DWP Urgent Warning: Essential Information for Tax Credit Recipients

Tax Credit recipients have received a stern warning from the DWP. These include Housing Benefit, Income Support, Jobseeker’s Allowance, and Income-Related Employment and Support Allowance that are being gradually phased out from the benefits system.
The DWP will not automatically transfer to the new system. Payments from the old system will stop from April 2025.

Universal Credit

Universal Credit and Pension Credit are the new benefits replacing six that have been withdrawn. However, the burden to switch rests upon claimants. Amongst those who already enjoy tax credits, they have to apply for a new one to receive the funds. Starting April 2025, any one who has not acted will completely stop receiving the payments coming from the old system.

The DWP has written to tax credit claimants about the process to apply for Universal Credit. A claimant should take action within three months from the date of the letter.
If you haven’t received the letter, no action is needed at present; however, it is advisable to keep a watchful eye on your correspondence.

Steps to be taken

When you get a migration letter, it is important to act fast. Gov.uk explains that you have to make an application for Universal Credit by the date indicated on the letter; otherwise, you will lose the financial support.
If you are unable to make an application before the deadline date due to exceptional circumstances, you can contact the Universal Credit Migration Notice Helpline to request an extension.

Transitional Protection

The government has brought in “transitional protection” to ease the financial impact on claimants transferring to Universal Credit. This will ensure that anyone who would receive less on Universal Credit than they did on their old benefits will receive an extra amount to make up the difference. This additional amount will reduce over time until the claimant receives the standard Universal Credit entitlement.

Specific Scenarios

Full-time students: Normally cannot claim Universal Credit, but those who are enrolled can until their course ends
Claimants who have savings and investments over £16,000: Normally are not eligible, but transitional capital disregard means that they can still claim for one year
Those of pension age: Those in receipt of a migration notice may claim Universal Credit

Exceptions to Eligibility

Universal Credit or Pension Credit will not be available for very few individuals. These individuals will continue receiving tax credits up to April 5, 2025. Beyond this date, tax credits will be discontinued entirely, and there will be no further payment made.

Additional Support

Organizations like Citizen’s Advice give guidance on the process, including information about eligibility and how to make best use of available support. If you receive a migration letter, it’s well worth looking at these resources so that you make a smooth transition.

In short, tax credit claimants will be able to continue receiving their financial assistance on time and enjoy some added safeguards in the process.