Universal credit: Transitional protection
The Government have said that anyone transferring to Universal Credit will not lose out in cash terms where their circumstances remain the same. In order to ensure this happens, UC will include a transitional protection in the form of an additional amount to make up the difference between UC amount and what the claimant was receiving from the legacy benefit (for example tax credits).
Transitional protection is not a new concept and has been used previously when major changes have been made to the benefits system that involved people moving from one benefit to another. The outline of transitional protection for UC and how it might work was first given in a DWP briefing note in May 2011. More detail was provided by a further briefing note in December 2012.
The Universal Credit (Transitional Provision) Regulations 2013 were published in Autumn 2012 and govern transitional protection rules for the pathfinder areas. DWP confirmed in their briefing note that these regulations are only intended for the pathfinders and that further regulations will be published to deal with the roll out of UC.
Transitional protection applies where a claimant is transferred from an existing benefit or tax credits to UC and at the point of transfer the total household UC entitlement would be lower than the total existing award of (means-tested) benefit and tax credits.
It is important to stress that transitional protection will not be given if the claimant moves to UC because of a change in their circumstances. It only applies where they are moved by DWP from their existing benefit.
The transitional protection will take the form of an addition to the claimant’s UC. DWP will compare the claimant’s monthly UC entitlement at the point of transfer with their monthly income from (means-tested) benefits and tax credits just before the transfer. Any deductions from those existing benefits are ignored for the purposes of comparison however the comparison is done after the benefit cap is applied to both existing benefits and UC.
The methods used by HMRC to end tax credits claims and calculate income for those final claims may therefore have a substantial impact on any transitional protection. More information about this can be found in our stopping tax credits section.
The additional amount awarded as transitional protection in the claimant’s UC award is not up-rated and remains at the same level throughout the UC award. Although the additional amount cannot increase, it can decrease if the overall UC award increases for example through up-rating of UC elements or having another child. Where this happens, the UC award will not change until all of the transitional protection is used up.
For example, if a claimant qualifies for £50 transitional protection, and subsequently has a small fall in income which causes an increase in UC, the award will not change until the transitional protection is used up. Essentially this means that any increase in the award will not be reflected unless it is more than £50.
Where a claimant’s earnings increase, so that their award decreases, the amount of transitional protection previously given will not be affected.
According to the DWP briefing note, where a claimant’s UC award reduced to Nil, their transitional protection will be removed at the set single taper rate (currently 65%). This is to ensure claimants do not experience a cliff edge by losing their transitional protection once they are no longer entitled to UC.
Transition protection will end altogether if:
- a new partner joins the household
- a partner leaves the household
- earnings drop below the earnings threshold in their claimant commitment for a period of 3 months or more
- the UC award ends
- one or both members of the household stopping work.
Updated 7 March 2016