A MAJOR overhaul of the benefits system is underway tomorrow.
The change will affect Universal Credit as more than a million Britons will be transferred to the support scheme.
The government has been slowly shifting claimants from the old-fashioned benefit to Universal Credit, but it is “raising the bar” from tomorrow.
The initial push will affect around 500 people as they are brought through the process of “forced migration”.
But the goal is for everyone to benefit from the new Universal Credit system by the end of 2024.
About 2.6 million households are currently receiving legacy benefits and tax credits but need to switch to the more modern benefit.
It replaces a total of six benefits from the old welfare system. They are:
- Work Tax Credit
- Child tax credit
- Income-Based Jobseeker’s Allowance
- Income support
- Employment and Income Support Benefit
- Housing allowance
The rollout happens automatically, so everyone will eventually switch by December 2024 as part of a managed migration.
But anyone who has a change in circumstances could be moved sooner – this could happen if you move house or have a baby.
And you can choose to switch earlier if you think you’ll be better – but not everyone will.
It is estimated that 1.4 million people will be better off with Universal Credit.
But another 300,000 will see no change in the amount they will get, while around 900,000 would be worse off under Universal Credit.
If so, you better leave the switch until the very last minute or you will be told.
But once the move is made, those affected will receive transitional payments to top up their income by the same amount, so they won’t be worse off.
However, transitional payments are only available through a managed migration, and if you’re the one making the decision to move, you won’t get them.
A benefits checker can help you understand whether or not you’ll be better off, and whether you should take the plunge yourself or wait to be forced.
Using an online benefits calculator can help you compare and is free and easy to use from charities such as Turn2Us and EntitledTo, and it’s also worth asking them for advice.
Once you’ve moved, you won’t be able to revert to inherited benefits, so it’s important to weigh in.
Here are examples of people who may be eligible for less on Universal Credit according to the government:
- Households benefiting from the ESA who and the severe disability premium and the increased disability premium
- Households whose addition for disabled children is the lowest on benefits inherited from the past
- Self-employed households that are subject to the minimum income floor after the end of the 12-month grace period
- Working households that have worked a certain number of hours (e.g.
parent working 16 hours and claiming Labor Tax Credits)
- Households receiving tax credits with savings over £6,000 (and up to £16,000)
What should I do from tomorrow?
You don’t have to do anything as most changes will be automatic.
With the government’s two-year delay, everyone will end up being moved anyway.
But after researching your own situation, you may find that it’s best to switch to Universal Credit sooner rather than later.
If so, you can start filing a claim immediately.
But beware, your benefits will end and you’ll have to wait five weeks for your first Universal Credit payment, which could leave you short.
You can get an interest-free advance, but you’ll pay it back in installments from future payments, which will reduce the amount you’ll receive each month.
Other recent changes have seen Universal Credit payments increase by 3.1% thanks to annual benefit rate increases.
And claimants can expect payment disruptions next month as dates are moved due to the Queen’s Jubilee.
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