Don’t Ignore crucial Letter from DWP – Martin Lewis’ MSE has issued a warning to Tax Credit claimants

The UK government is phasing out Tax Credits, with the final claims set to close by April 2025. If you receive Tax Credits, expect a letter from the Department for Work and Pensions (DWP) instructing you to switch to Universal Credit. Missing this deadline could result in your payments being stopped. Here’s everything you need to know about the change and how it might affect your benefits.

What’s Happening with Tax Credits?

Tax Credits are being replaced by Universal Credit as part of the government’s plan to simplify the benefits system. The transition is already underway, with letters being sent to current Tax Credit claimants. If you receive this letter, you will have three months to apply for Universal Credit. Failing to act within this period will result in your payments being cut off.

Key Deadline:

• Final Tax Credit claims close by April 2025.

Why You Shouldn’t Ignore the DWP Letter

According to a warning from Martin Lewis’ MoneySavingExpert.com (MSE), many people have already lost their benefits due to inaction. The MSE team highlighted that 3 in 10 people who received the migration letter in the past ignored it and subsequently lost their payments.

Remember: The DWP won’t send reminders—just one official letter. So, keep an eye on your mail and act immediately if you receive this notice.

How Transitional Protection Can Help

If your Universal Credit entitlement is lower than your existing Tax Credit payments, transitional protection may be applied. This extra amount will temporarily top up your Universal Credit to match what you previously received.

However, this protection only applies if:

• You wait for the DWP letter before applying.
• You apply within the given 3-month window.

Important: Transitional protection ends when your Universal Credit payments naturally catch up to your old benefit levels.

What to Expect When You Switch

Once you apply for Universal Credit, your Tax Credits will stop immediately. Your first Universal Credit payment will take five weeks to arrive. However, some legacy benefits like Housing Benefit and Income Support may continue for two weeks during the transition to ease the financial gap.

Who Else Is Affected?

Universal Credit is replacing several other legacy benefits, including:

• Income-based Jobseeker’s Allowance (JSA)
• Income-related Employment and Support Allowance (ESA)
• Income Support
• Housing Benefit

The government’s goal is to move all claimants to Universal Credit by March 2026.

Will You Be Better or Worse Off?

The DWP estimates that:

• 55% of claimants will be better off under Universal Credit.
• 35% will be worse off.
• The remaining 10% will see no change.

How to Check Your Situation

You can use these free benefits calculators:

• Policy in Practice
• entitledto
• Turn2us

Tip: If you find that you might be better off switching early, get advice before applying. Once you move to Universal Credit, you cannot go back to Tax Credits or other legacy benefits.

Where to Get Help

If you’re unsure about the transition, you can get free, one-on-one advice from:

• Citizens Advice – for personalized benefit checks and guidance.
• Turn2us – to understand how the switch might impact your finances.

The shift from Tax Credits to Universal Credit is happening now, with the final deadline approaching in April 2025. If you receive a letter from the DWP, act quickly to avoid losing your benefits. Use available tools to check if you’ll be better off and seek expert advice if needed. The government’s target is to complete this transition by March 2026, so stay informed and prepared.

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