Major changes to universal credit which will affect millions of people are set to come into effect this week. The UK government has announced it will start moving people from six old-style ‘legacy’ benefits to universal credit from Monday, May 9 after pausing the process due to the coronavirus pandemic.
The changes will mean around 2.6 million people on income-based jobseekers allowance, income-related employment and allowance, income support, housing benefit, child tax credit and working tax credit will gradually start to be moved onto universal credit. The government aims to phase out these benefits by 2024.
While many claimants will receive transition payments during this time, others will be left out of pockets. Here is exactly how the upcoming changes to universal credit will impact you. Read more: Hundreds of thousands to miss out on transition benefits payments
How will I be impacted?
The Department for Work and Pensions (DWP) will move people over in segments of ‘managed migration’ starting with a group of 500. Although the DWP will get in touch with everyone eventually, if you are on benefits you do have the option to choose to move straight away. This is useful for those who will end up being better off on universal credit – which the government estimates will relate to 1.4 million people (55% of the population on welfare).
The government has set out a plan for the people who will not automatically be better off on universal credit – an estimated 900,000 people – but it only applies to those who are moved by DWP. These people will receive transitional payments to make up the difference. But around 300,000 will lose out on the payments completely due to a change of circumstances or will leave the benefits system. For all the latest news and tips on benefits, money-saving and finance straight to your inbox, sign up for our WalesOnline Money newsletter twice a week here.
Based on the government’s assessment, you will be entitled to more money if the following benefit situation applies to you:
- Employment and support allowance (ESA) support group who are not in receipt of the severe disability premium
- In-work households receiving housing benefit only or working tax credit and housing benefit
- People who do not work enough hours to receive working tax credit
- Households who are not currently claiming all the legacy benefits they are entitled to.
You may end up getting less money if the following benefit situation applies to you:
- Households in receipt of ESA who are in receipt of the severe disability premium and enhanced disability premium
- Households with the lower disabled child addition on legacy benefits
- Self-employed households who are subject to the minimum income floor, after the 12 month grace period has ended
- In-work households that worked a specific number of hours (e.g. lone parent working 16 hours claiming working tax credits)
- Households receiving tax credits with savings of more than £6,000 (and up to £16,000).
You can use an independent benefits calculator to compare your government payments under both schemes.
