Tax Credits are ending this weekend after being replaced by other benefits. The majority of Tax Credit claimants have now been moved to Universal Credit or Pension Credit.
But a “very small” number of people who are not eligible for Universal Credit or Pension Credit will see their Tax Credit claims closed on April 5. Tax Credits are being closed as part of a major switch of older legacy benefits to Universal Credit, to simplify the benefits system.
The transfer to Universal Credit has been done in stages by the Department for Work and Pensions (DWP), having been temporarily paused during the coronavirus pandemic. At the time of the “managed migration” restarting in May 2022, some 2.6million people were still claiming old-style legacy benefits in the UK.
Everyone who is moving to Universal Credit will have received a “migration notice” in the post which contained a three-month deadline to start claiming Universal Credit. If you’re over state pension age, you should have been asked to claim Pension Credit instead. The benefits being replaced by Universal Credit are:
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The DWP sent migration notices to over 500,000 households getting Tax Credits only in 2023/24. Then in 2024/25, the DWP contacted a further 440,000 households, including the remaining Tax Credit claimants who are receiving other legacy benefits, and all claimants of Income Support, income-based JSA, and Housing Benefit.
In order to claim Universal Credit, you normally cannot have more than £16,000 in savings – but there is an temporary period of relief for people moving from Tax Credits. If you are moving from Tax Credits, you will be allowed to claim Universal Credit even if you have money, savings and investments of more than £16,000 for your first 12 assessment periods.
After 12 assessment periods, the normal eligibility rules will apply and you will not be eligible for Universal Credit if you still have more than £16,000 in money, savings and investments. A notice on GOV.UK reads: “Tax credits are ending on 5 April 2025. Don’t delay. If you receive them, you must claim Universal Credit by the date in your Migration Notice letter to continue receiving benefits.”
The way your Universal Credit is calculated is different to Tax Credits. Tax Credits are calculated yearly, whereas your Universal Credit payments are based on your circumstances each month, known as your assessment period. Your assessment period takes into account any changes in your circumstances, any income you may have earned, or deductions if you have any.
The DWP claims 55% of people will be better off on Universal Credit, and 35% would be worse off. The rest will see no change. If you moved to Universal Credit after receiving a “migration notice” and you’ll be worse off, you will get monthly transition payments which are designed to make cover the shortfall of payments.
The transitional protection lasts until there is no difference between the amount awarded under Universal Credit and what you received before under legacy benefits. The DWP plans to contact the final income-related ESA claimants in December 2025 and end all legacy benefit claims by March 2026.
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