Our Money Advice Team has recently supported a single parent with 2 children in moving from Tax Credits to Universal Credit.
The person was getting Tax Credits to help with childcare costs and was worried about claiming Universal Credit as they didn’t want to risk falling behind on their childcare cost payment with their childcare provider.
We explained that the rules relating to childcare costs under Universal Credit covers up to 85% of childcare costs and these can also be paid in advance. After paying the childcare costs, the person was left with only £27 per week Tax Credits.
We completed a benefit check and identified that they would be significantly better off each month by claiming Universal Credit.
Moving over to Universal Credit has meant that they are not just getting help with the childcare costs, but also their rent (Housing Costs) and the amount that the person needs to live off for their day to day living costs (Standard Allowance).
The outcomes were as follows:
Previous Tax Credits claim:
After childcare costs they were left with Tax Credits of £27 per week (£117 per month)
New Universal Credit claim:
After childcare costs they are now, entitled to £94.82 per week (£410.90 per month)
That is an extra £67.82 per week (£293.89 per month)
Starting from September 2023, anyone who gets Tax Credits only will be asked to make a claim to Universal Credit. If you do not make a claim within the timeframe, your Tax Credit payments will stop.
If you need any advice or assistance in checking whether you may be better off on Universal Credit or for help and advice on how to make a claim, you can speak to our Money Advice Team.