Working Tax Credit Has Ended: What Universal Credit Means for You
If you are searching for Working Tax Credit, the first thing to know is that it no longer exists. Tax credits closed on 5 April 2025, and everyone who used to claim them has either moved to Universal Credit or lost their award. This guide explains what changed and what to check if you moved across, or if you are claiming for the first time.
What happened to Working Tax Credit?
Working Tax Credit and Child Tax Credit were run by HMRC and were one of six older benefits being replaced by Universal Credit. The government moved claimants across in stages, using letters called Migration Notices. Those who did not claim Universal Credit by the deadline on their notice had their tax credits stopped.
If you think you may have missed the move, or you are unsure what you are receiving, check your gov.uk account or ask Citizens Advice. Do not assume an old award is still being paid.
What does Universal Credit replace?
Universal Credit replaces Working Tax Credit, Child Tax Credit, Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, and Housing Benefit. It is paid as one monthly amount by the Department for Work and Pensions.
How is Universal Credit different from tax credits?
Tax credits looked back at your annual income. Universal Credit looks at each monthly assessment period. Your employer reports your pay to HMRC, and your payment adjusts automatically. A good month at work lowers your payment, and a lean month raises it.
Payment is monthly in arrears, so you are paid for the month that has just ended. Housing support is paid to you rather than directly to your landlord unless you arrange otherwise, so you are responsible for making sure the rent is paid.
How does the taper rate work?
For every £1 you earn above your work allowance, your Universal Credit falls by 55p. Say Sarah earns £200 above her work allowance in a month. Her payment falls by £110, which is 55% of £200. She keeps the full £200 from her employer, so she is £90 better off for the extra work.
The work allowance only applies if you have children or a limited capability for work. If you do not, the taper starts from the first pound you earn.
What about childcare costs?
Universal Credit can repay up to 85% of approved childcare costs, which is higher than the 70% that Working Tax Credit covered. Monthly caps apply for one child and for two or more children, and they are uprated each April. Check the current caps on gov.uk before you rely on them.
What are the risks?
- The first payment wait. There is a wait of about five weeks before your first payment. You can ask for an Advance Payment, but it is a loan that is repaid from future awards.
- Variable pay. If your hours change month to month, your payment will swing too, so budget on the lower months.
- Savings limits. Savings above £6,000 reduce your award, and above £16,000 you cannot claim.
What if you lost out in the move?
People who were moved across by the DWP and ended up with a lower award may have received transitional protection, which tops up the difference. It reduces as your circumstances improve. If your payment dropped and you did not receive protection, speak to Citizens Advice or the DWP.
What should you do now?
- Check your Universal Credit journal and report any changes in work or family circumstances promptly.
- Run a benefits calculator such as Entitledto or Turn2us to confirm you are getting everything you can.
- Keep records of your rent, childcare receipts and any health conditions that affect work.
This article is general information, not personal benefits advice. Check gov.uk for current rates.
