Managed migration update
From 14th February 2024, people receiving Child Tax Credit and/or Working Tax Credit, without getting any other ‘legacy benefits,’ will begin to receive Universal Credit (UC) migration notices from the Department for Work and Pensions (DWP).
What are legacy benefits?
- Income Support
- Income Based Employment Support Allowance
- Income Based Jobseekers Allowance
- Working Tax credit
- Child tax credit
- Housing Benefit
If someone receives a ‘migration notice’ from the DWP, they will have three months in which to apply for Universal Credit.
It is difficult to advise on the best time for someone to apply for Universal Credit, but general consensus is that people should apply after they get paid if they are working or after they get a payment of their tax credits, if they are in receipt of tax credits. They must ensure that they do apply within the 3 month time limit.
This is because the first Universal Credit payment is not issued until 5 weeks after they make their application. If a claimant does not have sufficient funds to support themselves until their first UC payday, they can apply for an Advance Payment - a form of Universal Credit loan, to help them through to their UC pay date.
In some cases, moving to UC can mean an increase in the weekly benefit entitlement. This can be the case for those who have been in receipt of Income-related Employment Support allowance (ESA) and assessed as having ‘limited capability for work’ and ‘limited capability for work-related activity’. Also, built within the migration rules, is a system designed to make sure that people are no worse off.
If someone will have difficulty applying for Universal Credit online, they can contact the Universal Credit Migration Notice Helpline (0800 169 0328) which is open Monday to Friday between 8.00 am to 6.00 pm. They should be allowed to apply by phone but will be encouraged to try to complete the online claim, as it provides greater access to your application.
It is important that people apply within the three-month time limit. If they fail to do so, ‘legacy benefits’ entitlement will still end, leaving them without income.
Council tenants who need help to apply for Universal Credit, may contact the Welfare Benefits Team for assistance. You can also contact the UC migration helpline if you need more time to complete the application. The DWP can extend the time limit for applying if a person has a ‘good reason’ for not being able to apply in time.
New benefit rates 2024/2025
The new proposed benefit and tax credit rates for 2024/2025, payable from April 2024, have been announced.
| Claimant | April 2023 - 2024 | April 2024 - 2025 |
|---|---|---|
| Single pensioner | 201.05 per week | £218.15 per week |
| Couple pensioner | £306.85 per week | £332.95 per week |
| Claimant | April 2023 - 2024 | April 2024 - 2025 |
|---|---|---|
| Single claimants | £368.74 per month | £393.45 per month |
| Couple claimants | £578.82 per month | £617.60 per month |
| Claimant | April 2023 - 2024 | April 2024 - 2025 |
|---|---|---|
| Eldest child | £24.00 per week | £25.60 per week |
| Each other child | £15.90 per week | £16.95 per week |
Disabled claimants and UC migration
A new High Court ruling will be introduced from 14th February 2024 seeking to further ensure that disabled claimants who are in receipt of ‘legacy benefits’ and who need to make the move on to Universal Credit under ‘natural migration’, do not disproportionately lose out financially over those who are required to apply for Universal Credit under ‘managed migration’.
Natural migration - where a claimant has a change in their circumstances, that alters their entitlement to their existing legacy benefits.
Managed migration - where the DWP instruct you to make a claim and move to UC.
The DWP introduced a new element to UC, known as the ‘Transitional Severe Disability Premium Element’, to compensate those who were getting the ‘Severe Disability Premium’ (SDP) within their ‘legacy benefits’ and who were required to move on to Universal Credit under the ‘natural migration’ rules.
The High Court had ruled that it was unlawful to inflict such a loss of benefit income on those getting the SDP under ‘natural migration’ because there was no reasonable justification for doing so.
However, whilst the ‘Transitional SDP Element’ aided the claimants who brought the legal challenge, it did not fully address the financial loss incurred by the move on to Universal Credit. This is because it failed to provide any compensation for the loss of the ‘Enhanced Disability Premium’ (EDP) which they also received in their legacy benefits.
When the issue of this lost income was examined by the High Court it was similarly held that to expect people to incur such a loss, no transitional protection equivalent to that offered to those moving on to Universal Credit under ‘managed migration’, was unlawful.
The new rules will mean that from 14 February 2024 those who have been receiving the ‘Transitional SDP Element’ or who are entitled to it by reason of being entitled to the SDP before moving on to Universal Credit under ‘natural migration’, can now receive the following additional payments:
| Claimant | Legacy benefit | February 14 2024 |
|---|---|---|
| single person | Income-related ESA, Income-based JSA or Income Support that included a ‘enhanced disability premium’ | £84.00 per month |
| couples | Income-related ESA, Income-based JSA or Income Support that included a ‘enhanced disability premium’ | £120.00 per month |
| single person | entitled to an award of Income-based JSA or Income Support that included a ‘disability premium’ | £172 per month |
| couple | entitled to an award of Income-based JSA or Income Support that included a ‘disability premium’ | £246.00 per month |
| single/couple |
entitled to an award of Income-based JSA or Income Support that included a ‘disabled child premium’ |
£177.00 per month |
| single/couple | entitled to an award of Child Tax Credit that included the ‘disabled child element’ (for a disabled child or young person) but not the ‘severely disabled child element’ (for a severely disabled child or young person) | £177.00 |
To be eligible the person must have been receiving the relevant legacy benefit or premiums at some point within the month immediately preceding the first day of their award to Universal Credit.
The Regulations indicate that these rules also apply to people who were receiving the ‘Transitional SDP Element’ but who are no longer receiving it because it has been ‘eroded’ (reduced) due to other new elements being added to their UC claim. Speak with an advisor if you think this is the case for you.
The key reason why those receiving ‘legacy benefits’ can financially lose out when applying for Universal Credit under ‘natural migration’ as opposed to ‘managed migration’, is because outside of the ‘Transitional SDP Element’ there is no mechanism to bridge the gap between the value of their former ’legacy benefits’ and new Universal Credit entitlement. This is not the case under ‘managed migration’, where claimants can qualify for a ‘transitional element’ to buffer the difference between the two amounts. Put simply, the High Court found that it was not reasonable nor lawful to treat the two sets of people (those moving on to Universal Credit under ‘natural migration’ vs those moving on to Universal Credit under ‘managed migration’) differently.
When the introduction of Universal Credit was first announced, it was stated that no-one will experience a reduction in the benefit they are receiving as a result of the introduction of Universal Credit. At the point of transition onto the new system, those households whose circumstances remain unchanged and who would otherwise experience a reduction in income will receive protection. It is clear that this has not proven to be the case.
Example:
Sinead lives alone. She used to receive Income Related Employment Support Allowance (IRESA), including an enhanced disability premium and severe disability premium. She opted to apply for UC in June 2023, after a friend suggested that she might be better off on UC.
Unfortunately, her friend was incorrect - despite having the severe disability premium transitional element of £132.12 per month included in her UC calculation, Sinead was about £86 a month worse off than she had been, when she was receiving IRESA.
For Sinead’s first UC monthly assessment period starting after 14 February 2024, an extra £84 will be added to her SDPTE, bridging the gap between her current UC entitlement and her previous IRESA entitlement.
Note that some claimants will still be worse off on UC than they were on legacy benefits. The SDPTE will be eroded by later changes in circumstances and increases in benefit rates.
Freedom Pass renewals
Freedom Pass holders whose passes are due to expire on 31 March will have recently received a renewal letter.
If you have received a letter, you are advised to renew as soon as possible to ensure you get your updated card in good time.
You can renew quickly and easily online now at: www.freedompass.org/renewal
Please contact us if you need assistance to complete your form welfare.benefit@lbhf.gov.uk or call 0208 753 5566
National living wage / minimum wage increase
The national living wage (NLW) will increase from 1 April 2024.
- 16 to 17 year olds and apprentices: £6.40 an hour
- 18 to 20: £8.60 an hour
- 21: £11.44 an hour
Although this is a welcome move for many families and individuals, particularly those just above the cut-off point for in-work benefits, there are some additional points to consider.
Someone working 35 hours a week on NLW will get an extra £35.70 pw (£154.70 pm) in April 2024. They are over the ‘frozen’ tax and national insurance (NI) threshold of £12,570, so will lose £8.24 pw of that increase, gaining £27.46 pw net.
For those on UC, the gain is smaller. A £27.46 pw increase in net pay (£118.99 pm) means they will lose 55 per cent (£65.43 pm) of that from their UC. Taking the tax, NI and UC effects into account, an increase in pay of £154.70 pm translates into £53.56 pm extra income after tax, NI and the loss of UC is taken into account. If they also get means-tested council tax reduction, the gain would be further reduced by £23.79 pm, to give a net gain of £29.77 pm.
New support for domestic abuse survivors
There is a new national fund of £2 million to help domestic abuse victims escape abuse and rebuild their lives.
From 31 January 2024, victims of domestic abuse who do not have the financial means to leave their abusers, can apply for a one-off payment of up to £500 via one of over 470 support services. This is to assist with the cost of essential items such as groceries, nappies or support with new accommodation for them and their children. They can also apply for a further one-off payment of up to £2,500 to help with a deposit for rental accommodation.
The fund, which will initially last until March 2025, will be delivered via referrals from a network of local frontline services
The main referral route is contacting the National DA helpline 0808 2000 247 or via referrals to angleou@advance.org.uk.
"Survivors in the borough can still utilise our local Flexifund, which can be accessed via a referral to Angelou. The Flexifund can be used for anything, including clearing arrears, deposits, or new furniture."
Tax credits overpayments after a move to universal credit
One of the big surprises that claimants may get when they move from tax credits to universal credit (UC) is the shock of ‘old’ tax credits overpayments coming to light.
When a tax credits customer moves to UC, HM Revenue & Customs (HMRC) should send a letter to the customer. This letter is called a TC1131 (UC) that sets out the details of any overpayment.
If someone is unsure whether they have a tax credits overpayment, or how much that might be, they can check with HMRC helpline on 0345 300 3900.
If the household has already moved to UC, any tax credits overpayments owed to HMRC will be transferred to the DWP to collect from the UC entitlement. It will be recovered by DWP’s Debt Management Service. The DWP does not hold details of when or why the overpayment (debt) occurred.
Once the debt has been transferred to DWP, HMRC does not hold details of how or when the debt will be recovered by the DWP or the debt balance once recovery has started.
DWP will take an amount from a household’s UC payment to pay towards the money owed. The amount deducted for recovery of the overpayment usually depends on how much the claimants UC entitlement is and their household income, along with the amount of deductions for other debts that are also in place. A maximum of 25 per cent of the UC standard allowance can be used to recover debts. More information about deductions from UC payments is available on gov.uk
If there was an existing repayment plan for the tax credits debt (also known as a ‘time to pay’ arrangement), it will end after HMRC send the TC1131 (UC) letter.
HMRC will cancel any direct debits. If customers had other payment arrangements in place to repay a tax credits debt with either HMRC, or a debt collection agency acting on their behalf, they should check to ensure these are cancelled.
If someone needs help with managing their debts, they should call DWP Debt Management Service on 0800 916 0647 to discuss affordable repayment options and arrange a plan to suit their needs. To determine an appropriate repayment rate, customers may be asked about:
- any savings and income - including benefits and pensions
- living expenses - including rent, mortgage, childcare and household costs
- any other repayments being made - including loans, credit cards and utility bill
repayments
If the customer thinks HMRC has made a mistake about the debt, they should call HMRC on 0345 300 3900 or see gov.uk for information about how to dispute a tax credits overpayment. However, customers need to be aware that they must complete the TC846 dispute form within three months of first being notified by HMRC of the overpayment or the ‘decision date’ on the annual review notice.
While a dispute is being considered by HMRC, recovery of the overpayment will continue. If HMRC determines that the overpayment is incorrect (either in part or in full), they will notify DWP. The DWP will consider if any money due to the customer from the successfully disputed tax credits overpayment should be taken from any other tax credits overpayments outstanding before refunding it to the customer.
Child benefit update
Child benefit customers can now view and update their bank account details using the HMRC app or report changes that affect their child benefit on gov.uk.
Customers’ bank details can be viewed and updated instantly with no need to contact HMRC. Payments that are due within three days will be credited to the customer’s previously listed account.
Customers can download the free HMRC app from the App Store for iOS or the Google Play Store for Android. They should then follow the instructions on screen to complete the app settings. They will be asked to sign into their account and can sign in or register on the same sign in page if they have not used HMRC’s online services before. Once set up, customers can log in using a pin, fingerprint or with facial recognition.