Six month warning to nearly half a million people claiming tax credits who risk losing cash
NEARLY half a million people claiming tax credits have been given a six-month warning to ensure they continue to receive benefits.
The warning comes as the government continues to transition all two million claimants on legacy benefits to Universal Credit by the end of March 2025.
Recipients of tax credits do not need to take action until they receive a migration notice letter from the Department for Work and Pensions.
But, once received it’s important to act quickly to avoid having benefit payments cut off.
Legacy benefits – such as Tax Credits, Housing Benefit, Income Support, Jobseeker’s Allowance and Income-Related Employment and Support Allowance – are all being phased out.
All claimants will be moved to Universal Credit in a process known as ‘managed migration’.
Once claimants have received a letter they will have three months to migrate to Universal Credit.
Sir Stephen Timms, Minister for Social Security and Disability at the Department for Work and Pensions (DWP), said: “I can testify just how busy life can become in just a short space of time.
“But it is important to plan ahead. I wish to stress this especially if you are in receipt of legacy benefits and thinking about your financial future.
“In April 2025, tax credits will close, which means for thousands of people their old benefits will no longer be paid. Notices are being sent out to help transfer people to Universal Credit and I strongly urge you to respond to your letter when you receive one.
“If you do not, your entitlement will end. You may also lose out on financial protection if you do not respond. The majority of those moving onto Universal Credit will not be worse off than what they claimed previously. There are numerous protections in place, including, if necessary, direct payments to top up your entitlement to what you received previously.
“Not responding to your notice may mean these protections are not in place.”
The transition to Universal Credit is not automatic so it’s crucial for households to apply for the benefit within three months of receiving their migration notice.
Timms added: “Once you receive your migration notice, regardless of which old benefit you claim, do not delay in responding. The process is quick and easy which will make sure your future benefit entitlement is secured.”
Since July 2022, the DWP has sent nearly 1.14million migration notices.
However, according to the DWP’s latest figures, 284,660 individuals lost their benefits after failing to act on migration notices received between July 2022 and June 2024.
Some 623,310 individuals have since made successful claims for Universal Credit, and another 232,830 are still in the process of transitioning.
The Sun previously revealed that around 171,750 households receiving tax credits, who were sent migration notices between November 2022 and December 2023, have had their benefits stopped.
That’s according to figures from the DWP, provided to anti-poverty charity Z2K via a freedom of information request.
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.
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.
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