Universal credit: Pensioners
This section of the website explains the interactions between Universal Credit, Pension Credit and tax credits for people who have reached state pension credit qualifying age. There is a tool on the GOV.UK website that gives the qualifying date based on an individual's date of birth.
Generally, claimants who have reached their qualifying state pension credit age are not entitled to UC because they do not meet the basic conditions of the benefit (age grounds). There is an exception to this rule for couples where one member of the couple is below state pension credit qualifying age and the other member has already reached that age. This scenario is often referred to as a 'mixed age couple'.
From 15 May 2019, mixed-age couples can no longer make a new claim for pension credit and are generally expected to claim UC instead, We recommend speaking to a welfare benefits expert at a local advice agency such as Age UK before claiming.
From 1 February 2019, people who have reached their state pension credit qualifying age can no longer make a new claim for tax credits. If someone who has reached state pension credit qualifying age is part of a couple with a younger partner (a mixed age couple) HMRC state they cannot claim tax credits either unless one of two exceptions apply.
This also means that anyone in this situation having a change of circumstances that ends their tax credit claim will not be able to make a new tax credit claim at a later date (unless they are part of a mixed age couple and an exception applies, bearing in mind when looking at the exception relating to receipt of a severe disability premium, that SDP’s are payable with working age benefits).
For example, if a single claimant aged 68 currently receiving working tax credit moves in with a new partner, their tax credit award will end because they will need to make a new joint claim for support. They cannot make a new joint claim for working tax credit from 1 February 2019 onwards (unless they are a mixed aged couple and one of the two exceptions apply). What they can claim depends on whether they are a 'mixed age' couple or if they have both reached state pension credit qualifying age.
Mixed age couples
Mixed age couples can claim UC. Until 15 May 2019, they were also able to claim pension credit which, from 1 February 2019, also includes child elements. These are broadly equivalent to the child elements in CTC, although there is support towards childcare costs provided through pension credit. It should also be noted that the 2 child limit does not apply to pension credit. From 15 May 2019, mixed age couples can no longer claim pension credit (although with some limited exceptions to that broad rule - for example, where pension credit can be backdated up to three months meaning if the couple met the conditions on 14 May 2019 and backdating applies, they could still claim pension credit until 13 August 2019 - see Age UK factsheet for further information), and they will be expected to claim UC instead.
DWP have published specific guidance around entitlement to means-tested benefits for mixed-age couples who meet one of the exceptions to be able to claim one of the legacy benefits but would otherwise be prevented from doing so by reason of the age conditions (DMG memo 7/19).
Those who have reached state pension credit qualifying age
For couples where both partners have reached state pension credit qualifying age or for single people who have reached this age, the only option for support is pension credit (with housing benefit if appropriate). From 1 February 2019, it is no longer possible to make a brand new claim for tax credits.
It is expected that pension credit will be further enhanced to include support towards housing costs and in the Budget 2018, it was stated that implementation of this change would not be introduced before October 2023. Currently, pension claimants are expected to claim help towards their housing costs through housing benefit.
In pension credit, for each £500 of capital over £10,000, £1 is added to the person's income when calculating their entitlement.
In UC, for each £250 of capital over £6,000, £4.35 a month is added to the person's income when calculating their entitlement. Once capital reaches £16,000, there is no entitlement to UC.
There is no limit on capital in tax credits. In tax credits, actual capital is ignored and instead income from investments (e.g. interest on the capital or savings) is taken into account.
Existing tax credit claimants (although see below for those who have reached state pension credit qualifying age) will be moved to UC by the DWP/HMRC. The process for moving claimants started to be piloted with up to 10,000 claimants between July 2019 and July 2020 with everyone else being moved between November 2020 and September 2024. The pilot has been delayed due to the coronavirus outbreak. See our 'existing tax credit claimants' section.
For mixed age couples who are migrated from tax credits to UC, the broad provisions of transitional protection will apply. It is expected that those rules will include a time-limited disregard for capital in terms of the ceiling threshold for entitlement to UC (currently £16,000) but tariff income from capital is still expected to be taken into account for the UC award.
As it stands, pension credit will not include elements that replicate working tax credit (including the childcare element). Our understanding is that pension age tax credit claimants (or couples where both are of state pension credit qualifying age) will be transferred to pension credit and will receive some form of transitional protection meaning they should not be worse off (at least initially). However, the details of that process and any transitional protection are not yet known.
Last reviewed/updated 28 October 2020