Universal Credit and natural migration — when does a client have to claim Universal Credit?
A how to guide to some of the circumstances in which a client on legacy benefits might have to make a claim for UC
This article was amended in January 2021 to take account of the end of the sdp gateway”
The general rule is that if a client has to make a new claim for one of the benefits that UC replaces a claim for UC will be needed. What needs to be considered is:
- Can a client claim UC?
- Do they have to claim UC?
- Will they be better-off on UC?
Can a client claim Universal Credit?
Some clients cannot claim UC. Until 27 January 2021 this included clients who were entitled to a severe disability premium (SDP) within their legacy benefits (the SDP Gateway). Since the ending of the SDP Gateway, most working age clients can now claim UC. An exception to this is clients who live in temporary or specified accommodation who cannot claim UC for their housing costs. These clients will need to claim housing benefit for their housing costs, but can claim UC for their other living costs.
2. Does a client have to claim UC?
If a client claims UC, all of their claims for legacy benefits will end. This applies even if the client is worse off on UC or is not entitled to it. It is important that clients receive the correct advice as to whether they have to claim UC.
Change of circumstances that don’t require a UC claim
(this is not an exhaustive list)
Client:
- on housing benefit (HB) moves to a different address within the same local authority
- receiving income-related employment support allowance (IRESA) separates from their partner.
- receiving IRESA claims for a new partner.
- on working tax credit (WTC) becomes responsible for a child and wants to claim child tax credit (CTC).
- on CTC who starts to work over 16 hours and want to claim WTC.
- on old-style contributory ESA (CESA) becomes entitled to IRESA.
- on ESA who fails the work capability assessment (WCA) for the first time and appeals the decision.
- who is a HB claimant for a couple becomes single.
- on tax credits (TC) becomes responsible for a new child.
- or someone in their household begins to receive personal independence payment (PIP) or disability living allowance (DLA).
- A lone parent on income support (IS) whose youngest child becomes five but can they care for someone who is disabled and receives disability benefits.
- on HB whose landlord increases the rent.
Change of circumstances that do require a UC claim
(this is not an exhaustive list)
Client:
- on TC if they become a couple or are in a couple and become single.
- who is included on their partner’s HB claim who ceases to be in a couple and needs to make a new claim for themselves.
- who becomes responsible for a child and is not claiming TC.
- who moves to a new local authority area and needs to claim for housing costs.
- A lone parent on IS whose youngest child is five and has to claim as a jobseeker.
- Carer who loses their IS because the disabled person they are caring for stops receiving disability benefits or dies.
- who goes abroad temporarily, loses entitlement to their legacy benefits and then returns to the UK.
- on IRESA who fails to attend a medical and their IRESA is stopped. If the C lodges a mandatory reconsideration (MR) and this is unsuccessful it could be several months before an appeal hearing.
- Client who fails the WCA for the second time in a row and cannot claim ESA pending their appeal.
3. Will a client be better-off on UC
Some clients have a choice whether to claim UC or stay on legacy benefits. You may need to do a better-off calculation for these clients. If a client chooses to claim UC they need to prepare for:
- A monthly payment regime.
- Housing costs included in their monthly payments.
- Increased work related conditionality (including in-work conditionality).
- Increased evidence requirements to maintain their UC claim. This includes providing evidence on a monthly basis about earnings, childcare costs and self-employed earnings.
- Extensive evidence requirements for European Union nationals in relation to right to reside.
- Coping with managing an online claim.
- Managing during the five week waiting period for an initial payment.
- Reduction in payments to low paid self-employed workers due to the minimum income floor.
- Increased deductions from UC for fines, court orders or benefit overpayments.
Examples of clients who have choice:
Client appealing a work capability assessment
If an ESA claimant is appealing a decision that they have failed the WCA, if it is the first time they have failed the WCA, or if it is the first time they have failed the WCA since a previous decision that they satisfied it, they will be able to claim ESA pending their appeal. Some clients in this situation claim UC without checking whether they can stay on ESA. If they claim UC entitlement to income-related ESA will be lost even if they subsequently win their appeal. Following the High Court decision in Connor v SSWP a claimant no longer has to wait for a mandatory reconsideration decision before asking for an appeal in this situation.
Clients who works under 16 hours
Clients who are entitled to a work allowance and who work under 16 hours are often better-off financially claiming UC than legacy benefits as they can benefit from a work allowance and up to 85% of their childcare costs can be reimbursed. However, a client in receipt of child tax credits might want to consider whether they will be better-off increasing their working hours to over 16 and claiming working tax credit instead.
Example
Helen has a 3 year old son and works 12 hours a week. She has a childminder for her son. She receives IS, child benefit, CTC and HB. She claims UC as she will be better-off financially. However, as part of her claimant commitment she has to look for four more hours of work a week. She has not received any help with childcare costs because her childminder has not given her receipts to evidence her payments. Helen’s work coach tells her that when her son is in full-time school she will have to look for work of 25 hours a week. If Helen had increased her working hours to 16, she could have claimed working tax credit rather than UC. If she had done this, she would have been better-off financially, received a contribution toward her childcare costs and not have been subject to in-work conditionality.
Students
Most students are not able to claim UC. Some students such as students who are responsible for a child or students with disabilities may be eligible for UC. If a client or their partner is a student and receiving legacy benefits it is important that you do a better-off calculation if they wish to claim UC. This is because there is a difference between the way in which student finance is taken into account for tax credits and UC. Non-taxable student finance is disregarded for TC, but is taken into account for UC.
Example
Todd is working 8 hours. His partner Louise is a PhD student and receives a stipend of £15,000 per annum. The couple has two children and receive the full amount of child tax credits. Todd cannot claim WTC as he doesn’t work 16 hours and wonders if he should claim UC due to the work allowance. However, due to Louise’s student finance it is unlikely that they will be better-off on UC. If they try to claim UC their TC will stop even if they have no entitlement to UC.
Rachel Ingleby works in the Welfare Benefits Expert Advice Team at Citizens Advice.
