MILLIONS of people on tax credits are being urged to check if they could be better off on Universal Credit instead.
HMRC is writing to 2.1million getting the benefit from this week about renewing their claim.
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There are two types of tax credits – working tax and child tax credit.
Each year a claim for tax credits must be renewed, otherwise the benefit could be stopped, and you could even have to pay money back.
And tax credits claimants are being urged to check if they could be better off by moving to Universal Credit.
The new benefit is replacing six older “legacy” ones, including tax credits.
The government yesterday revealed that it will begin the process of moving everyone over to Universal Credit from next month, with a goal of completing it by the end of 2024.
Anyone getting tax credit now doesn’t have to wait to be moved – and could even be better off if they do.
The government estimates that around 700,000 tax credit claimants could be better off.
But another 300,000 could be worse off, and should not move until invited as they could end up with less money.
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Anyone thinking of switching should check carefully and seek advice so they don’t lose out.
Pensions secretary Therese Coffey said that around two-thirds of tax credit claimants could get a higher entitlement.
She said in a statement to Parliament on the next steps in rolling out Universal Credit: “That is why we have included information on UC in this year’s renewal forms for current tax credit recipients.
“It is important for current recipients to satisfy themselves that they would be better off on UC using independent benefit calculators before moving voluntarily, as once the claim is made, recipients cannot revert to tax credits or legacy benefits, nor receive any transitional protection payments.”
Tax credit renewal packs, which are being sent out from this week, and they will include information on how to do this.
How do I check if I’m better off on Universal Credit?
You can chose to move over to Universal Credit from tax credits at any time – 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 automatically if you have a change in circumstances, like moving home, a change in working hours or a have a baby.
Eventually everyone will be moved over to Universal Credit. This is known as “managed migration” and plans for this were paused due to the coronavirus pandemic.
The process is starting again from May 9 and the government has a goal date of moving everyone over to Universal Credit by 2024.
If you check and you won’t be better off on Universal Credit you should stay on tax credits.
You will be moved eventually but you will get transitional protection under managed migration, which means you will get payments topped up so you won’t lose income.
But you won’t get this if you move over voluntarily.
If you do find you’re better off on Universal Credit you can start making a claim straight away.
But beware that your tax credits will stop as soon as you do this, according to Turn2Us, but if there’s a delay you could be overpaid tax credits and might have to pay some money back.
You will also have a five week wait for your first Universal Credit payment, which could leave you short.
You can get an advance, which is interest-free, but you’ll pay this back in instalments from future payments which will reduce how much you get each month.
Moving to Universal Credit can affect other benefits you get, so check this carefully too.
For example if you’re getting council tax help you’ll need to tell your local authority you’ve switched to Universal Credit.
It’s best to seek advice before moving to Universal Credit, as well as using a benefit checker to see if you’ll be better off.
You can get free and independent advice from:
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