Universal credit: Changes of circumstances

Existing tax credit claimants are not affected by Universal Credit (UC) unless they choose to make a UC claim, need to claim another benefit that UC has replaced or they have certain changes of circumstances that cause their tax credits claim to end and they still need to claim support. This page looks further at how changes of circumstances impact on existing tax credit claimants.

Overview

UC full service has now rolled out and is available across the UK which means that most people are no longer able to make a brand new claim for tax credits, and are expected to claim UC (or pension credit) instead, although there are some exceptions. If an existing tax credit claimant has a change of circumstances that ends their tax credit claim, they will not be able to make a new claim for tax credits unless they fall into one of the exception groups.

On our 'making a UC claim' page, we explain how a tax credits award is automatically brought to an end when a UC claim is made. However, even though that process exists, it does not change the obligations on existing tax credit claimants to report relevant changes of circumstances to HMRC for tax credit purposes and they should make this notification to HMRC even if they have/plan to make a claim for UC.

What changes will end a tax credits claim?

The most common scenario will be a change in household status that brings to an end a single claim (and requires a joint claim) or a joint claim (and requires a single claim). This may happen where a couple separate or two single people form a couple - we explain more about when joint and single claims should be made on our 'understanding couples' page.

Example 1

Natasha is a lone parent with two children. She claims working tax credit and child tax credit as a single person. Natasha decides to move in with her boyfriend Richard on 1 March 2019. Richard does not claim tax credits or universal credit. Natasha informs HMRC on 2 March 2019 that she has moved in with Richard. HMRC terminated Natasha's working tax credit and child tax credit from 1 March 2019.

Prior to the introduction of UC, the couple would have made a joint claim for tax credits. As UC full service is now available across the UK, and none of the exceptions apply to the couple, they cannot make a new joint claim for tax credits. Instead, if appropriate based on Richard's circumstances, they will need to claim UC.

Other changes that may terminate a tax credits claim and trigger a UC claim are:

Other changes

Where an existing tax credit claimant is entitled to both working tax credit and child tax credit, any change that affects only one of them will not lead to termination of the whole claim and thus will not necessarily require a claim for UC.

Example 2

Jacob is a lone parent with two children. He works 20 hours a week and is entitled to working tax credit as well as child tax credit. Jacob is made redundant and is unable to find another job. Although this will mean his working tax credit claim will end, he is still entitled to child tax credit and if he does start working above 16 hours again, he can claim working tax credit again. He will not be required to claim UC (unless he needs to access another benefit that UC has replaced (see below for further information).

Changes that require claims for other benefits

Say that Jacob (in the example above) needs to claim income-based jobseeker's allowance and perhaps housing benefit to help with his rent, then he will need to claim UC which will terminate his child tax credit. This is because he needs to make a claim for a benefit (or, in this case, two benefits) that have also been replaced by UC. If Jacob claims UC and then returns to work, he will not be able to claim tax credits again and will remain on UC.

There is a useful chart, produced by Newcastle Welfare Rights Unit, which shows changes that trigger a claim for UC. This version was last updated in June 2018.

Last reviewed/updated 18 July 2019