Universal Credit UK: How a claim can impact your tax credits – even if it’s not approved

Universal Credit is replacing a number of benefits, which are known as legacy benefits. these are Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit.

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If a person currently receives any of the aforementioned benefits, then they don’t need to do anything, unless one of two circumstances apply.

These are if the person has a change of circumstances they need to report, or the Department for Work and Pensions (DWP) contacts them about moving to Universal Credit.

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The number of new claims for Universal Credit has soared in recent weeks, as Britons try to cope during the coronavirus (COVID-19) crisis.

Since the government has advised people to stay at home due to the outbreak, nearly two million people have applied for the payment.

Yesterday, Work and Pensions Secretary Therese Coffey told MPs there had been more than 1.8 million claims since March 16.

Amid the increase in claims, it’s important to be aware how Universal Credit and tax credits affect one another.

The Gov.uk website states: “If you get tax credits, they will stop when you or your partner applies for Universal Credit.”

So, how do tax credits and other benefits such as Universal Credit affect each other?

A person’s tax credits will end if they or their partner make a claim for Universal Credit.

The government explains that they will end even if the claim is not approved.

Another reason why they may end is if the recipient moves in with a partner who has made a claim for Universal Credit.

Gov.uk adds: “After your tax credits stop, you can only make a new claim for tax credits if you get the severe disability premium or got it in the past month and are still eligible for it.”

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Should the tax credits stop, the claimant will likely wonder what other options they have in terms of financial support.

It may be that they’re able to apply for either of the following payments instead.

These are:

Universal Credit, if they‘re under state pension age (or their partner is)

Pension Credit, if the recipient (and their partner) are over state pension age.

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If a person gets tax credits, they need to be aware that the amount they get in terms of other benefits may be affected.

While Child Benefit payments are not affected by any tax credits they get, others are – such as Housing Benefit.

However, tax credits recipients may get less:

• Housing Benefit
• Income Support
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Pension Credit.

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