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.

Pensioners and UC claim

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'.

The Government's intention is that eventually, mixed age couples will only be able to claim UC. From 15 May 2019, mixed-age couples will no longer be able to make a new claim for pension credit and will be expected to claim UC instead, although there are a couple of exceptions to that vroad rule and we recommend speaking to a welfare benefits expert at a local advice agency such as Age UK before claiming.

Pensioners and tax credits

From 1 Feburary 2019, people who have reached their state pension credit qualifying age can no longer make a new claim for 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) 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).

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 (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 will also be able to claim pension credit which, from 1 February 2019, also includes child elements. These are broadly equivalent to the child elements in CTC but there is no childcare support in pension credit. It should also be noted that the 2 child limt does not apply to pension credit. From 15 May 2019, mixed age couples will no longer be able to claim pension credit (although there are some limited exceptions to that broad rule), and they will be expected to claim UC instead. Until then, before deciding whether 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 no longer 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 around 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.

As it stands, pension credit will not include any 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. However, the details of that transitional protection are not yet known.

Last reviewed/updated 18 February 2019