Universal credit: Managed migration Transitional Protection
The Government said that where people move over to universal credit under the formal exercise managed by DWP from their existing legacy benefits (working tax credit; child tax credit; income support; income-based jobseekers allowance; income-related employment support allowance; housing benefit) and have no changes of circumstances, they will not be financially worse off at the point they move over. To meet this commitment transitional protection will be in place with the aim of maintaining benefit entitlement at the point they move.
Note: The DWP/HMRC operational migration process is fairly new and is still under development. Further changes may be made as it rolls-out to more people. Some of the information is only available via DWP guidance (sometimes published) but this guidance, and underlying processes, may change without any updates being published. We therefore recommend that for individual cases you check the latest position with DWP before taking or refraining from taking any action.
Transitional protection only applies to those who make a ‘qualifying claim’ for universal credit. A qualifying claim is a claim for UC by a single claimant who has been issued with a migration notice or by joint claimants who have both been issued with a migration notice. The claim must be made on or before the final deadline.
The final deadline is the day that would be the last day of the first assessment period in relation to an award commencing on the deadline day. Deadline day is the day specified in the migration notice by which a UC claim must be made. If a UC claim is not made by that date, legacy benefits will terminate. This rule allows someone who misses their deadline date, who has their legacy benefits terminated, to make a UC claim within a month of the deadline day and retain entitlement to transitional protection.
Transitional protection does not apply where people move over to universal credit outside of the formal migration exercise. The only exception is for those who have a severe disability premium in legacy benefits who may qualify for a transitional SDP element if they claim UC.
DWP must determine whether the transitional capital disregard and/or transitional element is to be included in a UC award before they make a decision on the qualifying UC claim (one which is made before the final deadline). However, DWP do not determine whether a transitional element is to be included to those who have been sent a migration notice and who were:
- A couple for the purposes of tax credits (or other legacy benefits) when the migration notice was issued, but are single claimants or members of a different couple when they claim UC; or
- A single claimant for the purposes of tax credits (or other legacy benefits) when the migration notice was issued, but are joint claimants when they claim UC; or
- Members of a polygamous marriage for the purposes of an award of tax credits (or other legacy benefits) when the migration notice was issued but are single or joint claimants when they claim UC.
Note that these exceptions do not apply to the transitional capital disregard, only to the transitional element. The definition of a couple differs between tax credits and universal credit which means that it is possible for two people to be part of a couple for one benefit but not for the other. For example, in tax credits two people who are married or civil partners and who live in separate households are treated as a couple and required to make a joint claim. Under UC rules, as they don’t live in the same household they are not a couple and therefore required to make single claims.
One of the basic conditions for entitlement to universal credit is that the person is not receiving education (with some exceptions).
Where a person who is currently receiving a legacy benefit, and is in a course of full time education, receives a migration notice, the universal credit entitlement condition that they must not be receiving education does not apply to them as long as they continue undertaking their course. If they finish that course and then later start a new course, the normal UC education conditions will apply.
This protection will end under the same circumstances that would also end the transitional element or the transitional capital disregard, see below. In addition, the protection can continue if a claim ends and a re-claim is made if, had the claimant been entitled to it, the transitional element or transitional capital disregard could be applied on the re-claim. The claimant may still fall into one of the normal exception categories which allow some students to claim universal credit.
Normally, anyone with capital over £16,000 is not entitled to universal credit. The £16,000 limit applies to joint UC claims as well as single claims. There is no corresponding rule in tax credits and so it is entirely possible that tax credit claimants may have capital over £16,000 (there is information about capital in our entitlement section and for rules about what counts as capital, see DWP ADM, chapter H1 and H2).
Under managed migration, tax credit claimants are protected from the capital ceiling in universal credit for up to 12 assessment periods from the date of their universal credit claim. The disregard only applies if the claimant is entitled to an award of tax credits and has capital exceeding £16,000 on the migration day. Migration day is the day before the first day on which the claimant is entitled to universal credit in connection with that claim. This means that claimant’s may need to think carefully about their capital in between getting their migration notice and making the UC claim. For example, if they had £18,000 of capital when they received their migration notice but needed to access £6,000 on a short term basis (bringing their capital to £12,000) – if they put the money back in their savings after the migration day so their capital rose above £16000 again, they would lose their entitlement to UC.
This means any capital over £16,000 is disregarded for up to 12 assessment periods both in determining whether the financial conditions for UC are met and in calculating the amount of the award. However, any capital between £6,000 and £16,000 is not disregarded will still attract tariff income. The disregard also applies when calculating the indicative UC amount for the purposes of whether a transitional element is to be included. However, any capital between £6,000 and £16,000 is not disregarded and will still attract tariff income.
Where there is a joint tax credit claim but the individuals are required to make single UC claims, the transitional capital disregard can be applied to each UC single claimant.
Where the capital disregard has been applied, and the claimant has a UC assessment period where their capital drops below £16,000, the disregard will no longer apply to subsequent assessment periods (even if the claimant’s capital increases again). This means that claimant’s who need to access their savings for a short period may need to think carefully if they are in the early months of their disregard.
After the end of the 12 assessment periods, the normal capital rules apply, so that if capital continues to exceed £16,000 UC entitlement ends.
The transitional capital disregard will end under the same circumstances that would also end the transitional element as explained below.
Usually where a claim is terminated or it is determined there is no entitlement (so the claim is effectively closed), the transitional capital disregard is lost even the person subsequently re-claims. However, there is an exception to this where the claim is closed due to an increase in earnings before the 12 assessment periods pass and the person re-claims within a certain period. The period is 3 months beginning with the last day of the month that would have been the final assessment period of the previous award had it not terminated (This is 4 months from the end of the assessment period for which UC was actually awarded).
Where a re-claim is made in this time period, they get any remaining assessment periods out of the 12. They do not get another 12 assessment periods in which they can have capital above 16k.
Broadly speaking, the DWP will compare the amount a person receives through their legacy benefits with the amount they would receive from universal credit if it were calculated by reference to the claimant’s circumstances on migration day, applying certain assumptions set out in the legislation. However the way that transitional protection is calculated is complex. The exercise uses a ‘total legacy amount’ ‘and an ‘indicative UC amount’ in the calculation of the transitional element. These amounts may or may not be the same as the claimant actually receives in legacy benefits and/or will receive in UC.
Broadly, If the amount from the ‘total legacy amount’ is more than the ‘indicative UC amount’ (assuming the indicative UC amount is above nil), the difference is calculated. This is called the transitional element and it is included as an element when calculating the maximum amount of UC in the first assessment period of the UC award (before the deduction of any income). In subsequent assessment periods, the transitional element may be eroded as explained below.
Claimants are not entitled to an amount of transitional element that would take them above the benefit cap.
See our transitional element calculation page for more detail on how the initial amount of the transitional element is calculated.
Please note, DWP will compare all legacy benefits a claimant may be receiving under the rules set out in the legislation but we are only illustrating the concept from a tax credit perspective.
We explain in detail how the calculation works on our ‘calculating the transitional element’ page.
The amount of the transitional element calculated is to be included in the calculation of an award of UC in the first assessment period. The transitional element is not time-limited but it will erode over time.
However, in the second assessment period, the amount is reduced by the sum of any relevant increases in the assessment period.
For the third and subsequent assessment periods, the amount that was included for the previous assessment period as the transitional element is reduced by the sum of any relevant increases. Once it gets to nil, it is not to apply in any future assessment periods. For this purpose, a relevant increase is any increase to the maximum award under Sections 9 to 12 of the Welfare Reform Act 2012. This effectively includes increases in any of the elements that make up an award (including any of those amounts that are included for the first time) apart from the childcare element. This means that the transitional element will be eroded by annual uprating of all of the normal UC elements.
A tax credit claimant moves from tax credits to universal credit after receiving a migration notice. Their transitional element is calculated as £100. The claimants UC award in the first assessment period includes the following elements:
- Standard allowance £368.74
- Child 1 £315
- Child 2 £269.58
- Severely disabled child element £456.89
The maximum award adds up to £1410.21 plus £100 transitional element meaning a maximum amount of £1510.21.
Their second assessment period coincides with the annual up-rating of benefits and the elements are all increased by 5% (illustrative) making the new total £1480.72. This is an increase of £70.51 This means the transitional element will be reduced by £70.51 – down to £29.49. This means the overall maximum will remain the same (£1510.21) and despite the annual up-rating, the claimant will not see any change to the maximum amount they are awarded.
Jason migrates from tax credits to universal credit. He is a single parent with 1 child on his claim. His transitional element is calculated as £500 (note this is just an illustrative figure for the purpose of the example). His UC award in the first assessment period includes the following elements:
- Standard allowance £368.74
- Child 1 £315
His maximum award adds up to £683.74 plus £500 transitional element making a total maximum award of £1183.74.
In his third assessment period, he is awarded custody of his son and is awarded the child element. His maximum award is calculated with the following elements:
Standard allowance £368.74
Child 1 £315
Child 2 £269.58
His maximum award now adds up to £953.32 before the transitional element is added on. However, his transitional element is reduced by the additional child element. This means his transitional element is reduced from £500 to £230.42. This makes his total maximum award £1183.74 (£953.32+230.42) which is the same as before he received the additional child element – so Jason sees no financial benefit from the award of the child element.
An increase in earnings does not erode the transitional element but under normal UC calculation rules any increase in earnings will (subject to the work allowances) decrease the overall UC award (which includes the transitional element).
The transitional element is not increased by annual uprating and once it is fully eroded it cannot be re-instated except where there has been a recalculation or successful appeal.
The only other variation to this concerns the LCW and the LCWRA elements. Where there is a change and a LCW element is replaced with a LCWRA element, the relevant increase to the universal credit award – for the purposes of transitional element, is the difference between the LCWRA element and the LCW element.
Once the transitional element is reduced to nil, no further transitional element will be included in subsequent awards.
Transitional element calculations can be later revised where:
- In the opinion of the DWP, the information held on migration day was inaccurate or incomplete in some material respect because of
- Misrepresentation by a claimant,
- A failure to report information that a claimant was required to report where that failure was advantageous to the claimant, or
- An official error
- A decision has been made on or after migration day on:
- An application made before migration day to revise or supersede a decision in relation to an award of an existing benefit (including the report of a change of circumstances), or
- An appeal in relation to such an application
For this purpose, official error means an error made by an officer or employee of the DWP, HMRC or a local authority administering housing benefit and was not caused or materially contributed to, by any person outside the DWP, HMRC or Local Authority.
The transitional capital disregard, the transitional protection for full-time students and the transitional element will each end in the following situations:
- Cessation of employment or sustained drop in earnings
Where a single claimant had earned income equal to or more than the single administrative threshold (under Regulation 99(6)(a) Universal Credit Regulations 2013) in the first assessment period of their award but their earned income has dropped below this level in each of 3 assessment periods since then – in the next assessment period (and any subsequent ones) their transitional element will end.
The same rule applies for joint claims but using the couple administrative threshold as the measure.
The single administrative threshold is currently set at 12 hours per week at the national minimum wage for a single claimant and the couple administrative threshold is 19 hours.
This does not apply if the claimant has the minimum income floor applied or would if they were not in their start-up period.
- Couples separating or forming
Change to household ie if joint claimants stop being a couple or become members of a different couple, or, in the case of a single claimant, where they become a member of a couple (unless they have an ineligible partner and so are entitled to still claim as a single person)
- Transitional protection in subsequent assessment periods
If a UC award is terminated or it is determined on a qualifying claim that there is no entitlement to an award, transitional protection will not apply to subsequent awards. The only exception to this rule is if:
the UC award terminated or there was no entitlement due to excess income (that is earned income on account of which the financial condition in Section 5(1)(b) or 5(2)(b) of the Act was not met); and
the claimant becomes entitled to an award within the period of three months beginning with the last day of the month that would have been the final assessment period of the previous award (had it not terminated). In the case where the person was found not to have entitlement, the three months runs from the day that would have been the last day of the first assessment period had there been entitlement to an award.
Where the exception applies, the new award is effectively treated as if it is a continuation of the previous award for the purposes of the transitional element/capital disregard.
Not everyone will receive transitional protection - that includes the transitional element, the transitional capital disregard and the protection for full-time students.
The main situations where tax credit claimants won’t get transitional protection are where they start to claim universal credit outside the formal migration exercise. This covers tax credit claimants who:
- choose to claim universal credit, or
- claim universal credit because they have a change of circumstances that brings their tax credit award to an end but and they need to make a fresh claim for support, or
- need to claim support that has now been replaced by universal credit (for example, help with rent – although there are some exceptions where housing benefit can still be claimed), or
- don’t renew their tax credit claims, HMRC can’t reinstate their late renewal and they need to make a fresh claim for support, or
- are issued with a migration notice by DWP but don’t claim universal credit by the deadline and no extensions are agreed.
The only exception to this is for those who have a severe disability premium in legacy benefits who may qualify for a transitional SDP element if they claim UC.
There are other situations where tax credit claimants will not be entitled to transitional protection. These are where:
- The claimants are a couple for tax credit purposes but not a couple for universal credit purposes (and vice versa). This means although both joint claimants will be issued with a migration notice, universal credit rules mean they must make separate single claims. Note, this does not include the scenarios where they are still accepted as a couple under universal credit rules and can make a joint universal credit claim but one of them is ineligible so the claim is processed as a single claim).
- Tax credit claimants are a couple at the point they are issued with a migration notice but there is a change in circumstances and the joint household ends before the universal credit claim is made. Each will need to make a fresh claim in their new single (or, if they have joined another household, their ‘new’ couple) capacity.
Last reviewed/updated 20 September 2023