DWP warning to legacy benefits claimants as transition to Universal Credit moves forward | Personal Finance | Finance


The DWP is contacting more households in the UK inviting them to move to Universal Credit.

Officials have so far been writing to those claiming Employment and Support Allowance and Housing Benefit, but now it will be contacting people on other benefit combinations.

The rollout of the Universal Credit has been moving in stages across different regions of the UK, moving to South East Wales and Central Scotland this month and to South West Scotland in November.

More than 22,000 people were sent a Migration Notice letter instructing them to switch to Universal Credit between July 2022 and May 2023.

Universal Credit is replacing the following legacy benefits, consisting of four DWP benefits and the two types of HMRC tax credits:

  • Income-related Employment and Support Allowance (ESA)
  • Income-based Jobseeker’s Allowance (JSA)
  • Housing Benefit
  • Income Support
  • Working Tax Credit
  • Child Tax Credit.

In its latest newsletter, the DWP says households in three areas of the UK who claim other legacy benefits as well as tax credits are now to be asked to apply for Universal Credit after this was tried out in September.

It said: “We started our small-scale discovery in September to test more benefit combinations and continue to learn how we move all households safely onto Universal Credit.

“As part of this discovery activity, we will be contacting a small number of households within Greater Manchester, Harrow, and Northumberland.”

Will you be better off on Universal Credit?

After the migration is completed, DWP estimates:

  • 3.8 million households (53 percent) will be getting more money when on Universal Credit, including 1.8 million who were on tax credits, one million who previously claimed ESA, 300,000 who had been on Housing Benefit and 100,000 who moved across from Income Support
  • 1.2 million households (17 percent) will receive the same amount including 500,000 who were transferred from Jobseeker’s Allowance, 400,000 from Income Support and 300,000 from ESA
  • The other 2.2 million households (30 percent) would be due to receive less – including one million on ESA and 800,000 on tax credits – but will get their benefits topped up to keep them at the same level. This is called transitional protection and will reduce over time as it does not go up with April benefit rises. It means a person’s benefit amounts will be kept the same until Universal Credit increases to the level of their old payments and cancels out the transitional protection.

Volunteering to move to Universal Credit before receiving a letter will mean a person is not eligible for transitional protection so they could end up on a lower amount.

Types of claimants who might see a higher entitlement under Universal Credit:

  • Employment and Support Allowance (ESA) Support Group who are not in receipt of the Severe Disability Premium
  • Working households receiving Housing Benefit only or Working Tax Credit and Housing Benefit (likely to have higher entitlements under Universal Credit as the earnings taper rules are more generous)
  • People who do not work enough hours to receive Working Tax Credit
  • Households who are not currently claiming all the legacy benefits they are entitled to.

Types of claimants who might see a lower entitlement under Universal Credit – and therefore likely to be eligible for transitional protection:

  • Households in receipt of Employment and Support Allowance (ESA) who are in receipt of the Severe Disability Premium and Enhanced Disability Premium
  • Households with the lower disabled child addition on legacy benefits
  • Self-employed households subject to the Minimum Income Floor, after the 12-month grace period has ended.
  • Working households doing a specific number of hours that prevent progression in the labour market (for example, a 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) – Universal Credit entitlement is reduced in a different calculation to tax credits (those with savings of more than £16,000 are not normally eligible for Universal Credit). If a person receives tax credits and have money, savings, and investments of more than £16,000, this is disregarded for 12 months before the normal eligibility rules will apply. They will then not be eligible for Universal Credit if they still have more than £16,000 in money, savings and investments.

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