Should I switch to Universal Credit from legacy benefits such as tax credits or housing benefit?

Universal Credit is gradually replacing six benefits, known as legacy benefits. If you’re claiming these you will eventually be moved to Universal Credit and get a single amount that will support you with the costs of everyday living, housing, bringing up children, caring or illness and disability.  

The benefits being replaced are:

• Housing Benefit

• Child Tax Credit

• Working Tax Credit

• Income Support

• income-based Jobseeker’s Allowance

• income-related Employment and Support Allowance.

The DWP is starting to contact people about moving to Universal Credit. You can decide to move sooner as some people will be better off moving to Universal Credit. 

However, this isn’t a decision to make lightly: once you move to Universal Credit from a legacy benefit, you can’t change your mind, even if you receive less money. 

The rules around Universal Credit are also different to legacy benefits which may mean you have to change the way you do things and manage your money.

So you need to make sure Universal Credit is right for you and your circumstances before you claim. 

You will continue to receive your legacy benefit(s), but you will eventually move to Universal Credit under one of these ways:

If you have a change of circumstances, for example, you start or finish a job, have a new baby, a partner moves in or out of the family home, or you start or stop an illness or disability claim you might be asked to make a new claim for Universal Credit.

You should always report a change of circumstancesOpens in a new window Not reporting it could mean you are paid too much or little in benefits. You could also be fined if you deliberately keep quiet about anything in your life that could affect your payments.

If you have a choice between staying on your current benefits and moving to Universal Credit, make sure you seek advice from a benefits specialist who can give you confidential advice about your situation. 

Eventually all legacy benefits will stop. If you’re claiming one of these, you will be moved onto Universal Credit at some point before December 2024. 

From April 2023, if you’re getting tax credits only, DWP may ask you to claim Universal Credit (UC) as part of its 'Move to UC' programme to move everyone on legacy benefits to Universal Credit.

If you're asked to move, you shouldn't initially be worse off on Universal Credit. If the amount you’re entitled to is less on Universal Credit than your old benefits, your payment will be topped up under Transitional Protection to make sure you don't lose out. 

You will need to claim Universal Credit even if you have recently renewed your tax credits claim. 

You won't be moved to Universal Credit automatically. 

You'll receive a Migration Notice letter asking you to claim Universal Credit within three months from the date on the letter.

 You will need to make the claim online (but there is lots of support available if you will struggle to do this). 

If you have any questions about moving to Universal Credit, call the helpline number given in your Migration Notice.  

If you live in England, Wales or Scotland you can contact a Citizens Advice Help to Claim Service.  

In Northern Ireland contact an NI Direct adviser.

This is sometimes called voluntary migration.  If you choose this, make sure you will be better off under Universal Credit before you apply.

If you choose to move voluntarily, you will not get transitional protection and could be worse off. For example, there are some groups of people where this is more likely to be the case and who are probably better off waiting until they are invited by DWP to move to Universal Credit. 

Do not make a claim until you have got specialist advice if you are in any of these groups: 

• only getting tax credits and have savings of more than £16,000 

• are self-employed  

• are getting Disability Living Allowance (DLA) or Personal Independence Payment (PIP) 

• are receiving any unearned income, such as a pension.

Universal Credit is different to your current legacy benefits. Here are some of the things to understand before applying. 

If you make a claim for Universal Credit and it’s accepted, your legacy benefits will stop, and you won’t be able to move back to them.

So, it's important to make sure that moving to Universal Credit is right for you before you do it.

If you live with someone as a couple and they are getting legacy benefits in their own name, you will have to make a joint claim for Universal Credit and their benefits will stop as well.

If you want to know if it's a good idea to move to Universal Credit before you make a claim, get advice from a benefits specialist who can check you haven’t missed anything important and whether you'll be better or worse off.

If you’re on legacy benefits you’re probably used to your payments being weekly or fortnightly and spread out across the month, which can help with budgeting.

In England and Wales, Universal Credit is usually paid once per month in arrears. 

In Scotland you can choose it to be paid either monthly or every two weeks.

In Northern Ireland, Universal Credit is paid fortnightly, but you can choose it to be paid monthly.

In England and Wales, your Universal Credit payment includes an amount for your rent, and you will be responsible for paying your landlord yourself.

In Scotland, you can choose whether to pay your rent yourself or have it paid straight to your landlord.

In Northern Ireland, your rent is paid automatically to your landlord, although you can choose to pay it yourself.

If you live with someone as a couple, you will both have to make a claim for Universal Credit, and you’ll have to decide which one of you will receive the payment.

Universal Credit is paid monthly in arrears. This means you'll have to wait one full assessment period (one calendar month), plus an additional seven days for the first payment to reach your bank account after making your claim.

You can apply for an advance payment to support you while you're waiting for your first payment, but you’ll need to repay it within 24 months.

If you or your partner has more than £16,000 in savings, you won’t be able to claim Universal Credit. 

This can particularly affect you if you’re only getting tax credits and are thinking of switching to Universal Credit. You could risk being turned down for Universal Credit, losing your tax credits and having to wait until your savings fall below £16,000 before you can re-apply for Universal Credit.

Savings between £6,000 and £16,000 will reduce how much Universal Credit you get.

If you have savings of over £16,000, are getting tax credits only and move to Universal Credit, you will be able to keep savings above the limit for 12 months. 

After that, if your savings are still above the limit, your Universal Credit payments will stop 

If you have savings between £6,000 and £16,000 your Universal Credit payments will reduce.

You will be able to keep any savings under £6,000 without affecting your Universal Credit payment.

If you move over to Universal Credit from tax credits by because you’ve received a Migration Notice, any savings over £16,000 won't affect your eligibility for Universal Credit for 12 assessment periods (about 12 months).

After then, the normal Universal Credit savings rules will apply. 

Get specialist advice before you do anything.

You will have to attend an interview at your local Jobcentre Plus office to prove you’re earning enough money from your self-employed work to be able to claim Universal Credit. 

Working out your Universal Credit payment can be more complicated when you’re self-employed so it’s likely to be better to wait until you’re asked to move by DWP. Get specialist advice before you do anything.

If you have certain debts for things like Council Tax, energy bills, or child maintenance, they can be deducted from your Universal Credit payment.

If you move from tax credits to Universal Credit, HMRC will do a final calculation on your account and you might get a letter from them telling you that you’ve been overpaid tax credits.

HMRC will inform DWP, who work out how much your Universal Credit payment should be and this overpayment will be taken from your future Universal Credit payments. 

If you have historic overpayments you still owe that haven’t been collected from your legacy benefits, these can be collected from Universal Credit payments, so bear this in mind. 

Before you make a claim for Universal Credit, you can check with HMRC if there is likely to be an overpayment, so you can prepare.

If you have received your letter from the DWP asking you to move onto Universal Credit, don’t ignore it and act quickly.  

You only have three months from the date of the letter to successfully make your claim and it can take a while to get all your paperwork and documents together. If you miss the deadline, your legacy benefits will stop automatically.

If you want more information about what the letter means or you’ll have trouble meeting the deadline, call the contact number in your letter or visit your local JobCentre Plus, especially if you’re vulnerable and will need face-to-face support to make a claim.

We also strongly recommend you get advice from a benefits specialist before you move from legacy benefits to Universal Credit.

You might be approached by ‘friends’ or on social media by someone offering to apply for a Universal Credit advance payment on your behalf and taking some of the money as a fee. 

They’ll often tempt you by suggesting this is free money from the government. It’s not. You must repay the entire advance back to the DWP. This includes the money the scammer charged you as a fee. 

You could also be suspected of committing benefit fraud and be interviewed under caution, which can have serious consequences as what you say could be used in a criminal prosecution.