Thousands on benefits cut off from £4,960 a year in Universal Credit move – how to avoid losing cash
THOUSANDS of households are being cut off from nearly £5,000 a year in a huge shake up of the welfare system.
The government aims to move all two million claimants on legacy benefits to Universal Credit by the end of March 2025 through a process known as managed migration.
The transition officially started in November 2022 after a successful pilot in July 2019.
As part of this process, households on legacy benefits, including tax credits, receive “migration notices” by post.
These notices provide instructions on how to switch to Universal Credit, as the transition is not automatic.
It’s crucial for households to apply for Universal Credit within three months of receiving their migration notice.
Failing to do so can result in their benefits being stopped.
Since July 2022, the Department for Work and Pensions (DWP) has sent nearly 1.14million migration notices.
However, thousands of recipients have not made the switch to UC.
Around 171,750 households receiving tax credits who were sent migration notices between November 2022 and December 2023, had their benefits stopped.
That’s according to new figures from the DWP, provided to anti-poverty charity Z2K via a freedom of information request.
This means a typical household has lost around £4,960 a year, amounting to £851million in benefits being cut off because claimants didn’t switch to Universal Credit.
A Z2K spokesperson said: “The total amount of benefits that the DWP has cut off for people who have missed their deadline for moving to universal credit has now jumped to over £850million.
“This is particularly concerning as we are fast approaching the point at which the government plans to start moving seriously ill and disabled people over to Universal Credit.
“We want to see the government slow down the move to universal credit to ensure that safeguards are in place so that no one is left without anything to live on.
“But in the meantime, if you receive a letter telling you to claim Universal Credit, you should seek advice immediately and make sure you submit the claim before the deadline.”
Experts have previously warned that managed migration poses a risk to vulnerable people who face losing money.
Top bosses at charities, including Mind, The Trussell Trust, Turn2Us and the Money and Mental Health Policy Institute, said in 2022 that around 700,000 with mental health problems, learning disabilities, and dementia could struggle to engage with the process.
More than 20 organisations have called on the government to halt managed migration to fix flaws in the system that could cause those at risk to fall through.
A DWP spokesperson said: “We are committed to ensuring all customers receive the support they need from our staff and services.
“The department has a wide range of support available to all individuals, particularly those who are vulnerable.”
Which benefits are stopping?
UNIVERSAL Credit is replacing six benefits under the old welfare system, commonly called legacy benefits. They are:
- Working tax credit
- Child tax credit
- Income-based jobseeker’s allowance
- Income support
- income-related employment and support allowance
- Housing benefit
If you’re on any of these benefits now, you can choose to move over – but you might not be better off.
You should consider carefully what moving over means for your money, as you can’t move back once you’re on Universal Credit.
Using an online benefits calculator, which is free and easy to use from charities such as Turn2Us and EntitledTo, can help you compare.
You may be moved to Universal Credit if your circumstances change, such as moving home, changing your working hours, or having a baby.
But eventually everyone will be moved over to Universal Credit under the managed migration process.
MANAGED MIGRATION PROGRESS
In January, the government announced the number of migration notices it plans to send out in the coming financial year.
Before this date, the focus was sending migration notices to households claiming tax credits only.
However, 110,000 income support claimants and a further 120,000 claiming tax credits with housing benefit started receiving their letters in April.
Over 100,000 housing benefit-only claimants were contacted in June.
More than 90,000 people claiming employment and support allowance (ESA) along with child tax credits started being asked to switch in July.
Meanwhile, 20,000 claimants on jobseekers allowance (JSA) will be contacted from September.
The Sun previously reported that, in August, those claiming tax credits who are over state pension age will be asked to apply for either Universal Credit or pension credit.
It was initially planned that those claiming income-related ESA alone would not be moved until 2028.
However, the DWP brought forward plans to move these households to Universal Credit by the end of 2025.
Since September 2024, 800,000 households have begun receiving letters explaining how to move from ESA to Universal Credit.
HELP CLAIMING UNIVERSAL CREDIT
As well as benefit calculators, anyone moving from tax credits to Universal Credit can find help in a number of ways.
You can visit your local Jobcentre by searching at find-your-nearest-jobcentre.dwp.gov.uk/.
There’s also a free service called Help to Claim from Citizen’s Advice:
- England: 0800 144 8 444
- Scotland: 0800 023 2581
- Wales: 08000 241 220
You can also get help online from advisers at citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim/.
Will I be better off on Universal Credit?
AROUND 1.4million people on legacy benefits will be better off after switching to Universal Credit, according to the government.
A further 300,000 would see no change in payments, while around 900,000 will be worse off under Universal Credit.
Of these, around 600,000 are expected to get top-up payments if they move under managed migration, so they don’t lose out on cash immediately.
The majority of those – around 400,000 – are claiming employment support allowance (ESA).
Around 100,000 are on tax credits while fewer than 50,000 each on other legacy benefits are expected to be affected.
Examples of those who may be entitled to less on Universal Credit according to the government include:
- Households getting ESA who and the severe disability premium and enhanced disability premium
- Households with the lower disabled child addition on legacy benefits
- Self-employed households who are subject to the Minimum Income Floor after the 12 month grace period has ended
- In-work households that worked a specific number of hours (e.g. lone parent working 16 hours claiming working tax credits
- Households receiving tax credits with savings of more than £6,000 (and up to £16,000)
But if they don’t switch in the future, they’ll risk missing out on any future increase to benefits and see payments frozen.
Those who move voluntarily and are worse off won’t get these top-up payments and could lose cash.
Those who miss the deadline and later make a claim may also not get this transitional protection either.
The clock starts ticking on the three-month countdown from the date of the first letter, and reminders are sent via post and text message.
There is a one-month grace period after this, during which any claim to Universal Credit is backdated, and transitional protection can still be awarded.