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.

With effect from 8 June 2024, there will also be transitional protection available for certain tax credit claimants who are invited to claim pension credit instead of universal credit or who are already claiming pension credit alongside tax credits and who receive a tax credit closure notice. See our Pensioners section for more information. This page focuses on transitional protection in relation to those moving to universal credit.

Who qualifies for transitional protection

Protection for full-time students

Transitional capital disregard

Transitional element

Transitional element erosion

Revision of the transitional element

Transitional protection ends

No transitional protection

Transitional protection and pension credit

Note: The DWP/HMRC operational migration process. 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.

Who qualifies for transitional protection?

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 is made up of a transitional capital disregard and a transitional element. There is also a protection for full-time students and for those who have deferred their state pension.

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:

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.

Protection for full-time students

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.

Transitional capital disregard

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.

State pension deferral protection

From 8 June 2024, where, at the time a migration notice is issued, a notified person has:

Then regulation 74 of the UC Regs does not apply in relation to that person for the purpose of calculating the amount of an award of universal credit (including the indicative UC amount) until the assessment period following the first 12 assessment periods of an award made in respect of a claim by that person. Usually, under UC rules, the amount of any state pension being deferred would be treated as notional unearned income and reduce the UC award £1 for £1. This provision means that people will be protected from that rule for 12 assessment periods.

This deferral protection will end in an assessment period in which the transitional element or transitional capital disregard would cease to apply (see below). 

Transitional element

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.

Transitional element erosion

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.

Example

A tax credit claimant moves from tax credits to universal credit in March 2024 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:

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 bymaking the new total £1,502.28. This is an increase of £92.07 This means the transitional element will be reduced by £92.07 – down to £7.93. 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.

Example

Jason migrates from tax credits to universal credit in May 2024. 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:

His maximum award adds up to £726.78 plus £500 transitional element making a total maximum award of £1,226.78. 

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:

His maximum award now adds up to £1,014.70 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 £212.08. This makes his total maximum award £1,226.78 (£1,014.70+212.08) 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.

Revision of the transitional element

Transitional element calculations can be later revised where:

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.

Transitional protection ends

The transitional capital disregard, the transitional protection for full-time students and the transitional element will each end in the following situations:

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.

This does not apply if the claimant has the minimum income floor applied or would if they were not in their start-up period.

For people who have reached their state pension qualifying age and who qualify for UC due to the waiver of the upper age limit, the rules regarding transitional protection and drop in earnings are slightly different.

Where this applies, there is protection from a drop of earnings for an initial period of 12 months. After that time, transitional protection will end after the third assessment period where the earned income (or joint earned income in a joint claim) is less than the equivalent of 16 hours work at national minimum wage (converted to a monthly amount).

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)

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.

No transitional protection

Not everyone will receive transitional protection - that includes the transitional element, the transitional capital disregard, the protection for full-time students and the state pension deferral protection.

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:

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:

Transitional protection and pension credit?

With effect from 8 June 2024, rules are introduced which cover transitional protection for tax credit claimants who have reached their state pension credit age (including mixed age couples who are already claiming housing benefit under pension age rules and have continued to do so since 2019), are claiming child tax credit but are not entitled to working tax credit and for those who have reached their state pension credit qualifying age who are claiming tax credits and also pension credit at the same tome.

Transitional protection will apply if they are either already claiming state pension credit when the tax credit closure notice is issued or they claim state pension credit before the deadline in the notice or within one month of the deadline day in the notice. Transitional protection does not apply in this scenario if the person was a member of a couple for tax credit purposes when the notice was issued but is not a member of the same couple when they claim state pension credit, or they were single for the purposes of child tax credit when the notice was issued and are a member of a couple when the claim for state pension credit is made.

Transitional protection covers several aspects.

There is a transitional additional amount that is added to the state pension credit award. This is similar to the transitional element for universal credit and is calculated by comparing the representative weekly amount of child tax credit (and the existing pension credit amount if relevant) on the migration day to an indicative state pension credit amount on the same day. The transitional element will be eroded by any relevant increases in the state pension credit award. If the claimant stops being entitled to state pension credit, the transitional additional amount is not subsequently included in any later pension credit awards. The transitional additional amount ends if the claimant ceases to be a member of the same household (joint to single and vice versa) or is no longer responsible for any child or qualifying young person they were responsible for at the time the tax credit closure notice was issued to them.

There is a 52-week exemption from the notional income rules in pension credit for people issued with their tax credits closure notice who have deferred claiming their state or non-state pension and they claim state pension credit on or after the date they are issued with their tax credits closure notice and within a month of the deadline day in the notice. This exemption ends after 52 weeks or when the person stops being entitled to pension credit, if sooner.

Last reviewed/updated 21 June 2024