HMRC are to stop paying Working Tax Credit and Child Tax Credit to people claiming the new Universal Credit, it has been revealed.
Previously, when people were moved to Universal Credit their tax credits accounts with the HMRC would remain open until the end of the tax year.
Tax credit payments will now form part of a households total Universal Credit award. Those who have not yet been moved (claiming) Universal Credit will continue to have their tax credits paid by the HMRC.
The changes, revealed in October’s issue of the DWP’s Touchbase magazine, come into force from this month (October) and will affect all existing and new Universal Credit claimants.
From this month, the HMRC will begin contacting affected claimants to inform them that their tax credit payments will stop, and give details on what they need to do.
The DWP say that claimants who are already getting tax credits do not need to contact the HMRC, while they wait for the changes to affect them. But they must report any changes in their circumstances as soon as possible, to ensure they receive the correct amount within the Universal Credit system.
People will be moved to Universal Credit ‘at different times’ depending on where they live, their circumstances and what benefits they are currently claiming. Work and Pensions Secretary Iain Duncan Smith recently announced plans to accelerate the roll-out of Universal Credit across the UK.
Tax credits will eventually be scrapped to form part of Universal Credit, as will a number of existing benefits including Housing Benefit and Income Support.
The HMRC is also changing the way it recovers overpaid tax credits. People who have been overpaid tax credit, largely due to HMRC blunders or accidental claimant error, may have their tax credit award reduced to repay outstanding debts. Depending upon a person’s circumstances this may include one or more previous claims.
Those affected will receive letters from the HMRC informing them of the overpayments. The amount deducted from their tax credit award could be as much as 25%. Those who have already made an arrangement to repay with the HMRC will not be affected.
Touchbase also reveals that Atos and Capita have employed more staff to increase the number of assessments they do for the new disability benefit, Personal Independence Payment (PIP).
The reports used by assessors have also been improved, claim the DWP, and changes have been made to the PIP IT system. DWP say that PIP decision-makers have doubled their output since April 2014.
They also claim that disabled people will not have to wait more than 16 weeks for a PIP assessment by the end of 2014.
The news comes after charities and politicians raised concerns over a growing PIP assessment backlog.
Last edited at 21:09pm 13 October 2014 to include further clarification.