THOUSANDS risk missing out on £4,300 a year as tax credits are phased out.
The government plans to move all two million claimants to Universal Credit (UC) by the end of March 2025, under a process known as managed migration.
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But thousands of people who have received so-called migration notices telling them they will need to claim UC instead have failed to do so.
This could leave them around £359 a month worse off, according to new figures by anti-poverty charity Z2K.
Letters to hundreds of people on the old-style benefit started going out last year as part of the shake-up and ramped up this year with 117,690 sent notices so far.
Anyone who gets a notice has three months in which to make the move to Universal Credit.
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If they fail to make a claim for the new benefit in time, their tax credit payments are terminated.
Even if they decide to claim after the deadline, they can still lose out on vital protections, which means they could end up with less cash.
So, acting as soon as you receive the managed migration notice is the only way to ensure you don’t lose out on your payments when tax credits are scrapped.
Ayla Ozmen, director of policy and campaigns at Z2K, which uncovered the figures, said: “These figures show that DWP has stopped millions of pounds worth of benefits for people who’ve missed their deadline to move to Universal Credit.
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“With more than two million people to move over in the coming years, including seriously ill and disabled people receiving employment and support allowance, it’s vital DWP gets this right and stops cutting off vital income.
“The DWP should stop putting the responsibility on people to make a new claim for Universal Credit, even if their circumstances haven’t changed at all.
“But until then, anyone who gets a migration notice needs to act on it as soon as possible to make sure they get everything they should.”
Z2K’s latest analysis said that around 16,000 on tax credits failed to claim UC after three months by November 2023.
We’ve asked the DWP how many more households have failed to act since.
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 last year 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, which those at risk could fall through.
What is managed migration and who is affected?
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 can help you compare and are free and easy to use from charities such as Turn2Us and EntitledTo, and it’s also worth asking them for advice.
You may be moved over to Universal Credit if you have a change in circumstances, like moving home, a change in working hours or a have a baby.
But eventually everyone will be moved over to Universal Credit.
This is known as “managed migration” and plans for this were paused due to the coronavirus pandemic.
Will I be better off on Universal Credit?
Around 1.4million will be better off on Universal Credit, the government calculates.
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 (eg 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 they could miss 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.
The latest data from the DWP shows 61,130 individuals have made a claim for UC, and 39,920 awarded transitional protection.
Another 40,540 are still in the process of moving to the new benefit.
Help claiming Universal Credit
As well as benefit calculators anyone moving from tax credits on to UC can find help in a number of places.
You can visit your local Jobcentre but searching at find-your-nearest-jobcentre.dwp.gov.uk/.
There’s also a free service called Help to Claim from Citizen’s Advice:
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You can also get help online from advisers at www.citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim/.
