Universal Tax Credits

Tax credits and Universal Tax Credits

As you may or may not know the UK tax credit system will soon join the Universal Credit system. But this does not mean that Universal Credit is just setting up. It works today in parallel with the Tax Credit system. From April 2017 benefits, such as housing benefit will also become part of the Universal Credit system so many changes are to come.

As of today, Universal credit works in a different system but with the condition that you cannot claim any tax credits, once you or your spouse has been awarded Universal Credit. This however does not mean, that you cannot continue with Universal Credit, once your tax credit period ends. If you decide to apply for Universal Credit after your tax credit ends, you will get an award letter from Universal Credit which would make you confirm your personal details and income situation. Also, it is worth noting that if you apply for Universal Credit while being on Tax Credit, it would automatically end tax credit.

If your tax credit ends you will be prompted to pay back your due to HMRC. The payback should have a 30 day deadline, so it’s essential for you to act during this period should you not be able to repay the whole sum in one. There are various repayment options available, but you will need to call the Tax Credit hotline in order to get more information on how to opt for the partial payment or have any further delay on repayment.

If you have opted for Universal Tax Credit, you will automatically become illegible to get any other Tax Credits. However if you decide to opt out of Universal Credit on time, then you can still apply for Tax Credit. Do not forget though that you will not have much time for the application.

In case you decide to switch to Universal Credit from tax credit, then all you need to do is to confirm your details as mentioned above then wait for your new credit to start to be paid to you. There might be a shorter gap between when your tax credit payment stops and when the new credit payment starts. This is why it’s good to opt for an advance payment.

If you are in a seriously bad financial situation and you have papers to prove this, then you can opt for an advance payment at Universal Credit.

It’s also worth noting that if you are self-employed, which means you basically manage your own income, then you will need to provide a monthly report to Universal Credit on a specific form called „ Statement of earnings” and send it back in.

It’s important to note that other benefits will also be replaced by Universal Credit. These include the following benefits:

Jobseekers’ Allowance

Housing Benefit

Employment and Support Allowance

Income Support


In the current situation this also means, once you apply for Universal Credit the payment of the above mentioned benefits would automatically stop. Get more information on the Tax Credit and Universal Credit hotlines.