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How will Universal Credit affect Working Tax Credits?

Universal Credit is replacing Working Tax Credits. We explain what this means for you, how Universal Credit will affect your Working Tax Credits, and the differences between the two benefits.

If you currently claim Working Tax Credits or receive Severe Disability Premium, you will not need to do anything unless your circumstances change or you are asked to move to Universal Credit under managed migration by the Department for Work & Pensions (DWP).

If you are not claiming either of the two benefits, you will not be able to make a new claim for Working Tax Credits, and instead will be required to apply for Universal Credit.

How will a change in circumstances affect my Working Tax Credits?

You will typically need to switch from Working Tax Credit to Universal Credit if your circumstances have changed significantly. This may include the following changes:

  • Become unemployed.
  • Started working less than 16 hours a week.
  • Became sick and unable to work while receiving Working Tax Credit.
  • Have a new child.
  • Start renting a property in a new local authority.
  • If you move in with a partner, and they are already claiming Universal Credit.
  • Split with a partner with who you had previously made a joint claim for Working Tax Credits.

If you have been moved over to Universal Credit from a legacy benefit - known as natural migration - the amount of Universal Credit you get could be more or less than the benefits you get now.

The Department for Work and Pensions (DWP) will gradually move people who already claim Working Tax Credit but have not had a change in circumstances on to Universal Credit - this is called managed migration.

If you haven't had a change in circumstances, you will be able to claim Transitional Protection. Universal Credit transitional protection is a top-up award that ensures you are not financially worse off when you claim Universal Credit.

Are you thinking about making a new claim for Universal Credit before you have been asked to move to Universal Credit?

Always try and speak to a Welfare and Benefits advisor if you claim Working Tax Credits but are thinking about making a new claim for Universal Credit.

Remember; you may be better or worse off depending on your circumstances, so always seek advice before starting a new claim.

What are the differences between Working Tax Credits and Universal Credit

There are several key differences you should understand when claiming Universal Credit compared to Working Tax Credit.

Universal Credit payments

Universal Credit payments are based on your earnings month by month, meaning you may not receive the same pay. We would advise you to budget carefully - use our Universal Credit budget tool.

Working hours

Unlike Working Tax Credit, there are no limits to the number of hours you are allowed to work. You will be expected to work the equivalent of 35 hours a week at minimum wage. If your earnings are less, you will need to prove you are looking for better work.

Claimant commitment

You will need to accept a Claimant Commitment - that sets out the responsibilities you have accepted in return for receiving Universal Credit payment and the consequences of not complying with them.

Your claimant commitment is specific to you and decided by your current situation such as:

  • Your health.
  • Home responsibilities etc.

If you are claiming Universal Credit as a couple both of you will need to accept a Claimant Commitment. However, you may be affected if your partner starts work or their circumstances change.

Report your earnings

For the DWP to calculate how much Universal Credit you should receive, they need to know how much you've earned in the past month - either you or your employer need to tell the DWP how much money you've made. Find out more about reporting your earnings here:

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