Universal credit: Pensioners

This section of the website explains the interactions between Universal Credit, Pension Credit and tax credits. By 'pensioners' we mean 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.

NOTE: This page provides information based on the announcements made and information we have obtained from HMRC and DWP. The legislation required to stop claims to tax credits from those who have reached state pension credit qualifying age from 1 February 2019 is not yet in place.

Pensioners and UC claim

Generally, claimants who have reached their state pension credit age are not entitled to UC because they do not meet the basic conditions of the benefit. There is currently 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'.

The Government's intention is that eventually, mixed age couples will have to claim UC. However, until such rules are in place, mixed age couples can choose whether to claim pension credit (along with housing benefit if applicable and possibly tax credits) or universal credit. In many cases, it is likely to be more beneficial to claim pension credit but before deciding we recommend speaking to a welfare benefits expert at a local advice agency such as Age UK, as the rules are very different for each benefit.

Pensioners and tax credits

At present, people who have reached state pension credit qualifying age (or mixed age couples, where one person has reached that age) can continue to make claims for tax credits. This means support for children can be claimed through Child Tax Credit and childcare help through Working Tax Credit. Those working at least 16 hours a week can claim Working Tax Credit.

From 1 February 2019, it is expected that it will no longer be possible for such people to make brand new claims for tax credits. This also means that anyone having a change of circumstances that ends their tax credit claim will not be able to make a new claim at a later date.

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. They will not be able to make a new joint claim for working tax credit from 1 February 2019 (if the legislation goes ahead). 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. They will also be able to claim pension credit which, from 1 February 2019, will also include child elements. These will be equivalent to the child elements in CTC but there will be no childcare support in pension credit. It should also be noted that the 2 child limt does not apply to pension credit. Before deciding wehther to claim pension credit or UC, we recommend speaking to a welfare benefits expert at a local advice agency such as Age UK as the rules are very different for each benefit.

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 will be pension credit (with housing benefit if appropriate). It is expected that it will no longer be possible to make a brand new claim for tax credits from 1 February 2019.

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.

Capital

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

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 will be piloted with 10,000 claimants between July 2019 and July 2020 with everyone else being moved between November 2020 and December 2023. We will publish more information in our 'existing tax credit claimants' section as it becomes available.

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.

In addition, for claimants being migrated to UC from ESA and who will reach their state pension credit age within one year of their migration, there are some other aspects of transitional protection which mean the LCW and the LCWRA conditions, respectively, are to be treated as being met where the claimant is in receipt of certain qualifying disability benefits.

It is not yet clear what will happen to those existing tax credit claimants who cannot claim UC. As it stands, pension credit will not include any elements that replicate working tax credit (including the childcare element) and we are currently trying to clarify whether such people will be able to claim pension credit and get some form of transitional protection. If this is not available, they may face drop in income. We will update this page with further information as soon as possible.

Last reviewed/updated 10 January 2019 Published 10 January 2019