Who isn’t migrating Tax Credits to UC ?

[treedragon]

Received a letter about migrating from Tax Credits to Universal Credit.

A deep dive into seems to show that a huge chunk will be taken due to savings over £16k. It also seems like a lot of hassle trundling into Job Centres.

I have decided not to bother with moving so do the TCs just stop?

Interested to learn who else has decided not to bother??

So did you actually need benefits at all if you find UC too much of a hassle? This is sort of the post that annoys UC claimants who were never on TC.

We were getting a very small amount of working tax credit for childcare costs, and we were notified that we would be migrated to UC. I worked out with tax free childcare we would have better off than we would be claiming UC, so we didn't bother claiming Uc, we went with TFC instead. If you're paying for any childcare, TFC doesn't consider savings in your entitlement, just earnings, so might be a better option.

You get transitional protection for a year.

It’s £174 per month taken and then the UC stops. Entitled to says it’s £32 per week on UC. So much for “not being worse off” and transitional protection. After a year it goes anyway unless we dispose of savings on a few holidays. I could understand the savings limit if this was an out of work benefit but it’s designed for people who are in work and disabled. Or at least Tax Credits were. It’s a very intrusive process too. I just don’t feel it’s worth the hassle for £32 a month. I have no real desires to traipse off to job centres and deal with their nonsense either.

But my question was are there any others who haven’t or aren’t bothering to migrate and if so is it simply TCs stop and you drop off the radar.

Yes well it's very different to tax credits. Tax credits was based just on earnings, UC is based on savings and capital as well .It's not just for working people it is for everyone, six benefits rolled into one. There is one initial trip to the job centre if your Id can't be identified online. There are no other job centre appointments unless you don't work enough hours or you are self employed. It's fine if you don't want to claim.

@Babyroobs

i am a disabled worker. I do 17 hours a week. I have no interest in changing jobs as it suits health situation from home. It’s ridiculous having a savings limit when people who are working may be saving for houses or disabled people would have savings to pay for say car or disabled overheads such as wheelchairs. Then there are house repairs etc. Not everyone lives in a rented house on housing benefit.

I’d like to know how they think for every £250 of savings you get £4.35 in income too. Where do you put your money to get 20% per year which is what that equates to.

entitledto won't give you an accurate estimation as it won’t provide the transitional element. Your UC would end after a year if you still have over £16,000 but you shouldn't be worse off when you move over. If you want accurate advice ring Help to Claim on 0800 1448 444.

My advice to anyone is don’t listen to the government when the lecture is about being frugal and saving for your old age. Just blow all your money and enjoy it because they clearly use being sensible as a barrier to UC.

I have just received the letter too. I can’t afford to not move over but I’m dreading it.
I really don’t agree with the savings threshold. I understand if someone is a millionaire but earns low they shouldn’t be able to claim, but to penalise someone for having savings is ridiculous.
As you say as a homeowner you need savings. If I rented I would get housing benefit and the landlord would have to fix things etc. As it is I have to pay a mortgage and I have to pay to fix things. Add in disabilities and/or additional needs which we all knows carries a hefty price tag, it’s just wrong. If someone spends all their money they get the full amount. If someone saves then the amount gets dropped till they can no longer claim. Yet their income stays the same.
Apparently carers allowance comes off £ for £ also? As if it isn’t already ridiculously low.
I haven’t looked into how it will work for us yet. Think I’m a bit head in the sand. Just another stress to deal with.

@Namerequired

add in all the draconian Job Centre scrutiny and stupid journal nonsense every day or whatever it seems like a very cumbersome system and completely unsuitable for working people. I’m not really wanting some stupid work coach telling me my job isn’t paying enough or whatever. I’d probably be thrown out of the job centre.

Don't do it then if you think you can survive without the money. We rarely get appointments or any other contacts from the job centre apart from accepting commitments from time to time. There are some decent Facebook groups who can calculate your entitlement. Unfortunately if you want the money then you will have to abide by the UC rules. Think how UC claimants that depend on the money they get from UC feel reading your posts? I am seeing lots of Tax credit claimants moaning about what they have to do. At least you have been able to build some cushy savings. It isn't that hard.

have called advice line seem to have conflicting information. They say that for the first year no deduction is made for savings but online reports are £174 is taken off even if you are migrated. So what is the true situation?

It also seems you have a year to blow all your savings so you reach a limit of under £6k which doesn’t attract deductions for being sensible.

^ This

https://www.gov.uk/guidance/tax-credits-and-some-benefits-are-ending-move-to-universal-credit
People on tax credits and students
If you claim before the deadline date on your Migration Notice, then some normal Universal Credit eligibility rules do not apply to you. These are:

• if you receive tax credits, you can make a Universal Credit claim even if you have money, savings and investments of more than £16,000. After 12 months, normal eligibility rules will apply. You will not be eligible for Universal Credit if you still have more than £16,000 in money, savings and investments

It's actually quite complex:

1. If your capital is >£16000 on application, your savings will be disregarded for 12 assessment periods.
2. However, if you drop below £16000, then any increase above £16000 after that will not be subject to protection, so if you have £17000, spend £3000, then save another £3000, you will no longer be eligible for UC.
3. The amount between £6000 and £16000 will still be deducted at a rate of £4.35 per £250.

So the transitional protection isn’t quite what they make out. If you have savings over £16k you are effectively “taxed” £174. So you’d automatically be £174 worse off under this migration and so called protection. Then after a year you are “taxed” 100% of the UC. So get nothing.

This needs to be daubed the savings tax. Like we had the bedroom tax.

It's very well explained and documented, and you have been given a generous warning time, as well as a generous grace period while you make your claim. It isn't a tax on your savings, it's a deduction based on the interest you could potentially get for your savings.

The transitional protection is for existing savings. If they didn't have that measure, you could repeatedly save and spend up to £16,000 in that year.

Can you please tell me where I would get £4.35 per month interest on each £250 saved?? That’s about 1.75% a month or 21% a year!!!

Tax rate is 20% so yeah I’m pretty genuine in calling it a savings tax.

And when I say where I mean a risk free savings account not some off shore risky fund used by tax avoiding MPs

Well, for example

https://www.nationwide.co.uk/savings/triple-access-online-saver/

Their interest rate is 4.25% if you make no more than 3 withdrawals in the year.

Using an example of £7000 in savings, you'd be charged a tariff rate of £17.40 per month, which is £208.80 per year. You would gain £297.50 in interest for the year using that account.

Your sums seem wrong.

£16,000 x 4.25% pa = £680 per year or £56 per month. UC deduct £174 per month for £16,000 of savings. So £174 is the rate of 14% on savings. Please direct me to such an account paying that?

We are not. We run our own business that employs both of us, I'm not convinced that we would get the monthly submissions right or be able to demonstrate that we couldn't pay ourselves more.