Universal Credit: Only one legacy payment will continue when migrating to the new system | Personal Finance

Universal Credit has, so far, replaced working tax credit, child tax credit, income-based jobseeker’s allowance, income support, income-related employment and support allowance and housing benefit. The Department for Work and Pensions (DWP) refers to them as legacy benefits.

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It is no longer possible for most people to make claims for these benefits but people who already receive them may carry on doing so.

As it stands, there is no obligation to move from the old benefits to Universal Credit but there are certain instances which can trigger moving over.

The DWP split moving over to Universal Credit into two categories. The first is called natural migration, which occurs when a claimant makes a new claim because of a change in circumstances.

Changes in circumstances can vary but they include things like changes to employment, family circumstances, or housing.

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Government

The government can start the process of moving claimants onto Universal Credit (Image: GETTY)

Universal Credit

The rollout of the Universal Credit system has been controversial (Image: EXPRESS)

The second is called managed migration, and here the defining circumstances aren’t made as clear.

According to the Money Advice Service, managed migration could occur even with no changes to circumstances being made; the DWP can just ask the claimant to start claiming Universal Credit.

The full rollout is not scheduled to happen for a number of years but DWP detail that they may start moving most people onto Universal Credit from November 2020.

While the shift to Universal Credit is meant to result in less hassle the reality is often the opposite.

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Universal Credit provides a one off monthly payment whereas the previous benefits system provided multiple payments throughout the month.

Many people have been hesitant to voluntarily move over to Universal Credit as there have been numerous stories of people falling behind with bills as their new payments are low and delayed, with the government themselves acknowledging that it is possible claimants could receive less money if they convert.

The problem is exacerbated by how long it takes for the first Universal Credit payment to come through. Once the application is put through for Universal Credit, it can take around five weeks for the first payment to be received.

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Some claimants have fallen into debt while shifting to the new system (Image: GETTY)

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This may not have been a huge cause of concern for people receiving the earlier benefits but once migration is made, payments automatically stop for the majority of legacy benefits.

However, there is one specific legacy benefit which will continue to pay for a while after a Universal Credit application/migration has been made.

In order to prevent rent arrears, people who received housing benefit will continue to receive payments for a further two weeks after the Universal Credit application has been made.

This will likely be a relief for those applicable, but there will be big changes to how the system works once the shift to Universal Credit is made.

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Housing benefit

Housing benefit is the only benefit that will continue to pay after a Universal Credit shift (Image: GETTY)

For applicable claimants based in England and Wales, the payment will no longer go directly to their landlord. The income will go to directly to them and it will be their responsibility to pay the rent effectively. This will be a new obligation that claimants will need to heed.

The five week wait has proven to be an issue for both claimants and the government. To offset budgeting issues, the government allow claimants to request an advance on the first payment.

This is designed to cover bills until the first payment comes through but this advance is in the form of a loan. As such, it must be paid back to the government and there have been reported instances of claimants falling into a debt spiral.

While the government make it clear that the repayments will be taken directly from Universal Credit payments, some claimants underestimate the impact this will have. If the claimant struggles to repay the loan, the government can take steps to ensure they receive it.