Managed Migration to
Universal Credit

The key message is if you are currently receiving ‘legacy’ benefits and you receive your Migration Notice letter about moving to Universal Credit you should ALWAYS seek independent advice so that you can make an informed choice based on your individual circumstances. – see nesaf.co.uk/info/where-to-get-help/
What is 'Managed Migration'
Legislation & Guidance
Links
Where to get help
Q & A

Key messages

Maximise your legacy benefit entitlement BEFORE you put in your Universal Credit claim.
Try to save a little, due to the delay in getting your first Universal Credit payment
IF you are unsure
GET ADVICE
If you are a Tax Credits claimant with savings over £16k you can still claim Universal Credit

What is 'Managed Migration'

Natural migration
Process of Managed Migration
Timetable of UC Managed Migration
Process of Managed Migration
Who is a tax credits only claimant?
Severe Disability Premium
Transitional SDP element
Backdated SDP in Managed Migration
Protection for full-time students
Transitional protection - State pension age claimants
Transitional Capital Disregard
Transitional Element
Total legacy amount (TLA) v UC Indicative amount
Reductions in and ending of Transitional Protection
Circumstances in which transitional protection ceases
Impact of transfer (Issues that may arise more often after migration)
Timing Claims & Tactics
Tax credit overpayments after a Move to Universal Credit
Appealing an entitlement decision

Natural migration

There are 2 forms of migration from the existing legacy benefits system to UC (Income Support, (ir) ESA, (ib) JSA, HB, Child and Working Tax Credits):
Natural migration is where a claimant as a result of a change of circumstances needs to make a new claim for a legacy benefit and is prevented from claiming a legacy benefit and has to claim Universal Credit (HB claims for temporary or specified accommodation are the exception to this rule).
  • A claimant can also if they wish just make a new claim for UC without facing a change of circumstances this could happen if they believed they will be better off (voluntary migration).
  • There is very little transitional protection within natural migration
  • Natural migration will continue to operate over the next few years
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Process of Managed Migration

However, we are now at the starting point of the second form of migration ‘Managed Migration’ commencing in Scotland.
This is the process by which the DWP themselves invite legacy benefit claimants to transfer from their existing benefits (legacy benefits) to Universal Credit.
Managed migration may offer far more transitional protection to a large number of legacy benefit claimants than available in natural migration.
Failure to take up this invitation will see the claimant losing their entitlement to existing legacy benefits.
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Timetable of UC Managed Migration

  • During 2023/24 – Tax Credit only cases.
  • During 2024/25 – All Tax Credit cases including ESA and Tax Credits. Income Support, (ib) JSA, and all HB claims (including combinations of these benefits).
  • During 2028/29 – All other Income-Related ESA cases.
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Process of Managed Migration

The process of managed migration involves:

 

  • DWP sending a migration notice to the recipient of a what is referred to as an existing benefit (this is a legacy benefit).
  • If the recipient is part of a couple for the purposes of the existing benefit, then the DWP need to send the migration notice to both.
  • A person to whom a migration notice has been issued then becomes a notified person/s (Reg 44(6)).
  • The said notified person/s is given a specific time by which a UC claim must be made.

Process

  1. Client receives Migration Notice (Reg 44) which will also advise that their legacy benefits will end in this process.
  2. The Migration notice must specify a day (known as the deadline day) by which a claim for UC must be made.
  3. This date must be a minimum of at least 3 months from the day on which the migration notice is issued.
  4. This day can be extended (Reg 45) on the Secretary of States initiative or if requested by the notified person and there is good reason to do so.
  5. There is no limit on the number of requests that can be made for an extension.
  6. It is also possible for the Sec of State to cancel a migration notice (Reg 44(5)). If it has been issued in error or in any other circumstance the Secretary of State considers it necessary to do so in the interests of the person or class of person.
  7. If the ‘deadline day’ is extended the customer will receive a letter, within 2 -3 business days of the extension date being entered onto the system, with the details of their deadline extension and the new date by which they need to claim Universal Credit.
Good Reason to extend the deadline day?
  • Health issues
  • Significant caring responsibilities
  • Are homeless
  • Need support to deal with issue and this is delayed
  • Domestic emergency
  • Awaiting a benefit appeal which will impact on legacy benefit entitlements???
Note
  • Joint claimants requesting an extension should explicitly request for the extension to be applied to both partners’ deadline days, and ask the agent to confirm that they have in fact extended both.
 
Failure to make a claim for UC on or before the deadline day will see the notified persons existing bens (legacy bens) being ended (Reg 46).
In the case of HB, IS, (ib)JSA or (ir)ESA this will be at the end of a two-week period beginning with the deadline day.
In the case of Tax Credits on the day before the deadline day.
However, where existing bens have been ended (as per top point on this slide) and
  • The notified person makes a claim for UC within the period running from after the deadline day to what would be the last day of the assessment period which started on the deadline day (This is known as final deadline).
  • UC is to commence on the deadline day.

Housing Benefit

It should be noted that despite housing benefit being a legacy benefit and ending either on receipt of a UC claim or if the notified person had failed to claim HB within the allotted time, an award of HB claimed in respect of specified or temporary accommodation does not terminate in these circumstances (Reg 46(2)).

Example

  • John (the ‘notified person’) receives his Migration Notice which states his deadline day is 23nd November.
  • John fails to claim Universal Credit by this date and did not ask for an extension.
  • John makes a claim for Universal Credit on the 15th December which is sometime before the 22nd December (i.e. the final deadline).
  • The award of UC is therefore to commence from the 23rd of November.
  • John will also still have entitlement to any ‘transitional element’ that had been calculated

Claims

Once a UC claim has been received within the appropriate time frame (in the managed migration process).
Before making a decision on the claim the DWP must determine (Reg 50):
  • If a transitional capital disregard is to apply and/or
  • If a transitional element is to be included.
This applies to what is referred to a qualifying claim i.e. one made on or before the final deadline day.

 

Q&A

Can the Transitional Element be backdated if a client is later found to have been eligible for ADP once migration has taken place. Yes it can be – see reg 62 of the Transitional Provisions Regs – www.legislation.gov.uk/uksi/2014/1230/regulation/62

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Who is a tax credits only claimant?

These will be claimants whose only ‘legacy benefit’ is Tax Credit so will include families like:
  • Gemma who receives New-Style JSA, Child Tax Credit and Child Benefit.
  • Gillian who receives Working Tax Credit and Personal Independence Payment.
  • Greta who receives Widowed Parent’s Allowance, Child Tax Credit and Child Benefit.
  • Gordon who receives Working Tax Credit and Industrial Injuries Disablement Benefit
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Severe Disability Premium

The Severe disability premium (SDP) is a premium (extra amount) in awards of income-related employment and support allowance (ESA), income support (IS), income-based jobseeker’s allowance (JSA), pension credit or housing benefit (HB).
Severe disability premium (SDP) is included in an award if:
  • client receives a qualifying disability benefit (Attendance Allowance, Constant Attendance Allowance, Disability Living Allowance care component at middle or highest rate or Personal Independence Payment/Adult Disability Payment daily living component at standard or enhanced rate); and
  • no-one gets paid Carer’s Allowance (CA) or Carer Element of UC for looking after them and
  • they count as living alone or, for couples, both receive a qualifying benefit
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Transitional SDP element

If claimant managed migrates, they won’t get the TSDP element – they will get a standard transitional element (which will take account of the SDP amount in the legacy amount).
  • The TSDPE is only payable on natural or voluntary migration.

TSDPE protection

How much Severe Disability Premium transitional protection you are entitled to will depend on any other disability premiums you get and your household’s circumstances when you claimed Universal Credit.
  • Single, with Limited Capability for Work Related Activity £132.12 per month
  • Single, without Limited Capability for Work Related Activity £313.79 per month
  • Couple, only one person entitled to Severe Disability Premium on legacy benefits, with Limited Capability for Work Related Activity in either partner’s name £132.12 per month
  • Couple, only one person entitled to Severe Disability Premium on legacy benefits, without Limited Capability for Work Related Activity in either partner’s name £313.79 per month
  • Couple, both entitled to Severe Disability Premium on legacy benefits £445.91 per month 
You can get monthly additional amounts if you are entitled to TSDPE protection:
  • Single and if you received the enhanced disability premium in your legacy benefits – £84
  • Single and if you received the disability premium in your legacy benefits – £172
  • Single and if you received the disabled child premium or disabled child element in Child Tax Credit – £177 (per child)
  • Could and if you received the enhanced disability premium in your legacy benefits – £120
  • Couple and if you received the disability premium in your legacy benefits – £246
  • Couple and if you received the disability child premium or disabled child element in Child Tax Credit – £177 (per child)
Claimants already getting the TSDP element within their Universal Credit, could be eligible for backdated payments if they were also entitled to other disability premiums prior to claiming Universal Credit. The Department for Work and Pensions has not yet confirmed how they will process these payments. 
These are the amounts that will be paid when you first start getting Universal Credit. Over time, these amounts will go down. You can learn more about how it reduces on the ‘How long will I get Universal Credit transitional protection‘ page of this guide.
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Backdated SDP in Managed Migration

Under Natural Migration there is a Transitional SDP element.
Under managed migration, there is only a Transitional Element (even for SDP recipients- which is not the same set amounts of TSDP element – it’s the actual difference in payments).
  • Reg 62 of the UC TP Regs 2014 confirms when the amount of TP can be adjusted. Reg 62 1a confirms that if you got too much TP due to official error, failing to report a change or misrepresentation, DWP can go back and reduce the TP
  • Reg 62 1b (b) says DWP can adjust TP if  ….. a decision has been made on or after the migration day on—

(i) an application made before migration day to revise or supersede a decision in relation to an award of an existing benefit (including the report of a change of circumstances), or
(ii) an appeal in relation to such an application

  • So, where PIP or ADP has been awarded after migration day, for this to prompt a change to the TP – an application to revise or supersede the ESA award would have had to have been made before migration day.
  • Due to that regulation, we think that even though ESA can definitely add the SDP to ESA, they won’t be able to re-assess the TP unless someone had asked ESA to revise the amount of the award before migration day.
  • Safest advice is to ask ESA to add an SDP to the ESA award. This would be refused if PIP/ADP hasn’t been decided yet, but then there is an application to revise/supersede that can be actioned when the PIP/ADP has been awarded – thus enabling a TP re-check

Case Study

  • Anna gets irESA. On 1 October she gets a migration notice with a deadline day of 1 January. On 20 October she is awarded Personal Independence Payment daily living component, so becomes entitled to SDP.
  • If Anna requests a supersession of her irESA award to include SDP, and then claims UC, it will be possible for the UC decision to be changed by including the SDP in Anna’s total legacy amount for irESA resulting in a higher transitional element.
  • For example, if Anna requests the irESA supersession on 30 October and claims UC on 1 November, then once the irESA supersession is carried out, the SDP can be added to the calculation of the transitional element.
  • However, if Anna claims UC before requesting the irESA supersession to include the SDP, this will not be possible.
  • For example, if Anna claims UC and requests the irESA supersession both on 1 November, the SDP won’t be included in the calculation of the transitional element.
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Protection for full-time students

One of the basic conditions for entitlement to universal credit is that the person is not receiving education (with some exceptions) (section 4(1)(d) of the Welfare Reform Act 2012).

If:

  • you are currently receiving a legacy benefit,
  • you are on a course of full-time education on the day on which the existing award of legacy benefits terminate, and
  • you receive a migration notice,

the rule that you must not be receiving education DOES NOT apply to you for as long as you continue undertaking the course you are on.

If you finish that course and then later start a new course, the normal universal credit education conditions will apply.

Case Study

  • Tess is entitled to the enhanced rate mobility component of PIP.
  • She is studying F/T for a degree and began her four-year course on 17/09/2018.
  • On 03/09/2019 Tess is sent a migration notice. She claims UC before the deadline day, and although she remains on the degree course, the UC education condition does not apply. Tess completes the course in June 2022.
  • The education condition now applies in the normal way should she wish to undertake any further courses while entitled to UC.
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Transitional protection – State pension age claimants

For tax credit claimants who have reached state pension age (in a couple, where both claimants have reached state pension age), they will move to pension credit instead of universal credit. No details have been released yet about whether this will be a managed migration similar to the move to UC nor have any details about transitional protection been given.
  • Most mixed age couples are not able to claim pension credit and must claim UC instead.
  • However, those who were in receipt of pension age housing benefit on 14 May 2019 and who have not had any break in their claim, can claim pension credit. It is not yet clear how existing tax credit claimants in this position will be dealt with.
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Transitional Capital Disregard (Reg 51)

This applies where (on migration day) the claimant is entitled to tax credits and has capital exceeding £16000.
Anyone with capital over £16,000 is not entitled to universal credit but there is no corresponding rule in tax credits and so it is entirely possible that some tax credit claimants may have capital over £16,000.
Tax credit claimants under managed migration are protected from the upper capital limit in universal credit for up to 12 assessment periods from the date of their universal credit claim. The disregard only applies if you are entitled to an award of tax credits and have capital exceeding £16,000 on the migration day. Migration day is the day before the first day on which you are entitled to universal credit in connection with your universal credit claim.
This means that you may need to think carefully about your capital in between getting your migration notice and making your universal credit claim.
For example, if you have £18,000 of capital when you received your migration notice but need to access £6,000 on a short term basis (bringing your capital to £12,000) – if you put the money back in your savings after the migration day so your capital goes above £16000 again, you will lose the transitional capital disregard and would lose your entitlement to universal credit.
However, any capital between £6,000 and £16,000 is not disregarded will still attract tariff income. 
After the end of the 12 assessment periods, the normal capital rules apply, so that if capital continues to exceed £16,000 universal credit entitlement ends.
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Transitional Element (Reg 52)

This is an amount unique to managed migration.
  • Where it has been established that a claimants total legacy amount entitlement was greater than their (what is referred to as the) indicative UC amount.
  • This difference figure is to make sure that managed migration claimants are no worse off moving from legacy benefits to UC.
  • It is called a transitional element and will be used in the calculation of a claimants max UC entitlement.
Remember this does not mean you will be paid UC but rather in your UC applicable amount sits a Transitional Element. 
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Total legacy amount (TLA) v UC Indicative amount 

  • The TLA is the sum of the notified person/s existing benefits (legacy benefits) as they were entitled to on migration day.
  • Where a person’s HB has been reduced as a result of the benefit cap then the figure used in the TLA calculation will be the reduced figure.
  • However, the amount of an award of irESA or ibJSA is to be calculated before any reduction for a sanction (Reg 53(5)).

Indicative UC amount (Reg 54)  

  • The indicative UC amount is the amount a claimant would be entitled to.
  • By reference to the claimants’ circumstances on the migration day.
  • Any earned income in the calculation is to be based on the information used to calculate their tax credits i.e. info already held by HMRC.
  • The UC indicative amount is to be calculated after any reduction under the UC benefit Cap regulations.
  • But before any reduction as a result of sanctions.
It does appear that if the notified person was someone who was receiving ESA and also doing Permitted work
  • No earnings should be taken into account when assessing the indicative UC amount
  • Because Reg 54 (C)(ii) states that were claimant is entitled to an award of irESA the amount of earnings used in calculating the total legacy amount should be replicated in the indicative UC amount including nil of none were taken into account.
  • And in such a case permitted work earnings are invisible for ESA (within the appropriate limits).

Transitional Element

It should be noted that the managed migration regulations would appear to allow a recalculation of both the indicative UC amount and the total legacy amount.
  • In a situation of a revision, supersession or appeal amending the legacy entitlement post migration but date of change is pre migration date.
  • i.e. Appeal re component of ESA won post migration changing Work component to Support component from pre migration date.
  • Argument seems to run however that this would be unlikely to be useful in the case of an ADP appeal as they are not existing benefits.
  • (The legislation talks about revising or superseding an award of an existing benefit (Reg 62))
A transitional element is not to be determined on:
  • where Notified Persons who were a couple for the purposes of an award of an existing benefit (legacy benefit) when the migration notice was issued
  • are members of a different couple or are single for the purposes of claiming UC
or
  • Notified Persons who were single for the purposes of an award of an existing benefit when the migration notice was issued are a couple for the purposes of claiming UC (Reg 50 (2)).
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Reductions in and ending of Transitional Protection

Managed Migration Transitional Element

Just like the Transitional SDP element in natural migration cases:
  • The Transitional Element contained within some managed migration cases can decrease and, in some cases, end all together.

The Regulations that deal with these situations are

Reg 55: Transitional Element – initial amount and adjustment where other elements increase

  • In the first assessment period the transitional element to be included in the UC maximum amount figure is the initial amount.
  • However, from the second assessment period the initial amount can be reduced by the sum of any relevant increase in that period.
  • For the third and subsequent assessment periods it’s the amount that was included in the previous assessment period reduced once more by any relevant increases.
  • A relevant increase is an increase in any of the amounts of any elements within UC including any new element with the exception of childcare.

Adjustment to the transitional element:

  • Annual Increases – Reg 55 means that the annual increases in UC element rates will reduce a transitional element.
  • Child Disability Payment Award – An award of the Scottish Child Disability Payment (CDP) would have a knock-on entitlement to a child disability element. The introduction of this element will reduce the transitional element etc.
  • LCW element is replaced by a LCWRA element – The relevant increase is to be treated as the difference between the amounts of those elements. Thus, the size of reduction in transitional element could depend on when claimants period of sickness began.

Example

  • Jane moved from Legacy Benefits to Universal Credit.
  • As a result of her calculation Jane has a transitional element of £150 per month in their maximum UC figure.
  • In the fourth assessment period she moves to a new social housing home with rent £50 per month more expensive.
  • Her maximum UC figure will not change.
  • But her transitional element will be reduced to £100 as her Housing Costs element has increased by £50 per month.
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Circumstances in which transitional protection ceases (Reg 56)

The transitional capital disregard and/or the transitional element does not apply in any assessment period where:

  • In the first assessment period of the award the claimants earned income or combined earned income (if joint claimants) is equal to or greater than the single administrative threshold.
From 30 Jan 2023 the Administrative Earnings Threshold (AET) was raised to: 
  • £617 per month for single claimants
  • £988 per month for couples
And it is now the assessment period after the third consecutive assessment periods where their earned income is less than the above.

The transitional capital disregard and or the transitional element does not apply in any assessment period where:

  • Joint claimants cease to be a couple or becomes members of a different couple, or
  • Single claimants become a member of a couple unless it is a case where the person by virtue of the UC Regs claims as a single person because of an ineligible partner
It should be noted that the managed migration regulations allow a recalculation of both the indicative UC amount and the total legacy amount
  • In a situation of a revision, supersession or appeal amending the legacy entitlement post migration but date of change is pre migration date
  • i.e. Appeal re component of ESA won post migration changing Work component to Support component from pre migration date
  • Argument seems to run however that this would be unlikely to be useful in the case of an Adult Disability Payment appeal as they are not existing benefits (Legislation talks about revising or superseding an award of an existing benefit).

Example

TSDPE erosion where a new Element replaces the LCW Element
  • Phil is a single UC claimant. His UC includes a Carer Element and the Transitional SDP Element.
  • He has just had a Work Capability Assessment and has been found to have LCWRA.
  • So, his Carer Element is replaced by the LCWRA Element (he cannot get both).
  • Phil loses both his TP of £313.79 (completely eroded by the LCWRA Element) and also Carer Element of £185.86 (because it is replaced by the LCWRA Element (£390.06 2023/24)).
  • So, his total losses are £499.65. He has only gained the LCWRA Element of £390.06 – an overall loss of £109.59!
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Impact of transfer

Issues that may arise more often after migration:
Sanctions?
  • A WTC claimant will not be sanctioned as part of the tax credits system
  • Once on UC there is the potential for sanctions.
If in receipt of income related ESA, sanction regime not as harsh as under UC sanction regime. 
  • i.e. Paying back hardship payments.
Providing income details if self-employed.
  • On Tax Credits this can be done annually on UC it should be monthly.
Impact of Benefit Cap.
  • On legacy benefits limited to Housing Benefit on UC the cap applies to the totality of UC figure.
Full Time Education Protection
  • It should also be noted that where a full-time student in receipt of a legacy benefit would fail to meet the not receiving education rule. That rule is not to apply to a notified person while they continue to undertake that course.
  • This protection however does not apply and will be lost in any assessment period in respect of which a transitional element or transitional capital disregard would (if the claimant had been  entitled to either) have ceased to apply.
    • By virtue of the circumstances by which transitional protection ceases (Reg 56 previously covered).
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Timing Claims

Case Study

  • Philip has been issued with a migration notice so he has 3 months to claim Universal Credit.
  • They have 1 child already and get tax credits. His wife is due to give birth next month. At present, his legacy benefits are £118 more than he will get on UC, so he will have transitional protection of £118.

Should he make his claim for Universal Credit before or after the birth of their child?

  • If Philip claims UC and gets the transitional protection, any increases to their UC after the first MAP will ‘erode’ the TP.
  • So, if the baby arrives in the second monthly assessment period, the inclusion of the child element in the UC award would completely erode the TP – they would have lost the £118 per month forever.
  • If the child element is included in that first assessment period, they can get the child element and keep their TP – until some other increase erodes it.

Tactics

  • When clients receive a migration notice, they will have to claim UC as their legacy benefit entitlement will come to an end. However, there are a number of things that can be done to make sure the client maximises their financial protection when they migrate to UC.
  • The timing of the UC claim will determine whether the client qualifies for transitional protection. They must claim after they have been issued a migration notice, but before their Final Deadline, to be eligible for protection. This will generally be a four-month period.
  • It is important to make sure that the client’s UC award is fully maximised within the first assessment period, as any increases to the elements in later assessment periods will erode their transitional element.
  • It is also important to maximise a client’s legacy benefit entitlement before they claim UC. This will ensure that the amount for legacy benefits used in calculating transitional protection is as high as possible. This includes, for example:
  • Making sure to request that any relevant premiums are added to the legacy benefit awards, including the SDP;
  • Checking to see if the client can be exempted from the benefit cap;
  • If the client is in the work-related activity group of ESA but qualifies for the support group, requesting a reassessment. This assessment does not need to be completed by migration day.
  • All these changes should be requested at least a day before the UC claim is made to make sure they are taken into account in calculating the transitional element.

Tax Credits tactical advice

Savings over £16,000?
  • The savings limit for UC is £16,000. However, Tax Credit claimants with over £16,000 in savings can still receive UC if they make a claim after receiving a managed migration notice under the ‘Transitional Capital Disregard’ rules.
  • Many may not realise this transitional protection exists, be put off claiming UC and fail to make the claim and miss out.
  • Therefore, one message to get ‘out there’ is how the ‘Transitional Capital Disregard’ works.

Ensuring the information held by HMRC is up to date and accurate

  • Many working claimants are better off on UC. Some, however, are worse off.
  • These claimants – if Tax Credits are their only legacy benefit –  will receive a migration notice at some point during 2023/24. This means that they will need to make a claim for UC.
  • Where their Tax Credit award is higher than an award of UC based on the same information (ie using the same wage, childcare etc as used by HMRC), then their UC award will include a Transitional Element that ensures they are no worse off on UC at the point of claim.
  • DWP work out this ‘indicative UC award’ by using the information given to them, and therefore held by, HMRC.
    It is therefore important that Tax Credit claimants ensure that the information held by HMRC about them is up to date and accurate.

Maximizing Tax Credit entitlement

  • Where a Tax Credits claimant would be worse off on UC, then a Transitional Element is included when their UC award is assessed. 
  • However, some Tax Credit claimants are not receiving all the Tax Credits they are entitled to.
  • For example, a Disabled Child Element should be included when HMRC work out someone’s entitlement to Child Tax Credit if a dependent child has been awarded Disability Living Allowance/Child Disability Payment or Personal Independence Payment/Adult Disability Payment). But if the Tax Credit claimant has never reported an award of DLA/CDP or PIP/ADP for a disabled child to HMRC they will be missing out on this element and therefore may also miss out / reduce any potential Transitional Element.
  • It is therefore important that Tax Credit claimants have their existing Tax Credit award checked over to ensure they are in receipt of the correct amount.

Timing of the UC claim

  • Once a claimant has been issued with a Migration Notice they have 3 months within which to make their claim for UC before their Tax Credits award is brought to an end. 
  • However, as soon as they make their claim for UC their Tax Credits award is terminated – there is no run-on of Tax Credits as there is for the other legacy benefits.
  • For many claimants it will not matter when they make that claim for UC. But for others it will

Case Study: Tax Credits tactical advice

  • Jock has received his Migration Notice.
  • He works full time and receives Tax Credits. He is due £2,000 as a back payment of wages in respect of a pay increase that has just been settled.
  • If he claims UC before he receives this payment, it will be taken into account as earnings in the UC award for the Assessment Period in which it is paid (and reduce his award by 55p per £1 net received).
  • However, if he is still on Tax Credits when he receives it, it will have no effect on his award (assuming he has had no other increase in wages in the current tax year), as Tax Credits ignores increases of up to £2,500pa.

Case Study: Tax Credits tactical advice

  • Liv has received her Migration Notice.
  • She works part-time and her Tax Credits make up a large part of her income.
  • She has school uniforms to buy which is always a struggle.
  • If she claims UC, her Tax Credits award will come to an end and she will have to wait a calendar month and 7 days before she receives her first payment (although she could ask the DWP for an Advance Payment this is a loan that needs to be repaid).
  • She may, therefore, be better sticking with Tax Credits for a couple of months, buying the school uniform, and then making the claim for UC.
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Tax credit overpayments after a Move to Universal Credit

How are tax credit customers notified of a tax credits overpayment?

  • HMRC send tax credit customers a letter advising them of a tax credit overpayment, which includes when the overpayment occurred, and the amount owed.
  • When a tax credit customer moves to Universal Credit (for whatever reason), HMRC send a letter to the customer. This letter is called a ‘TC1131 (UC)’ and sets out the details of any overpayment.

How will a customer know if they have a tax credit overpayment?

  • If someone is unsure whether they have a tax credit overpayment, or how much they might be, they can check with HMRC – Tax credits overpayments: Overview – GOV.UK (www.gov.uk)
  • If there are any questions about when the overpayment happened, or why money is owed, the customer should use the link above or contact the HMRC helpline 0345 300 3900.

What will happen to any tax credit overpayments when a household moves to Universal Credit?

  • Once a claim is made for Universal Credit, any tax credit overpayments owed to His Majesty’s Revenue and Customs (HMRC) will be transferred to the Department for Work and Pensions (DWP) to collect from Universal Credit.
  • The overpayment will be transferred to and recovered by DWP’s Debt Management Service. DWP will refer to this overpayment as a ‘debt’. DWP Debt Management keeps records of money owed and will ask a claimant to repay that debt.
  • DWP does not hold details of when or why the overpayment (or debt) occurred.
  • Once the debt has been transferred to DWP, HMRC does not hold details of how or when the debt will be recovered or the debt balance once recovery has started. DWP will take an amount from a households UC payment to pay towards the money owed. The amount paid usually depends on how much a claimant gets and their household income, up to a maximum of 25% of the standard allowance.

How soon will the DWP start to take payments for any monies owed once a household moves to UC?

  • When the DWP receives the tax credit overpayment details from HMRC, it will be put into recovery against the Universal Credit award straight away, unless other debts with a higher priority are in place.
  • A maximum of 25% of the standard allowance of Universal Credit payment can be deducted to repay a tax credit overpayment.

What about customers who have an existing payment plan with HMRC?

  • If there was an existing repayment plan for the tax credit debt (also known as a ‘Time to Pay’ arrangement), it will end after HMRC send the TC1131 (UC) letter. HMRC will cancel any Direct Debits.
  • If customers had other payment arrangements in place to repay a tax credit debt with either HMRC, or a Debt Collection Agency acting on their behalf, they should check and ensure these are cancelled.
  • Tax credits overpayments: If you get Universal Credit – GOV.UK (www.gov.uk)

What support is available for households who cannot afford repayments?

  • If someone needs help with managing their debts, they should call DWP Debt Management Service on 0800 916 0647 talk to them about affordable repayment options and arrange a plan to suit their needs.
  • To determine an appropriate repayment rate, customers may be asked about:
    • any savings and income – including benefits and pensions.
    • living expenses – including rent, mortgage or childcare payments and household costs.
    • any other repayments being made – including loans, credit cards and utility bill repayments.

If a customer disagrees with the overpayment, what can they do?

  • The customer should call HMRC first on 0345 300 3900 if they think HMRC have made a mistake. However, customers need to be aware that they must complete the dispute form within 3 months of either:
    • the date on the first letter, statement or notice received informing that there has been an overpayment.
    • the ‘decision date’ on the Annual Review notice
  • While a dispute is being considered by HMRC, recovery of the overpayment will continue by DWP Debt Management Service.
  • If HMRC determine that the overpayment is incorrect (either in part or in full), they will notify DWP of the outcome of the dispute. DWP will consider if any monies due to the customer from the successfully disputed tax credit overpayment should be taken from any other tax credit overpayments outstanding before repaying them to the customer.
  • Tell HMRC online or by post.
  • Tax credits: appeals and complaints: Overview – GOV.UK (www.gov.uk)

How to contact the DWP Debt Management Contact Centre

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Appealing an entitlement decision

The usual rules about appeals apply to entitlement decisions and so it follows that if you disagree with the transitional element amount, the fact your award doesn’t include a transitional element or any other aspect of transitional protection, the resulting universal credit award decision can be challenged under the mandatory reconsideration and appeal procedures.

The first stage in the appeals process is to ask DWP for a mandatory reconsideration. This means DWP must look at the decision again and check whether it is correct. You need to ask for this within 1 month of the date of decision.

Once DWP have done their mandatory reconsideration, they should contact you with the outcome. You should receive a mandatory reconsideration notice. You can then appeal to the tribunal to have the decision looked at independently.

If you are looking to challenge a universal credit decision, you may wish to get specialist advice.

Mandatory reconsideration

The first stage in the appeal process is to ask DWP for a mandatory reconsideration.

This can be done either:

  • Via your universal credit online journal
  • By telephone to the universal credit helpline
  • By letter (sent to the DWP)
  • By filling in and sending a mandatory reconsideration form (available on the GOV.UK website)

It is important to try and explain why you think the decision is wrong and you can include evidence to support your request. If posting documents, it is a good idea to write your national insurance number, name and date of birth on each and get proof of postage.

It is possible to ask for a mandatory reconsideration after the one month deadline but you need to show you have good reason for missing the 1 month deadline. You will need to do this within 13 months of the date of decision.

Appeal to First-tier Tribunal

After DWP have had another look at the decision and done their mandatory reconsideration, they will send you a letter with the outcome and explanation.

If you are unhappy with the outcome, you can appeal to HMCTS for your claim and appeal to be looked at independently.

You have 1 month from the date on your mandatory reconsideration notice to apply to a tribunal. The Tribunal may extend the time you have to appeal, up to 13 months, if they think you have a good reason for missing the 1 month deadline.

You can appeal online, or fill in and send the SSCS1 form by post.

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Legislation & Guidance

Legislation

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Guidance

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Links

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Q & A

What’s the latest date I could claim without missing out on transitional protection?
I'm a Carer, how will UC Migration affect me?
I’ve been told it can take up to six weeks to get UC. Do we get any help towards bills in the meantime?
I’m assessed as having LCW/LCWRA. What will happen when I migrate to UC?

My migration notice says I have to claim UC by 25 April. What’s the latest date I could claim without missing out on transitional protection?

Your deadline day of 25 April is the day on which your tax credits will end. If you choose to claim earlier, they will end on the day that you claim. Any other legacy benefits will stop two weeks after the date you claimed Universal Credit.

Even if you miss the deadline of 25 April, you should still have a further month after your deadline day within which you can claim Universal Credit and still be eligible for TRANSITIONAL PROTECTION. This is known as your ‘FINAL DEADLINE DAY’. So long as a valid claim for Universal Credit is made by 24 May, your claim would be automatically backdated and you will still be eligible for transitional protection.

There are two potential problems with waiting until closer to the final deadline day.

    1. Firstly, the gap between your tax credits stopping and your Universal Credit payments starting will be even longer than the normal five weeks (as your tax credits will definitely end on 25 April at the latest).
    2. Secondly, you might run out of time if you have any last-minute problems in getting your UC claim completed

If you are unsure then seek advice.

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I’m a Carer, how will UC Migration affect me?

Will Universal Credit force my partner and I to look for work, even if I get Carer’s Allowance?

The Universal Credit rules make clear that you cannot be asked to take part in any work-related activities like job-seeking if you are eligible for Carer’s Allowance (or if the only thing that stops you being eligible for Carer’s Allowance is that your earnings are too high). Since this applies to you, Universal Credit cannot force you to look for work or take part in any other work-related activities.

Although you can’t be expected to look for work, there is a risk that your partner might. Where two people both provide 35 hours or more of care to the same disabled person, only one of them will be treated as a carer and be exempted from work-related conditions. The other carer is usually expected to take part in work-related activities like job-seeking.

If this happens to your partner, they should seek advice. The DWPcan use their discretionary power to also treat your partner as a carer and exempt them from any work-related conditions. The number of hours you would be expected to work, if not classed as a carer, will depend on your own situation (for example, any health or disability-related problems).

But if you and your husband each care for a different person (for example, if you have two children who get DLA, PIP, CDP or ADP), then you would both be treated as carers under UC. This applies even if your husband does not qualify for Carer’s Allowance, so long as the reason why he doesn’t qualify is because his earnings are too high. In this case, neither of you would be asked to look for work or increase your working hours.

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I’ve been told it can take up to six weeks to get UC. Do we get any help towards bills in the meantime?

There is usually a wait of at least five weeks before you get your first UC payment after lodging a claim.

If the delay in waiting for Universal Credit payments to start would cause you financial issues, then it is possible to ask for an ADVANCE PAYMENT.

An advance is effectively a loan from the DWP that you will need to repay by having a regular deduction made from your monthly Universal Credit payments, once these start.

This does mean that your Universal Credit payments would then be lower than they normally should be for a period of time while you’re paying back the DWP for the advance loan.

Depending on your circumstances, there may also be other sources of support available to help with household costs such as water, fuel and other utility bills. See our pages on ‘Help & Support’.

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I’m assessed as having LCW/LCWRA. What will happen when I migrate to UC?

On transfer to Universal Credit from ESA, if you have already been assessed as having Limited Capability for Work or Limited Capability for Work and Work-related Activity, under Regulation 19 of the Universal Credit Transitional Provisions Regulations 2014, your status under ESA should transfer to the Universal Credit claim without the need for a new Work Capability Assessment and the LCWRA element should be paid from the first UC payment.

If you had a Limited Capability for Work element prior to April 2017, this should also be paid from the first UC payment.

This has been confirmed by Director General Neil Couling. You do not have to supply a fit note for this; instead Universal Credit Service Centre should use a MGP1 process to action the LCW or LCWRA element in the UC claim.

Where a claimant was in the process of assessment of their capability for work in connection with an award of old style ESA at the time that award terminated, the assessment period for universal credit will be adjusted accordingly, under regulation 20.

Similar provision is made in regulation 21, in respect of claimants who were not entitled to old style ESA, but who were entitled to credits of contributions and earnings on the grounds of limited capability for work.

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