DWP to stop benefit for 730,000 households with exact date for 'no more claims'

The Department for Work and Pensions has confirmed that the tax credits system is now coming to an end as part of the full rollout of Universal Credit, with an exact date issued. In updated guidance to staff, it makes clear that regulations mean no more claims will be allowed.

HM Revenue and Customs is in charge of administering tax credits but all recipients are being migrated over to Universal Credit by the DWP. There are two types - Working Tax Credit and Child Tax Credit - with a current total of 730,000 claimants still receiving one or both of these. The average payment is £3,200.

The latest documentation, published this past week, gives guidance to all DWP staff on the implications of The Social Security and Universal Credit (Migration of Tax Credit Claimants and Miscellaneous Amendments) Regulations 2024, which came into force on April 1 this year.

READ MORE:

• Thousands of households lose Housing Benefit and Council Tax Support after being excluded

• DWP to give thousands of Universal Credit claimants a payment boost from today

In a section on 'tax credit closure and migration,' it explains that the regulations are "designed to prevent any renewal of existing Tax Credit claims or allow a person who is claiming one tax credit (for example Working Tax Credit), to claim the other Tax Credit (Child Tax Credit), and vice versa. This will also ensure there are no Tax Credit claims from April 2025."

Tax credits will cease to exist by April 5, 2025, so all claimants are being told to move to Universal Credit within the current financial year. Those on several other legacy benefits - Income Support, Housing Benefit, income-related Employment and Support Allowance, and income-based Jobseeker's Allowance - are also being moved across.

Previous rules had allowed exceptions for people on one type of tax credit to claim the other and for existing claimants to renew their awards. It says: "These exceptions are now removed – so there can be no more claims to a Tax Credit." This change will come into force from April 6, 2025, preventing any new claims for either type of tax credit so the system can be closed down.

Tax credits claimants who are told to move to Universal Credit but fail to do so by the deadline are issued with a 'stop notice' by the DWP telling them their current tax credit payments have been terminated. An amendment to the process means they will be sent a finalisation statement soon after that rather than having to wait until the end of the financial year.

So far, just over a fifth of households on tax credits have decided not to move across to Universal Credit. Some tax credit claimants say they made a conscious decision not to claim Universal Credit where the amount they would receive was particularly small, while others thought they weren't eligible and a number felt there was a stigma attached to Universal Credit that hadn't been there for tax credits.

A DWP spokesperson said: "We alert people three months before they need to move to Universal Credit and follow up with reminder letters and texts. Evidence shows most Tax Credit claimants have been able to claim Universal Credit without the need for additional support.

"Extensions can be arranged for those who need more time to make a claim and support is available in local jobcentres and via a dedicated DWP helpline. Benefits are only ever stopped as a last resort after multiple unsuccessful attempts to engage with claimants."

The DWP is accelerating its migration plans for legacy benefits and recently announced that those who get income-related Employment and Support Allowance (ESA), either on its own or with Housing Benefit, will be told to migrate across by the end of 2025 rather than in 2028/2029. A subsequent newsletter from the Department said that claimants will start being notified from September 2024, which is four years earlier than people were anticipating.

Get breaking news on BirminghamLive WhatsApp. Join our dedicated community to get the latest updates. You can find out more in our Money Saving Newsletter which is sent out daily with all the updates you need to know on pensions, benefits, finances, bills and shopping discounts.