Universal Credit UK: How tax credits could be drastically affected by a claim

Universal Credit is a living support payment which is targeted towards helping those who are in financial need to meet everyday costs. It is issued every four weeks to eligible claimants, but those who are claiming for the first time are required to wait for five weeks. Universal Credit is slowly replacing six key benefits known as ‘legacy’ entitlements. These are Child Tax Credit, Working Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance.


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But it is important to know that tax credits and Universal Credit are likely to affect one another. 

It is not possible to receive Universal Credit and tax credits at the same time.

The government website states: “If you get tax credits, they will stop when you or your partner applies for Universal Credit.”

But many Britons are keen to understand how this works, and the payments they would like to prioritise.

If a person or their partner makes a claim for Universal Credit, their tax credits will come to an end, even if their claim is not approved.

Partners will then be treated as joint claimants of Universal Credit instead.

The government has explained the reason for this as helping claimants to manage their money together, as well as Universal Credit helping with childcare costs if both claimants are in work.

The website adds: “After your tax credits stop, you can only make a new claim for tax credits if you get the severe disability premium or got it in the past month and are still eligible for it.”

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If tax credits stop, however, there are two main options of financial support which can be received. 

Universal Credit is available to those who are under the State Pension age, with Pension Credit at hand for those over this age.

The government has pledged to provide support and financial advice to those who are transitioning from tax credits to Universal Credit. 

If there is a gap between one benefit ending and another beginning, claimants may consider applying for an advance on Universal Credit.


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This is for those in difficult financial circumstances, and payments, if approved, can be made within three working days.

However, it is worth noting that future monthly payments will be reduced to repay the advance sum.

When transferring to Universal Credit, any tax credit debt will be moved to the Department for Work and Pensions (DWP).

The government website says this may also reduce Universal Credit payments in an effort to recover the debt. 

Those who currently receive any one of the six legacy benefits do not currently have to take any action.

This is, unless, one of two circumstances apply to their personal situation.

These are if a person has had a change of circumstances which must be reported, or if the DWP contacts them about transitioning to Universal Credit. 

Millions have claimed the universal benefit within the last weeks and months due to the severe financial implications of coronavirus. 

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