The Department for Work and Pensions (DWP) in the UK is set to make significant changes to the benefits system by cancelling four old-style benefits by the end of the 2024-25 financial year.
This move is part of a larger plan to transition all remaining claimants to Universal Credit, a more streamlined and integrated benefits system.
The shift aims to simplify the welfare system, reduce administrative costs, and ensure a more efficient delivery of support. However, this transition will significantly impact individuals currently relying on these benefits.
Which Benefits Are Being Cancelled?
The four benefits that will be phased out are:
1. Working Tax Credit
- Who Is Affected?: Individuals and couples who receive support due to low earnings.
- Impact: These recipients will need to transition to Universal Credit, which will consolidate their support into a single payment.
2. Child Tax Credit
- Who Is Affected?: Families who receive financial assistance for their children.
- Impact: These families will also transition to Universal Credit, where their child support will be included in their overall benefits package.
3. Jobseeker’s Allowance (JSA)
- Who Is Affected?: Unemployed individuals actively seeking work who currently receive JSA.
- Impact: These individuals will need to apply for Universal Credit, which replaces JSA as part of the integrated benefits system.
4. Income Support
- Who Is Affected?: Individuals with low income, including carers and lone parents.
- Impact: These claimants will also move to Universal Credit, which is designed to provide a broader range of support within a single payment.
Timeline for Transition
The DWP has laid out a structured timeline to minimize disruption for those affected by the transition:
- April 2024: Migration notices sent to working-age households on Income Support and those receiving Tax Credits with Housing Benefit.
- June 2024: Notices issued to Housing Benefit-only claimants.
- July 2024: Employment Support Allowance claimants who also receive Child Tax Credits will receive migration notices.
- August 2024: Claimants of tax credits over State Pension age will be contacted to apply for either Universal Credit or Pension Credit.
- September 2024: Jobseeker’s Allowance claimants will receive their notices.
Support and Adjustments for Affected Claimants
To aid in this transition, the DWP has committed to providing additional support to ensure a smooth process.
Employment Minister Jo Churchill emphasized the department’s responsiveness to feedback and the efforts made to resolve issues swiftly, with the aim of minimizing complaints.
Financial Adjustments
As part of this transition, the DWP and HMRC have confirmed new payment levels for those still receiving tax credits:
- Working Tax Credit Adjustments:
- Basic element: £2,435 (up from £2,280)
- Couple and lone parent element: £2,500 (up from £2,340)
- Disabled worker element: £3,935 (up from £3,685)
- Severe disability element: £1,705 (up from £1,595)
- Childcare costs for 1 child: £175 (no change)
- Childcare costs for 2 or more children: £300 (no change)
- Child Tax Credit Adjustments:
- Family element: £545 (unchanged)
- Child element: £3,455 (up from £3,235)
- Disability element, disabled child rate: £4,170 (up from £3,905)
- Disability element, severely disabled child rate: £1,680 (up from £1,575)
These will be the final adjustments before the complete shift to Universal Credit.
Why the Change?
The government’s decision to phase out these benefits is driven by a desire to simplify the welfare system, making it easier to manage and reducing the risk of overpayments and fraud.
Universal Credit is designed to replace multiple benefits with a single payment, which is easier to administer and track. The consolidation also allows for more consistent and timely support for recipients.
The cancellation of these four benefits marks a significant change for many households across the UK.
While the transition to Universal Credit aims to streamline the benefits system, affected individuals and families will need to adapt to new processes and possibly changes in the amount of support they receive.
It is crucial for those impacted to stay informed, respond to migration notices promptly, and seek assistance if needed to ensure their financial stability during this transition. The DWP has pledged support throughout this process, but proactive engagement from claimants will be key to a smooth transition.
FAQs
Which benefits are being cancelled after the 2024-25 financial year?
Working Tax Credit, Child Tax Credit, Jobseeker’s Allowance, and Income Support are being phased out.
What is Universal Credit?
Universal Credit is a consolidated benefits system that replaces multiple benefits with a single payment.
Will I receive less money under Universal Credit?
It depends on your circumstances. Some may receive more, while others may receive less. Check with DWP for a detailed assessment.
When will I need to transition to Universal Credit?
Migration notices will be sent between April and September 2024, depending on your current benefit and situation.
How can I get help during the transition to Universal Credit?
The DWP provides support through their helpline and local offices to assist with the transition.
