The Department for Work and Pensions (DWP) is set to cancel four old-style benefits by the end of the 2024-25 financial year. This move is part of a broader plan to transition all remaining claimants of Working Tax Credit, Child Tax Credit, Jobseeker’s Allowance, and Income Support onto Universal Credit. The shift is expected to streamline the benefits system and generate savings for taxpayers, but it also means significant changes for the affected individuals and households.
DWP’s Changes
The transition will impact around 500,000 households currently receiving one or both types of tax credits. These households were required to make a claim for Universal Credit by the end of May 2024, or risk having their payments cancelled. Additionally, the DWP will be migrating recipients of Income Support, Jobseeker’s Allowance, and Housing Benefit to Universal Credit.
Affected Groups
The households affected include:
- Working Tax Credit recipients: Individuals and couples who receive support for their low earnings.
- Child Tax Credit recipients: Families receiving financial assistance for their children.
- Jobseeker’s Allowance recipients: Those receiving benefits while they are unemployed and seeking work.
- Income Support recipients: Individuals who receive support due to low income, including carers and lone parents.
Transition Timeline
The DWP’s timeline for transitioning these benefits to Universal Credit is structured to minimize disruption:
- April 2024: Migration notices issued to working-age households on Income Support and those claiming Tax Credits with Housing Benefit.
- June 2024: Housing Benefit-only claimants will receive their notices.
- July 2024: Notices sent to Employment Support Allowance claimants who also receive Child Tax Credits.
- September 2024: Jobseeker’s Allowance claimants will be notified.
- August 2024: Those claiming tax credits who are over State Pension age will be contacted to apply for either Universal Credit or Pension Credit, depending on their circumstances.
Support and Adjustments
Recognizing the challenges associated with transitioning to Universal Credit, the government has committed to providing additional support through various channels. Employment Minister Jo Churchill highlighted that the department is attentive to feedback and has resolved issues swiftly, ensuring minimal complaints. The DWP aims to continuously improve the service to facilitate a smooth transition for all affected individuals.
Financial Implications
As the transition proceeds, HMRC has confirmed new payment levels for those still receiving tax credits. These adjustments will be the final increases before the complete shift to Universal Credit:
| Benefit | Previous Amount | New Amount |
|---|---|---|
| Basic element (Working Tax Credit) | £2,280 | £2,435 |
| Couple and lone parent element (Working Tax Credit) | £2,340 | £2,500 |
| Disabled worker element (Working Tax Credit) | £3,685 | £3,935 |
| Severe disability element (Working Tax Credit) | £1,595 | £1,705 |
| Childcare costs for 1 child (Working Tax Credit) | £175 | £175 |
| Childcare costs for 2+ children (Working Tax Credit) | £300 | £300 |
| Family element (Child Tax Credit) | £545 | £545 |
| Child element (Child Tax Credit) | £3,235 | £3,455 |
| Disability element, disabled child rate (Child Tax Credit) | £3,905 | £4,170 |
| Disability element, severely disabled child rate (Child Tax Credit) | £1,575 | £1,680 |
Why the Change?
The government’s decision to phase out these benefits is part of a strategy to simplify the welfare system and cut administrative costs. The Universal Credit system is designed to consolidate multiple benefits into a single payment, making it easier to manage and reducing the risk of overpayments and fraud. Moreover, the transition is expected to yield significant savings for taxpayers by closing down redundant systems like the tax credit system managed by HMRC and the various old-style benefits managed by the DWP.
The transition to Universal Credit aims to create a more efficient and streamlined benefits system, bringing significant changes for the affected individuals and households. Those transitioning will need to navigate new systems and, in some cases, may experience changes in the amount of support they receive.
The DWP has committed to providing the necessary support to ensure a smooth transition, but it remains crucial for claimants to stay informed and proactive about the changes to avoid disruptions in their benefits. As the deadline approaches, the emphasis will be on ensuring that all eligible households have successfully moved to Universal Credit, safeguarding their financial support amidst these systemic changes.
FAQs
What benefits are being canceled?
Working Tax Credit, Child Tax Credit, Jobseeker’s Allowance, and Income Support.
Who is affected by the changes?
Around 500,000 households receiving the old-style benefits.
When will the transition to Universal Credit begin?
Migration notices will start being issued in April 2024.
Will there be financial support during the transition?
Yes, the DWP will provide additional support to affected households.
Why is the government making this change?
To simplify the welfare system and reduce administrative costs.
