Tax Credits and Universal Credit

Tax Credits are being replaced by the Universal Credit which replaces both tax credits and Housing Benefit. It does not replace Child Benefit.

The child element in tax credits and Universal Credit is now only available to two children and there is now no higher rate for the first child. These new rules apply to new children born on or after 6 April 2017. The old rules continue to apply to children born before 6 April 2017. Universal Credit is being rolled out gradually: following the 2017 Budget the roll-out has been further delayed and will not be completed before the end of 2018. The managed migration of existing benefit claims will start in July 2019 and complete in March 2022.[1]

The plan to scale back tax credits announced in the 2015 Summer Budget was abandoned but some of the cut backs have taken place. The family element – worth of the Child Tax Credit (£750 pa) is now only available if the claimant has a child born before 6 April 2017. In was announced in the April 2016 Budget that tax credits would be frozen in cash terms for 4 years from April 2016.

[1] Written Statement House of Lords July2016 (HLWS 98).