The UK government has announced the conclusion of the Working Tax Credit (WTC) system, with all tax credit awards ending on 5 April 2025.
This significant change means that individuals currently receiving WTC must transition to Universal Credit (UC) to continue receiving financial support.
Understanding the eligibility criteria, payment schedules, and the transition process is crucial for affected individuals.
Key Changes in 2025
- End of Tax Credits: All tax credit awards, including WTC, will cease after 5 April 2025.
- Transition to Universal Credit: Individuals receiving tax credits will need to apply for UC to maintain benefits.
- Pension Credit: Those of State Pension age may be eligible for Pension Credit instead of UC.
Eligibility Criteria for Working Tax Credit (Up to 5 April 2025)
To qualify for WTC, individuals must meet specific criteria based on their circumstances and work hours.
Work Hours Requirements
| Circumstance | Hours per Week |
|---|---|
| Aged 25 to 59 | At least 30 |
| Aged 60 or over | At least 16 |
| Disabled | At least 16 |
| Single with 1 or more children | At least 16 |
| Couple with 1 or more children (combined) | At least 24 (one working at least 16) |
Definition of a Child
A child is defined as someone under 16 or under 20 if they are in approved education or training.
Exceptions for Couples with Children
Couples may be eligible if:
- Combined work hours are less than 24 per week.
- One partner works at least 16 hours per week.
- Additionally, one of the following applies:
- Disability of either partner.
- Partner is entitled to Carer’s Allowance or Carer Support Payment (Scotland only).
- Partner is in hospital or prison.
Qualifying Work Activities
Eligible work includes employment for someone else or self-employment. Self-employed individuals must aim to make a profit, work regularly, keep business records, and comply with relevant regulations.
Payment Amounts (Up to 5 April 2025)
| Element | Annual Amount |
|---|---|
| Couple applying together | Up to £2,500 |
| Single parent | Up to £2,500 |
| Working at least 30 hours per week | Up to £1,015 |
| Disability (individual) | Up to £3,935 |
| Disability (partner) | Up to £1,705 |
| Approved childcare costs (per week): | |
| 1 child | Up to £122.50 |
| 2 or more children | Up to £210 |
Payment Frequency
Payments are made directly into bank accounts, either weekly or every four weeks, as chosen during the claim process. If a payment date falls on a bank holiday, payments are typically made on the preceding working day.
Transitioning to Universal Credit
As tax credits end on 5 April 2025, affected individuals should:
- Await Notification: Look out for a Migration Notice from the Department for Work and Pensions (DWP) detailing the transition process.
- Apply Promptly: Follow the instructions in the Migration Notice to apply for UC before the specified deadline to avoid a gap in payments.
- Consider Pension Credit: Individuals of State Pension age may be advised to apply for Pension Credit instead of UC.
Important Considerations
- Reporting Changes: Notify HM Revenue and Customs (HMRC) within 30 days of any changes that could affect tax credits, such as job loss, starting work fewer than 16 hours a week, or changes in income.
- Overpayments: Be aware of potential overpayments due to income changes and be prepared to repay any excess amounts received.
The phasing out of tax credits and the shift to Universal Credit represent significant changes in the UK’s welfare system.
It’s essential for individuals affected by these changes to stay informed, adhere to deadlines, and seek guidance to ensure a smooth transition and continued financial support
FAQs
What happens if I don’t transition to Universal Credit by 5 April 2025?
Failure to transition by the deadline will result in the loss of tax credit payments, and you may not be able to reclaim them later.
Can I apply for Universal Credit before receiving my Migration Notice?
It’s advisable to wait for your Migration Notice to ensure you follow the correct process and deadlines.
Will my payment amounts change when moving to Universal Credit?
Your UC payments will depend on your circumstances and may differ from your current tax credit amounts.