The Department for Works and Pensions (DWP) will start moving people back from the old benefits system to Universal Credit from May 9 – but will you be better off or worse off?
Video not available
Up to 2.6million Brits will switch from ‘old’ benefits to Universal Credit from this month – but will they be better off after the switch?
The so-called ‘managed migration process’, moving people from the old benefits system to Universal Credit, has been temporarily suspended due to Covid – but this will resume from May 9th.
Only about 500 people will initially move to Universal Credit, but the Department for Works and Pensions (DWP) is set to increase the number of people it serves over the next few months.
Everyone will eventually transition from the older welfare system to Universal Credit by December 2024.
Anyone applying for new benefits now will automatically receive Universal Credit.
Here’s what you need to know…
Which services are replaced?
Universal Credit replaces the following six benefits:
- Labor Tax Credit
- child allowance
- Earned Unemployment Assistance (JSA)
- social care
- Income-related Employment and Support Allowance (ESA)
- housing benefit
Most of those moving to Universal Credit relate to ESA (1.2 million) or tax credits (1 million).
200k receive welfare and 100k each housing benefit and JSA.
When will I switch to Universal Credit?
It depends on how the process is done in stages.
You will receive a “Migration Notice” in the coming months when it is your turn to migrate to Universal Credit.
This then gives you three months to apply for Universal Credit or stop your benefits.
Some people may switch to Universal Credit early if they notice a change in circumstances — for example, moving home or changing their work hours.
As we mentioned above, everyone will eventually migrate — but you can migrate sooner if you think you’re better off.
It’s important to do your research first to see if you’re better off with Universal Credit before deciding to make the move yourself – we explain how to check below.
Switching to Universal Credit may affect other benefits you receive. So get advice on this.
Once you apply for Universal Credit, your old benefits will stop — you’ll then have to wait five weeks for your first Universal Credit payment to arrive.
Some legacy benefits will “roll on” for two weeks to fill some of this gap.
These include Housing Benefit, Income Support, Earnings-Related Employment and Support Allowance, and Earnings-Related Unemployment Assistance.
Both types of tax credits stop paying once you claim Universal Credit.
Will I be better off with Universal Credit?
The DWP claims that 1.4 million legacy contenders (55%) will be better off under the new system than they are now, and 900,000 (35%) would be worse off.
The other 300,000 beneficiaries will see no change.
To check if you’re likely to do better with Universal Credit, you should first use a free performance calculator.
Some of the most popular online calculators are those from Turn2us and titleto.
However, since the performance system is complicated, you should also get free advice from the above organizations to check the results of the calculator.
Sue Anderson, Media Director at Stepchange, said: “While new beneficiaries are automatically placed on Universal Credit, existing claimants for legacy benefits often continue, not least because of the major sticking point of the five-week wait for new UC claims.
“If a client was considering (or asking about) a change, we would refer them to a welfare rights specialist to help them understand whether or not they would be better off with UC.
“ The five-week waiting period means applicants are often required to take a budget advance to fill the gap, which is then recouped through deductions once payment begins.
“As a result, people find it difficult to make ends meet – with all the associated risks of borrowing and vulnerability to debt.
“We have also seen UC claimants affected by historical overpayments for tax credits, which are revealed when the client’s case is referred to DWP by HMRC’s tax credit office.”
If you don’t think you’re better off with Universal Credit, you can stay and wait for managed migration to move you.
You’ll receive transitional monthly payments designed to ensure your performance income stays where it was before you switched to Universal Credit.
Transitional protection lasts until there is no longer a shortfall between the amount granted under Universal Credit and the amount previously received.
However, there have been warnings that these transitional payments could effectively result in a freeze on benefits for poorer Brits.
Because as Universal Credit increases over time in line with inflation, the transitional protection diminishes until the benefit catches up with what they paid.
Some people will also lose – or miss out on – their transitional funds when their circumstances change.
Transitional payments are not granted to beneficiaries who choose to switch to Universal Credit.
Ms Anderson continued: “Overall, Universal Credit can be a valuable asset for people, but it also has characteristics that can cause real trouble and actually make people’s debt worse.
“The five-week waiting period, deductions without a proper affordability check, and the increase in benefits to just 3.1% instead of an inflation-adjusted 7% are all factors that can make things worse for people with debt at a time when they need to revert to the benefits system for support.”
https://www.mirror.co.uk/money/universal-credit-you-worse-after-26862032 Universal Credit: Will You Be Worse After Switching From Older Benefits?