The government is sending out Universal Credit (UC) Migration Notices. If you receive one, what does it mean and why must you act now to ensure you don’t lose valuable benefits?
End of an era
By the end of 2025 Universal Credit (UC) will have replaced various legacy means-tested state benefits, including tax credits and housing benefit (seeThe next step). While an individual may fall within the UC net because of a change of circumstances or by making a voluntary claim, many will be forced to swap as part of the government’s managed migration exercise. As UC is a working age benefit, individuals over state pension age will need to claim pension credit instead.
What is managed migration?
There is no automatic transfer toUC. Each benefits claimant will receive a Migration Notice by post which states a deadline date (at least three months from the date of issue) for making their UC claim.
Tip. You can request a month’s extension to the deadline date. If no UC claim is made by this date, a further month’s grace period is allowed (known as the final deadline day). If you miss the final deadline your legacy benefits will be lost and no transitional protection is allowed in these circumstances.
Tip. The UC claim should be made online and requires up-to-date evidence of identity and income (seeThe next step). Capital over £16,000 is ignored for the first twelve months.
Mind the gap
Tax credit payments stop as soon as UC is claimed or on the deadline date, while other legacy benefits, such as income support, run on for a further two weeks. However, the first UC payment won’t be received for at least five weeks after the claim, as it’s paid monthly in arrears. If this results in financial hardship, it is possible to apply for an advance.
Transitional top-ups
Transitional protection is intended to ensure no one is worse off on UC by offering top-up payments based on the overall difference between the UC system and legacy benefits. However, it’s not an income guarantee and there are several mismatches between the two regimes. There is no provision for payments to be uprated with inflation so their value will diminish over time. Changes in circumstances will terminate transitional protection.
Trap. Certain so-called passported benefits, e.g. free school meals and help with health costs, have different eligibility criteria under UC and are not protected.Example.Peta receives legacy benefits totalling £1,500 per month but her UC award under the normal rules is only £1,250. Assuming Peta makes a UC claim by her final deadline date, she will receive a transitional top-up of £250 per month to bring the total to £1,500. This total won’t increase.
Winners and losers
The migration’s effects will depend on individual circumstances. For example, a full-time student claiming legacy benefits will be able to claim UC as a one-off and enjoy transitional protection until the end of their existing course. By contrast, families with a disabled child will be worse off to the tune of over £40 per week. Whatever your circumstances you need to act promptly to ensure you don’t lose out on your UC entitlement.
Claiming UC by the deadline date is key to avoiding an extremely uncomfortable gap in benefits. While transitional protection will help claimants fill the gap between existing benefits and UC some will see a fall in their income because of the migration.
The next step
Making online claims
GOV.UK on which benefits are affected
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.