Tax credits ended for all claimants in 2025
Working Tax Credit and Child Tax Credit ended for the remaining legacy claimants through the managed migration process that concluded in 2025. If you were previously on tax credits, you will have received a migration notice from DWP and will now be claiming Universal Credit (or have had your entitlement closed if you did not respond).
If you still have an active tax credits award and have not claimed UC, contact HMRC immediately. A migration notice gives a three-month deadline. Missing it can mean losing transitional protection.
Transitional protection, what it means and how long it lasts
If you migrated to UC and your calculated UC amount at the point of migration was lower than your tax credits award, you received transitional protection. This is a top-up element added to your UC award to ensure you did not lose money on migration day.
Transitional protection is not permanent. It erodes over time as other elements of your UC increase (for example, as standard allowance rates rise each year). It is also removed if your circumstances change significantly: moving in with a partner, having an additional child, or changes in employment. It does not transfer to a new UC claim.
Key differences between tax credits and Universal Credit
Tax credits were annual awards based on the previous year's income, with a significant income disregard for in-year rises. Universal Credit is a monthly calculation based on current earnings. This means UC is more responsive to earnings changes, for better and worse.
The 55% earnings taper in UC is a significant change from the tax credits taper structure. UC claimants with fluctuating or self-employed income can see monthly UC awards change substantially based on RTI earnings or declared self-employment income.
Savings rules under UC vs tax credits
Tax credits had no capital limit. Under UC, the £6,000 and £16,000 thresholds now apply. If you had significant savings that were irrelevant under tax credits, they may now affect or prevent UC entitlement.
If savings are between £6,000 and £16,000, the tariff income rule reduces UC. If savings are £16,000 or more, standard UC is not payable. This is a significant rule change for long-term tax credit claimants who had accumulated savings.
Self-employment on Universal Credit
Under Working Tax Credit, self-employment income was assessed annually based on the previous year's accounts. Under UC, it is assessed monthly with a Minimum Income Floor (MIF) that can apply after the first twelve months of self-employment.
The MIF is broadly equivalent to the National Living Wage at the expected hours you should be working. If your actual earnings fall below the MIF, DWP will use the MIF figure for the UC calculation instead of your actual earnings. This can reduce UC significantly for part-time or low-earning self-employed claimants.