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A new report shows many tax credit claimants are unaware of the implications of transfer to Universal Credit, in particular the initial six-week wait for payments.
A report on the transfer of tax credit claimants to Universal Credit shows many did not know about the six-week delay associated with UC payments and a third were facing financial difficulties as a result.
The report from HMRC and the Department for Work and Pensions was conducted with some of the first tax credits claimants moving to Universal Credit and in advance of the ‘managed migration’ of all claimants over the course of 2019. UC replaces six working age benefits, including Working Tax Credit and Child Tax Credit.
The report shows only 42 per cent of tax credit claimants were aware that there would be a gap between their tax credits stopping and their first UC payment being made. Two fifths did not know when their first UC payment would arrive and only around half said it was the amount they were expecting.
Over a third were ‘having financial difficulties’, for instance, falling behind with some, or many, bills and commitments. Among this group, around 62 per cent said their difficulties started in the same month or after they began claiming Universal Credit.
The report also noted a lack of awareness and a perceived lack of clear information about UC and the migration process. The majority of claimants contacted HMRC or DWP during their application process, with around half contacting both departments, for instance, to find out when their UC payments would start and how much they would be paid.
The report claims some elements of the process are working well, such as the online claims process, although two fifths of claimants needed help either from family and friends or a Jobcentre adviser. Two thirds found it easy to arrange an interview at the Jobcentre and getting together all the documents they needed. Three quarters understood why they were being moved to UC. Around two thirds thought their entitlements were well explained and queries handled well.
Awareness of UC was low prior to making a claim, with 45 per cent saying they had never heard of it before they made a claim. Over half (56 per cent) of claimants felt that they received too little information from HMRC and wanted more.
Three quarters of those with tax credit overpayments only discovered they had an overpayment after their UC claim had started and few were aware that this debt would be recovered via deductions from their UC award after transfer.