Up to 2.6million Brits will start to be moved from “legacy” benefits to Universal Credit from this month - but will you be better off after being switched over?
The so-called “managed migration” process of transferring people over from the old benefit system to Universal Credit was temporarily paused due to Covid - but this will start again from May 9.
Only around 500 people will be moved to Universal Credit at first, but the Department for Work and Pensions (DWP) will increase the numbers of people it processes over the next few months.
Everyone will eventually be moved from the older welfare system to Universal Credit by December 2024.
Anyone who applies for new benefits right now gets Universal Credit automatically.
Here is what you need to know...
Which benefits are being replaced?
Universal Credit is replacing the following six benefits:
- Working Tax Credit
- Child Tax Credit
- income-based Jobseeker’s Allowance (JSA)
- Income Support
- income-related Employment and Support Allowance (ESA)
- Housing Benefit
Most of those being moved over to Universal Credit are on ESA (1.2million) or Tax Credits (1million).
200,000 are on Income Support and 100,000 on each of Housing Benefit and JSA.
When will I be moved over to Universal Credit?
It depends, as the process is being done in stages.
You will receive a “migration notice” in the coming months when it is your turn to be moved over to Universal Credit.
This will then give you a three-month deadline to claim Universal Credit or have your benefits stopped.
Some people may be moved across to Universal Credit early if they see a change in circumstances - for example, if they move home or change their working hours.
As we've mentioned above, everyone will be migrated over eventually - but you can also choose to transfer over sooner if you think you'd be better off.
It is important to do your research first to check if you'll be better off on Universal Credit before deciding to make the move yourself - we explain below how to check.
Moving to Universal Credit can affect other benefits you get, so seek advice for this too.
Once you make a Universal Credit claim, your old benefits will be stopped - you will then have to wait five weeks for your first Universal Credit payment to arrive.
Some legacy benefits will "run on" for two weeks to help bridge some of that gap.
This includes Housing Benefit, Income Support, income-related Employment and Support Allowance and income-based Jobseeker's Allowance.
With both types of tax credits, payments will stop as soon as you claim Universal Credit.
Will I be better off on Universal Credit?
The DWP claims 1.4million legacy claimants (55%) are set to be better off under the new system than they are now, and 900,000 (35%) would be worse off.
The other 300,000 benefit claimants will see no change.
To check whether you are likely to be better on Universal Credit, you should first use a free benefits calculator.
Some of the most popular online calculators include ones from Turn2us and entitledto.
But as the benefits system is complicated, you should also seek free advice from the above organisations too to double check the results of the calculator.
Sue Anderson, head of media at Stepchange, said: "While new benefit claimants will automatically be put onto Universal Credit, existing claimants of legacy benefits often continue on these, not least because of the big sticking point of the five week wait on new UC claims.
"If a client was considering switching (or asking about it) we’d signpost them to a welfare rights specialist to help them understand whether or not they’d be better off on UC.
" The five week wait results in claimants often needing to take out a budget advance to plug the gap, which is then recovered through deductions once it starts being paid.
"The effect of this is that people can struggle to make ends meet as a result– with all the risks of borrowing and susceptibility to debt this entails.
"We’ve also seen UC claimants hit with historic tax credit overpayments. which are unearthed when the client’s case is passed from the tax credits office at HMRC to the DWP. "
If you think you won't be better off on Universal Credit, then you could stay put and wait to be moved over through managed migration.
You will be handed monthly transition payments which are designed to make sure your benefits income remains the same as it was before you moved to Universal Credit.
The transitional protection lasts until there is no shortfall between the amount awarded under Universal Credit and the amount previously received.
But there have been warnings that these transitional payments could effectively amount to a benefits freeze for poorer Brits.
This is because as Universal Credit rises over time in line with inflation, the transitional protection will reduce until the benefit catches up with what they're being paid.
Some people will also lose their transition payments - or miss out on them completely - if they have a change of circumstances.
Transitional payments are not awarded to benefit claimants who choose to make the move to Universal Credit.
Ms Anderson continued: "Overall, Universal Credit can be a valuable support to people, but it also has features that can cause real hardship and can actually worsen people’s debt.
"The five week wait, deductions applied without proper affordability assessment, and the uprating of benefits to just 3.1% rather than an inflation-matching 7% are all factors that can exacerbate the situation for people experiencing debt at a time when they need to turn to the benefits system for support."
