in UC. The only way to receive extra UC for the extra costs of being a disabled worker is to be assessed as having limited capability for work and as a result being entitled to the work allowance and/or being found to have limited capability for work related activity to get the limited capability for work related activity element in UC.  

If you are making a voluntary move to UC, you will only be able to be assessed as having limited capability for work/work related activity if you earn under £658.66 per month or are in receipt of a disability benefit or have already been found to have limited capability for work under the UC system or can be treated as having limited capability for work under UC.

Therefore it is important for disabled workers on Working Tax Credit to get a benefit check and advice before considering a voluntary move to UC.

Claimants receiving the lower disabled child element in Child Tax Credit

The equivalent element in UC is paid at a lower rate (£132.89 per month in UC compared to £295.41 per month in Child Tax Credit or other legacy benefits). A benefit check is advised if you have a disabled child to check that you will not receive less on UC.

Claimants who are both a carer and have limited capability for work/work related activity or a disability premium

Under legacy benefits when the same person is both a carer and is disabled or has limited capability for work, you can be paid both the carers premium and a disability premium or work related activity/support component at the same time. In UC if the same person is a carer and has limited capability for work/work related activity only the highest element is included. 

Claimants not in receipt of their full benefit entitlement

Just entering current benefits into an online calculator will not show whether you would be better off on UC if you are not claiming all the benefits you are entitled to.  

One of the case studies referred to in the DWP policy paper is that of a single claimant only receiving ESA in the support group as being better off on UC. This is correct, however before suggesting a move to UC, if this claimant had independent advice it may be suggested that they could be entitled to Personal Independence Payment and if awarded may be entitled to the severe disability premium. Whether this would apply to you will depend on how your health or disability affects you.

Therefore if you are thinking of making a voluntary move to UC, please get this checked first.

Claimants whose Housing Benefit entitlement is lost in full due to the benefit cap

Under legacy benefits the benefit cap (total amount of benefits a benefit family can receive) only applies to housing benefit. If your housing benefit entitlement is reduced to nil due to the benefit cap, you may lose out on UC where the whole award, not just your housing costs, can be reduced.

If you have been affected by the benefit cap, please seek advice to check if you could be exempt or could apply for a discretionary housing payment.

Other issues to be taken into account before a voluntary move to UC

There are other considerations apart from the maximum UC you may be entitled to that you should be aware of in order to make a fully informed choice whether to voluntarily move to UC.

Work-related requirements

To claim UC, both members of a couple need to sign a claimant commit which sets out your responsibilities and which work related requirements will apply. Unlike legacy benefits, when the partner of a claimant may have no or limited requirements, under UC both members of a couple are the claimant and have individual work related requirements according to their circumstances. 

Citizens Advice have a guide to help check whether you are in the right UC work related activity group: Check you’re in the right Universal Credit work-related activity group (Citizens Advice)

Historic overpayments

This is an issue that can emerge when making a new claim for UC, an old overpayment that you may know nothing about can be recovered from UC. This is particularly an issue if you are no longer receiving tax credits but have previously and you could be completely unaware of a past tax credit overpayment.  

There is advice on deductions, overpayments and other deductions, from UC here: Find out about money taken off your Universal Credit payment (GOV.UK)

Advance payments

Whilst having an advance payment can make the transition to monthly payments of UC easier, an advance payment is recovered from ongoing UC payments over the following 24 months, meaning you have less to live on every month.

If you are considering a voluntary move to UC, it is worth considering whether an advance is needed. If a claim for UC is made while HB, IS, income-based JSA or income-related ESA is still in payment these benefits will end but a two week non repayable run on of legacy benefits should be paid automatically. This could bridge the gap enough to avoid or request a lower advance payment. There is no run on of tax credits when making a UC claim.

Claims are usually made online and managed via an online journal

Whilst this makes it easier or is preferable for some claimants, are you someone who would struggle with an online claim? Whilst telephone claims can be made in exceptional circumstance, most claims will be online.

Our Lifelong Learning Team can help people get online and have courses on IT skills and digital literacy: Adult education - Lifelong Learning

All our libraries have free computer and wifi access: Libraries

Citizens Advice can help people make a claim for UC. 

Alternative payment arrangements

It is important to remember that people claiming UC can request alternative payment arrangements (APA) if this will help you manage your money better and you are at risk of financial harm through receiving one monthly payment including housing costs.

An APA can be requested to:

  • pay housing costs of Universal Credit as a Managed Payment (MP) direct to the landlord
  • to be paid more frequently than monthly payments
  • split payment of an award between partners

The guidance on APAs is available here: Alternative Payment Arrangements (GOV.UK)

Some people will be better off claiming UC and with the current increases in the cost of living we do not want to put you off if it will increase your income, just to make sure that you are fully informed.  

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