More than 2.5 million people to be moved onto universal credit from today, leaving 900,000 worse off - here's all you need to know
More than 2.5 million people on legacy benefits will start to be moved over to universal credit from today in an automatic process that was previously halted due to the Covid-19 pandemic. The Government's own figures show that the move could leave 900,000 people worse off – though many others will see their circumstances improved. Here's all you need to know.
The Government plans to have everyone switched over to universal credit by the end of 2024. This will happen through a mixture of people making the move ‘naturally’ or through a Government managed process called "managed migration" – which starts today.
The Government predicts 1.4 million people will be better off, 300,000 will see no change, and 900,000 will be eligible for less on universal credit than on their current mix of benefits.
In 2019, the Department for Work and Pensions piloted the managed migration scheme in Harrogate, but just 13 people were moved over to universal credit.
Universal credit is a 'catch-all' benefit that's replacing six legacy benefits. Because universal credit is a bit different from the benefits it's replacing, some people can end up much better or worse off on universal credit than with their current combination of benefits.
Will I be better off?
The Government predicts 1.4 million people will be financially better off, but 900,000 will be worse off from the move. Whether you're better off on universal credit will depend on your circumstances. The table below gives you a broad overview of the winners and losers but you can also use our benefits calculator to get a quick estimate of whether you'll be better off or not.
Take these figures with a pinch of salt, however. The changes to national insurance in July mean that some of those in the 'better off' group will not see as great a benefit. If you earn over £9,880, the higher national insurance threshold that comes in in July will have a dual impact: it'll reduce the national insurance you pay, but it'll also reduce the amount of universal credit you get.
|Most people who work and rent||Lone parents who work but don't pay rent|
|Some people who have 'higher earnings' (1) but don't rent||Those with a disability, in work, but not paying rent|
|TABLE_CELL_STYLE||Self-employed workers earning less than the 'minimum income floor' (2)|
|TABLE_CELL_STYLE||Those with savings over £16,000|
Fortunately, if you're in the 'worse off' group and are moved over by the Government you’ll be given "transitional protection". This means that if you get less money on universal credit than on your current benefits, your payment will get topped up to match what you currently get.
However, while your universal credit payment will technically rise in line with inflation each year, this will reduce the transitional amount you receive, meaning there is no overall net gain and your payments are effectively frozen. You'll also lose your transitional protection if your circumstances change – for example, you move house, have a child, or split with your partner.
If you switch by yourself, you can't switch back
Switching from legacy benefits to universal credit is not a decision to be taken lightly. Even if you'd potentially be better off, there are factors that might outweigh that for you. We cover the things to consider in more detail in our Should I switch to universal credit guide.
If you think you may be better off switching, seek advice. The Government runs a free guidance and information service called MoneyHelper, which offers the option to chat (online or phone) with an adviser. Plus you can get free one-on-one benefits check-ups from Citizens Advice or independent advice centres. It's best to go there before making a firm decision as this isn't one you want to get wrong.