A DWP letter will be sent to those affected by the end of HMRC tax credits in a few months – here’s what you need to know including how to keep your tax credit payments
A letter from the Department for Work and Pensions (DWP) could indicate the cessation of payments for some claimants. HM Revenue and Customs (HMRC) tax credits are set to end nationwide, which means those who fail to take action will experience a reduction in their income.
A Migration Notice Letter issued by the DWP will confirm that tax credits will cease on April 5, 2025. Those affected will have the chance to transfer their claim to Universal Credit, with additional safeguards in place to ensure they do not lose out on money they were receiving from their tax credits claim.
Some of the HMRC benefits being impacted include Child Tax Credit, Working Tax Credit, Income-based Jobseeker’s Allowance (JSA), Income Support, Housing Benefit, and Income-related Employment and Support Allowance (ESA).
The way your payments will change when moving to Universal Credit
If your new Universal Credit entitlement is less than your previous tax credits or benefit, you could receive transitional protection to help bridge the gap in what would otherwise be lost. For instance, if a claimant was receiving the maximum Working Tax Credit with disability element of £3,935 a year (or £327.91 a month) but their Universal Credit entitlement is initially £227 a month, they will receive a transitional protection of £100.91, bringing their total Universal Credit entitlement to £327.91.
It’s crucial to understand that transitional protection can only be granted if the claimant has transitioned to Universal Credit after receiving their Migration Notice letter and has applied before the date specified in the letter. Additionally, there should be no changes in your circumstances at the time of application.
Don’t wait to move to Universal Credit
It’s essential for all those who receive a Migration Notice Letter not to delay their transition to Universal Credit. This is because if you claim within the deadline stated in the letter, you will be exempt from certain Universal Credit rules that could otherwise hinder you.
For instance, typically, you cannot claim Universal Credit if you have money, savings, and investments worth more than £16,000. However, if you receive tax credits and make the transition on time, this rule will not apply, and you can still make an initial claim for Universal Credit.
This specific rule will only come into effect after 12 assessment periods, after which you will no longer be eligible for Universal Credit if you still have money, savings, and investments worth more than £16,000.
Mixed aged couple claiming tax credits
There are unique migration rules for mixed-aged couples claiming tax credits.
When this group receives a Migration Notice letter, they must follow the instructions exactly when applying for Universal Credit.
If they attempt to apply in a different manner, they could lose their tax credit and Housing Benefit claim once the deadline has passed. A claim can be made for mixed aged couples even if they are employed, have renewed tax credits, and possess money, savings, and investments exceeding £16,000.
More information on Migration Notices specifically for mixed aged couples can be found here.
