Shocking DWP Announcement: What Happens If You Don’t Claim Universal Credit?

The Department for Work and Pensions (DWP) has begun sending letters to individuals who receive tax credits, informing them about upcoming changes that will take effect from April 2025. This change means that tax credit payments from HMRC will officially end, and claimants will need to take action to continue receiving financial support. If you receive tax credits, here’s what you need to know and what steps you may need to take.

DWP’s Letter to Tax Credit Claimants

The DWP is issuing letters to all individuals who may be affected by the discontinuation of tax credit payments. These letters, known as ‘Migration Notices,’ are sent under the managed migration system, notifying recipients that their tax credits will stop on April 5, 2025.

If you or your partner receive Working Tax Credits or a combination of Working Tax Credits and Child Tax Credits and are of State Pension age, the Department for Communities will send you this notice. You will then have three months from the date mentioned in the letter to switch to Universal Credit (UC) if you wish to continue receiving financial support.

How to Transition to Universal Credit

If you are affected by these changes, you have the option to claim Universal Credit (UC) to ensure you continue receiving support. Here’s what you should know about the transition:

1. Eligibility and Financial Considerations

• You can claim Universal Credit even if you have savings or investments over £16,000, but only for 12 assessment periods (around 12 months).
• If you receive Housing Benefit, it will end one day before your three-month deadline mentioned in the Migration Notice. However, you will continue to receive Housing Benefit payments for two additional weeks after your tax credits stop.

2. What Happens If You Don’t Claim Universal Credit?

• If you do not apply for Universal Credit, you will need to reapply for Housing Benefit to continue receiving housing support.
• If you receive a Migration Notice letter but prefer to claim Pension Credit, you can do so. However, choosing Pension Credit over Universal Credit means you won’t be eligible for Transitional Protection, which ensures your income doesn’t drop significantly during the switch.
• Once you claim Pension Credit, you cannot switch back to Universal Credit.

How Long Does It Take to Receive Universal Credit?

If you qualify for Universal Credit, your first payment will arrive approximately five weeks after submitting your claim. However, if you are struggling with financial difficulties while waiting for your first UC payment, you may be eligible for extra support, such as:

• Universal Credit Contingency Fund Grant – a one-time payment to help with essential expenses, which does not need to be repaid.

The end of tax credit payments from April 5, 2025, is a significant change for many individuals relying on this financial support. The government is encouraging affected claimants to switch to Universal Credit within three months of receiving their Migration Notice letter to ensure a smooth transition. While those with savings over £16,000 can still claim UC for up to 12 months, it’s crucial to act promptly to avoid any disruptions in financial assistance. If you are unsure about your options, seeking guidance from DWP or a financial advisor is recommended to make the best decision for your circumstances.

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