Universal Credit: Primary Legislation
The main primary legislation relating to Universal Credit is the Welfare Reform Act 2012. This section of the site gives more detail about the provisions contained in the Act. We also highlight other primary legislation that is relevant to Universal Credit.
The Welfare Reform Act 2012 (original)
The Welfare Reform Act 2012 was debated during the various Parliamentary stages of the Bill. You can find details of these debates and relevant documents in our resources section. You can find consolidated versions of the Act in our Tax Credits: Statutes - Consolidated section.
Note that the Act (under Section 149) only applies to England, Wales and Scotland with the exception of a small number of sections which also apply to Northern Ireland. The sections that apply to Northern Ireland are Sections 32,33,76,92,126(1) to 126(13), 127(1) to 127(9) and Part 7 (except Schedule 14). You can track the progress of the Welfare Reform Bill in Northern Ireland in our Northern Ireland section. You can find out more about devolution of welfare powers to Scotland in our Scotland section.
Sections 128 and 129 (information sharing powers between the Secretary of State and Director of Public Prosecutions) only apply to England and Wales.
As well as introducing Universal Credit, the Welfare Reform Act 2012 also makes amendments to jobseeker’s allowance, employment and support allowance, income support, tax credits, industrial injuries benefit, housing benefit and the social fund. It also provides for the abolition of council tax benefit from April 2013 (to be replaced by local council tax schemes) and sets out the framework for the introduction of the personal independence payment (PIP) to replace disability living allowance for people of working age. Various other social security changes are also implemented by the Act including the benefit cap.
You can find detailed commentary on the changes to tax credits made by the Welfare Reform Act 2012 in our tax credits policy section.
The provisions in the Welfare Reform Act 2012 are being gradually introduced. Some sections of the Act came into force on the day the Act was passed (8 March 2012). The remaining provisions come into force through a series of commencement orders.
You can find a full list of commencement orders in the secondary legislation section. The latest commencement order always contains a full list of earlier commencement order dates.
There are several sections in the Welfare Reform Act 2012 that are relevant for the transition of claimants from tax credits to Universal Credit.
Abolition of tax credits
Section 33(1)(f) Welfare Reform Act 2012 confirms that child tax credit and working tax credit are to be abolished. Commencement Order 32 brought into force this section from 1 February 2019 however there are a number of savings provisions where it does not apply (in other words tax credits are abolished in some cases but not others). You can find out more about the latest timetable for migration in our stopping tax credits section.
Migration to Universal Credit
Section 36 and Schedule 6 Welfare Reform Act 2012 set out some basic detail about the migration from benefits that are abolished under Section 33 (including child and working tax credits). Schedule 6 gives power to create Regulations that ‘make provision for the purpose of, or in connection with, replacing existing benefits with universal credit’. The remainder of the Schedule sets out how this power might be used. Paragraphs 1(1), 2(b), 3(1)(a), 4(1)(a), 5(1), 5(2)(c), 5(2)(d), 5(3)(a) and 6 commenced on 25 February 2013 (under Commencement Order No.8)
The appointed day is defined as the day on which Section 1 of the Act comes into force.
The Schedule allows:
- claims for UC to be made before the appointed date for a period on or after that date.
- claims for UC made before the appointed date to be treated as claims for existing benefits including child tax credit and working tax credit. This might apply where a person falls into a group that had not started the transition process.
- claims made for existing benefits before the appointed date (including child tax credit and working tax credit) to be treated as a claim for UC. This might be used where a person applied for the existing benefit shortly before the introduction of UC.
- claims made before the appointed day to be awarded UC for a period before that date
- claims made after the appointed day to be excluded from making a claim for UC (either permanently or temporarily) or excluding entitlement to UC (either permanently or temporarily). These powers may e used to exclude certain people, such as those approaching state retirement age, from claiming UC.
- claims made for UC after the appointed day can be treated as claims for an existing benefit. This might apply where someone is barred from claiming UC.
- claims made for existing benefits after the appointed day can be treated as claims for UC
In relation to working tax credit and child tax credit (as well as other benefits to be abolished) provisions exist to terminate awards of tax credits, to make an award of UC without a claim to a person whose tax credits have been terminated, and to award transitional protection where the amount of UC will be less than the amount of the existing benefit.
Finally, Schedule 6 grants powers to amend the Tax Credits Act 2002 and any provision made under it as necessary. This is a wide ranging power and means that DWP and HMRC can make changes to the TCA 2002 (primary legislation) through regulations. According to the explanatory notes it ‘may be used to align certain tax credit rules more closely with universal credit in advance to facilitate the transition process’. In addition Schedule 6 allows new provisions to be made for the purposes of recovering overpaid tax credits and specifically states that overpayments of tax credits can be treated as overpayments of UC.
In summary, the Act gives DWP and HMRC a great deal of scope for dealing with the transition from tax credits (as well as other means-tested benefits) to UC both in terms of ending tax credits awards and awarding UC but also in respect of dealing with existing tax credits debt.
Transfer of functions from HMRC to DWP
Section 126 Welfare Reform Act 2012 allows any tax credit function of the Treasury or Commissioners of HMRC to be transferred to the Secretary of State by an Order in Council. This provision was included in order to remove a previous provision under the Commissioners for Revenue and Customs Act 2005 which stated that certain functions, including in relation to tax credits, could not be transferred by Order in Council.
According to the explanatory notes:
'An Order under this section may also make provision in connection with such a transfer or direction, and other provision including provision relating to the use or supply of information, combining any aspect of the payment and management of tax credits with any aspect of the administration of social security and applying social security legislation in relation to tax credits. Subsection (5)(a) allows new functions to be conferred on, or functions to be removed from, the Secretary of State, the Treasury, the HMRC Commissioners, a Northern Ireland Department or any other person. Under subsection (5)(b), the Order may authorise the Secretary of State and the HMRC Commissioners to arrange for the HMRC Commissioners to provide services to the Secretary of State in connection with tax credits.'
The section also allows:
- provisions to apply to tax credits any provision of primary or secondary legislation relating to social security
- provisions that combine or link any aspect of the payment and management of tax credits with any aspect of the administration of social security
- provisions about the use or supply of information held for tax credits purposes including allowing it to be used for other purposes
- provisions in relation to information held for non-tax credit purposes and allowing it to be used for a purpose connected with tax credits.
As with the other provisions relating to tax credits, Section 126 gives DWP a wide range of powers in relation to the tax credits system.
Information sharing between HMRC and DWP
Section 127 Welfare Reform Act 2012 allows information held by HMRC (and those who provide services to HMRC) to be supplied to the Secretary of State (or to a person providing services to them) or to a Northern Ireland department (or to a person providing services to him/her) for the purposes of departmental functions. Similarly information held by the Secretary of State (and those who provide services to him/her) can be shared with HMRC for the purposes of HMRC functions.
The Section prohibits either DWP or HMRC receiving information and sharing it with any other person or body unless certain conditions are met.
Following the Summer Budget 2015, the Welfare Reform and Work Bill was introduced into Parliament. The Bill received Royal Ascent on 16 March 2016.
The Welfare Reform and Work Act (WRWA) introduces several provisions including:
- Benefit cap changes
- Freeze of rates for four tax years
- Changes to the child element of universal credit
- Changes to the limited capability for work element and work related requirements
You can read about the bill's progress before it was enacted including explanatory notes and briefing papers by following the links below:
The purpose of the Coronavirus Act is to enable the Government to respond to the coronavirus pandemic. Section 77 of the Act includes a provision to up-rate the basic element of Working Tax Credit by an additional £20 a week for 2020-21 meaning the basic element is worth £3,040.
Last reviewed/updated 28 May 2020