The UK government is making major changes to tax credits, and failing to act on a Migration Notice Letter from the Department for Work and Pensions (DWP) could cost you up to £3,935 in lost benefits.
HM Revenue and Customs (HMRC) has confirmed that tax credits will officially stop on April 5, 2025.
To continue receiving financial support, claimants must move to Universal Credit before the deadline. This guide explains who is affected, how payments may change, and why acting fast is essential.
Who Will Be Affected by the Tax Credit Changes?
The government is replacing tax credits with Universal Credit. If you receive any of the following benefits, you must switch to Universal Credit to keep receiving financial support:
- Child Tax Credit
- Working Tax Credit
- Income-based Jobseeker’s Allowance (JSA)
- Income Support
- Housing Benefit
- Income-related Employment and Support Allowance (ESA)
If you are on any of these benefits, expect a Migration Notice Letter from the DWP. This letter will provide instructions on how to apply for Universal Credit and what happens if you don’t.
How Will Your Payments Change?
Switching to Universal Credit may change your payment amount. However, transitional protection is available to prevent immediate financial loss.
Example of Payment Changes
| Current Tax Credit Payment | Universal Credit Payment | Transitional Protection Provided | Total Monthly Income |
|---|---|---|---|
| £327.91 | £227 | £100.91 | £327.91 |
This means if your Universal Credit payment is lower than your current tax credits, you will receive an extra amount to keep your income the same temporarily.
However, this protection only applies if:
You apply for Universal Credit before your deadline (stated in your letter).
Your circumstances remain unchanged (e.g., same income, household situation).
Why You Should Not Delay Moving to Universal Credit
If you receive a Migration Notice Letter, you must apply before the deadline to avoid losing your benefits.
Key Benefits of Moving to Universal Credit on Time
- Savings Over £16,000 Rule Doesn’t Apply – Normally, Universal Credit isn’t available for those with savings over £16,000. But if you move from tax credits before the deadline, you can keep receiving benefits for 12 months, even with high savings.
- Guaranteed Transitional Protection – Ensures your income doesn’t drop immediately after switching.
- Avoid Loss of Benefits – If you miss the deadline, your tax credits will stop, and you may not qualify for Universal Credit.
- No Repayment Issues – If you delay and later apply, you may receive lower payments and face financial hardship.
⚠ Important: After 12 months, if your savings are still over £16,000, you will no longer qualify for Universal Credit.
Special Rules for Mixed-Aged Couples
If you and your partner are of different ages (one above and one below State Pension age), special rules apply when switching to Universal Credit.
What You Need to Know:
You must apply as directed in the Migration Notice Letter.
If you apply incorrectly or miss the deadline, you could lose tax credits and Housing Benefit.
Even if you are working and have savings over £16,000, you can still claim Universal Credit if you apply before April 5, 2025.
What Should You Do Now?
Check your mail regularly – Look for a letter from DWP or HMRC about tax credit changes.
Read the letter carefully – It includes your deadline and instructions for applying.
Apply for Universal Credit before the deadline – Missing it could mean losing £3,935 in benefits.
Seek financial advice if needed – Citizens Advice and DWP helplines can help you understand your options.
