The Department for Work and Pensions (DWP) has sent urgent warning letters to thousands of parents regarding the imminent closure of Tax Credits.
This transition will take effect on April 5, 2025, marking the first of several legacy benefit closures scheduled for this year.
Key Information on the Tax Credit Closure
The deadline for Tax Credit claimants is fast approaching. As of April 5, 2025, no further payments will be made to those receiving Child Tax Credits and Working Tax Credits.
Claimants who are still receiving these benefits must make the switch to Universal Credit as soon as they receive their migration notice letter. Failure to do so will result in the complete cessation of their payments.
Migration to Universal Credit: Why It Matters
For those receiving Tax Credits, it is critical to act swiftly upon receiving the migration notice letter. If they don’t make the move to Universal Credit within the designated time frame, they will lose their benefits entirely.
However, claimants who miss the deadline can still transition to Universal Credit, but they will not receive transitional protection. Transitional protection is a safeguard that ensures individuals are not financially worse off due to the switch from Tax Credits to Universal Credit.
According to the DWP Tax Credits website, “Tax credits end on 5 April 2025. No more payments will be made after that.” This is a clear indication that claimants need to act quickly to avoid any disruption in their financial support.
Understanding Transitional Protection
Transitional protection is a crucial component for those who are transitioning from Tax Credits to Universal Credit. If a claimant’s new Universal Credit entitlement is lower than their current Tax Credits, they will receive a top-up payment to make up the difference.
For instance, if someone receives £600 under Tax Credits but would only be eligible for £400 under Universal Credit, the transitional protection would ensure they receive an additional £200 to match their previous benefit level.
However, research conducted by Ipsos UK for the DWP revealed that while 78% of respondents were aware of Universal Credit, only 30% understood the transitional protection available to them.
This means that many claimants may not fully realize the importance of responding quickly to their migration notices to avoid losing this vital financial protection.
DWP’s Ongoing Migration Programme
The transition from legacy benefits to Universal Credit is part of a larger initiative called the managed migration programme, which is set to move all claimants of legacy benefits to Universal Credit by March 2026. The benefits included in this migration include:
- Child Tax Credits
- Housing Benefit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Working Tax Credits
It’s important to note that there has been confusion about the migration process, particularly regarding the eligibility for transitional protection. Many recipients are at risk of losing this protection if they do not respond within three months of receiving their migration notice.
Other Changes in Benefit Policies
Apart from the Tax Credits transition, the DWP is also moving forward with controversial reforms to Personal Independence Payments (PIP).
These changes are part of a broader overhaul of the welfare system, which has seen spending on working-age health-related benefits rise significantly from £36 billion in 2019-20 to £48 billion in 2023-24.
Concerns Over Benefit Cuts
The Government’s approach has raised concerns, particularly from groups like the New Economics Foundation (NEF).
The NEF warns that the scale of the proposed cuts could push an additional 340,000 people into poverty, which is 100,000 more than what the Government has estimated.
Critics argue that the Government is understating the impact of these cuts on vulnerable individuals.
However, the DWP defends its approach, with a spokesperson stating: “Helping people into good work and financial independence is at the heart of our Plan to Change.”
The end of Tax Credits is an urgent matter for many families, and the upcoming deadline of April 5, 2025 is fast approaching. Claimants must act quickly to transition to Universal Credit and ensure they receive transitional protection if necessary.
By staying informed and responding promptly to the migration notice, families can avoid losing their financial support and help ensure a smoother transition to the new system.
FAQs
What is the deadline for switching from Tax Credits to Universal Credit?
The Tax Credit benefits will end on April 5, 2025. Claimants must switch to Universal Credit upon receiving their migration notice letter to avoid losing their benefits.
What happens if I miss the deadline for migration?
If you miss the migration deadline, you can still transition to Universal Credit later, but you will not receive transitional protection.
How does transitional protection work?
Transitional protection ensures that if your new Universal Credit payments are lower than your current Tax Credits, you will receive a top-up to make up the difference, protecting you from financial loss during the transition.
Will I lose my Tax Credits if I don’t act?
Yes, Tax Credits will end on April 5, 2025. If you don’t switch to Universal Credit by then, your payments will stop completely.