DWP shares which legacy benefit claimants could get lower payments on Universal Credit

Universal Credit: Expert discusses benefits of claiming

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The Department of Work and Pensions (DWP) has began the move which is expected to be completed by December 2024. Older benefits namely income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), Income Support, Housing Benefit, Working Tax Credit and Child Tax Credit – will be completely phased out.

The DWP has issued guidance on these tax credits and how some people may find they end up receiving less.

The DWP also recently announced that only 500 people will initially be moved to Universal Credit through the managed migration process, but this will increase over the coming months in order to complete the move for all claimants by the end of 2024.

Legacy benefit claimants will receive a migration notice giving them three months notice of when the ‘managed migration’ process will begin.

However, there are three ways people will migrate to Universal Credit, outlined in the DWP’s ‘2022-24 strategy for implementing the final phase of Universal Credit’.

These are:

  • Natural migration – a change of circumstances triggers a move
  • Voluntary migration – claimants chooses to move
  • Managed migration – DWP triggered

The DWP estimates that 1.4m people on legacy benefits may be better off when they move to Universal Credit – some 54 percent.

However, by those same estimations the DWP figures suggest that 900,000 people (35 percent ) will be worse off and 300,000 will see no change (11.5 percent).

Full details can be found on the Government website.

The DWP has issued guidance on which people may see their payment decrease.

On their website it listed the types of claimant that might see a lower or higher entitlement under Universal Credit.

If people see a lower payment, they are therefore likely to be eligible for transitional protection if they are moved through the managed migration process.

This includes:

  • Households in receipt of Employment and Support Allowance (ESA) who are in receipt of the Severe Disability Premium and Enhanced Disability Premium
  • Households with the lower disabled child addition on legacy benefits;
  • Self-employed households who are subject to the Minimum Income Floor, after the 12 month grace period has ended
  • In-work households that worked a specific number of hours (e.g. lone parent working 16 hours claiming Working Tax Credits), which discouraged progression in the labour market. This was not good for employees, but it also caused problems for employers, limiting their scope to design jobs to fit their business rather than the incentives created by the welfare system; and
  • Households receiving tax credits with savings of more than £6,000 (and up to £16,000) – Universal Credit entitlement is reduced in a different calculation to tax credits (households with savings of more than £16,000 are not normally eligible for Universal Credit)

On the other hand, the types of claimant that might see a higher entitlement under Universal Credit include:

  • Employment and Support Allowance (ESA) Support Group who are not in receipt of the Severe Disability Premium;
  • In-work households receiving Housing Benefit only or Working Tax Credit and Housing Benefit (likely to have higher entitlements under Universal Credit as the earnings taper rules are more generous);
  • People who do not work enough hours to receive Working Tax Credit; and
  • Households who are not currently claiming all the legacy benefits they are entitled to

The amount that someone may get is based on their specific circumstances, and this is just a guide.

People can work out how much they’ll be paid using an online benefit calculator.

Millions of claimants will start switching from the old to new welfare system from May 9 as the government resumes managed migration.

Small numbers will be moved off legacy benefits on to Universal Credit initially.

But the Government’s goal is to get all 2.6 million people still on old-style legacy benefits moved over to Universal Credit.

Their figures show that up to 900,000 of them could be worse off long-term.

People can also choose to switch to Universal Credit if they think they will be better off.

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