DWP and HMRC shake-up will see two benefits permanently scrapped next April

Hundreds of thousands of people will lose their existing payments and be expected to get support from Universal Credit instead

A DWP and HMRC shake-up will see two benefits permanently scrapped next April. The Department for Work and Pensions is urging people to respond to letters telling them to move onto Universal Credit if they still want to receive financial support.

Households need to make the changeover before the tax credit system closes for good in April 2025. HMRC administers both Working Tax Credit and Child Tax Credit, and after these two benefits are abolished, it will only be responsible for handling Child Benefit and Guardian's Allowance.

Migration Notice letters were sent to around 500,000 tax credit claimants before April this year. Since then, more people have been contacted who are claiming tax credits alongside other legacy benefits set to be axed later next year.

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From April 2024 onwards, around 120,000 people claiming tax credits with Housing Benefit were contacted, and then another 90,000 who get tax credits and income-related ESA (Employment and Support Allowance) were sent letters from June. In each case, claimants have three months from the date of the letter to switch to Universal Credit.

Some people decide not to make the move, and then their tax credits are terminated. Figures show that between July 2022 and June 2024, nearly 285,000 people who were sent Migration Notices did not apply for Universal Credit and saw their claims closed.

The DWP pointed out that tax credit recipients can move across even if they have more than the Universal Credit savings limit of £16,000 in their bank and building society accounts. These savings would only be taken into account after 12 months. But in order for the money to be disregarded, you must move before the three-month deadline given in the letter.

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