THOUSANDS of households on legacy benefits have been issued an urgent warning after thousands had their payments cut to nothing.
It comes as the government continues to move all two million claimants on legacy benefits to Universal Credit (UC) or pension credit by the end of March 2025, under a process known as managed migration.
AlamyMore than 31,000 people on tax credits who were invited to move to UC did not make a claim and have had their benefits stopped[/caption]
Universal Credit was set up to replace legacy benefits.
The managed migration process began in May last year after a successful pilot in July 2019.
Eligible households are being contacted via letters in the post which tell them how to make the move from tax credits to Universal Credit.
Once you receive a letter, you have three months to move over, or you could lose your current benefits.
But more than one in five people on tax credits who were invited to move to UC did not make a claim and had their benefits stopped, according to a new report by the National Audit Office (NAO).
By the end of December 2023, the Department for Work and Pensions (DWP) had sent nearly 350,000 migration notices advising legacy benefit claimants they need to apply for UC if they want to continue receiving financial support.
However, the DWP has already closed nearly 150,000 of these migration cases, and 31,000 closed cases resulted in the claimant having their legacy benefits stopped because they failed to make a claim for UC.
Gareth Davies, head of the NAO said: “DWP is on track to move legacy benefit claimants to Universal Credit.
“But it needs to be sure people who have not switched to Universal Credit are receiving the benefits to which they are entitled.”
A DWP spokesperson said: “The vast majority of Tax Credit claimants have successfully moved to Universal Credit, accessing the vital safety net provided to millions as they build towards financial independence.”
“As the NAO recognised, evidence shows Universal Credit is having a sustained positive impact on the jobs market, and people on Universal Credit are more likely to be in work six months after making a claim.
“There is also a range of support available to help people move, including extensions for those who need extra support.”
Last month, the government announced how many migration notices it plans to send out in the coming financial year.
This will start with income Support claimants and those claiming tax credits with housing benefit from April.
Housing benefit-only claimants will then be contacted in June.
Those claiming income support and tax credits with housing benefit will begin to receive letters from April.
Housing benefit-only claimants will then be contacted in June.
Anyone getting Employment and Support Allowance (ESA) along with child tax credits will start being asked to switch from July.
Meanwhile Jobseekers Allowance (JSA) claimants are being contacted from September.
The Sun previously reported that those claiming tax credits who are over state pension age will be asked to apply for either Universal Credit or pension credit from August.
Those claiming income-related ESA alone will not be moved until 2028.
In 2024/25 the DWP estimates that around 440,000 will be contacted, with a breakdown as follows:
Tax credits and housing benefit – 120,000
Income support – 110,000
Housing benefit only – 100,000
Income-based ESA with child tax credits – 90,000
Income-based JSA – 20,000
Tax credits only – 10,000
What is managed migration?
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” .
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 which those at risk could fall through.
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.
Help claiming Universal Credit
As well as benefit calculators, anyone moving from tax credits 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:
England: 0800 144 8 444
Scotland: 0800 023 2581
Wales: 08000 241 220
You can also get help online from advisers at www.citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim/.