The Department for Work and Pensions (DWP) has issued an urgent alert to millions of benefit claimants across England, confirming that two major services—Tax Credits and Income-Related Employment and Support Allowance (ESA)—are being phased out as part of the government’s transition to Universal Credit (UC). This change, part of the DWP’s “managed migration” programme, is set to impact approximately 1.2 million households by the end of 2025–26. With the deadline for these services looming, the DWP is urging claimants to act swiftly to avoid losing critical financial support. This article, tailored for an English audience, explains who is affected, what steps to take, and how to navigate this significant welfare reform. We’ll also address potential challenges, scams to watch out for, and what this means for vulnerable claimants.
What’s Happening with Tax Credits and Income-Related ESA?
The DWP’s announcement, reported on 22 June 2025, signals the final phase of phasing out six “legacy benefits” in favour of Universal Credit, a single, streamlined monthly payment system. Tax Credits (including Working Tax Credit and Child Tax Credit) and Income-Related ESA are the immediate focus, with their services shutting down for most claimants by the end of June 2025. This is part of a broader plan to simplify the UK’s welfare system, which the government argues will provide more consistent support and encourage employment. By March 2026, all legacy benefits, including Income Support, Housing Benefit, and income-based Jobseeker’s Allowance (JSA), will be fully replaced by Universal Credit.
The DWP has been rolling out this transition since 2013, but the pace has accelerated, with over 2 million migration notices already issued by the end of 2024. For Tax Credits, the cutoff is particularly urgent, as payments will cease for most claimants by July 2025. Income-Related ESA claimants have until December 2025 to receive their migration notices, but some may face earlier deadlines depending on their circumstances. Failure to apply for Universal Credit within three months of receiving a migration notice will result in a complete loss of benefits, making immediate action critical.
Who Is Affected?
The shutdown of Tax Credits and Income-Related ESA will impact a wide range of claimants across England, particularly low-income families, single parents, and those with health conditions or disabilities. Here’s a breakdown of who is affected:
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Tax Credits Recipients: Approximately 440,000 households currently receive Working Tax Credit (for low-income workers) or Child Tax Credit (for families with children). This includes single parents like Jane from Birmingham, who relies on both for household expenses, and low-income workers supplementing their earnings.
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Income-Related ESA Claimants: Around 800,000 individuals receive this benefit due to limited capability to work caused by health conditions or disabilities. This group includes people with long-term illnesses who are not yet migrated to Universal Credit.
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Combined Claimants: Some households receive both Tax Credits and Income-Related ESA, meaning they’ll need to transition multiple benefits to Universal Credit.
To check if you’re affected, look for a Migration Notice letter from the DWP, which outlines your specific deadline to apply for Universal Credit. If you haven’t received one, contact the DWP via their helpline (0800 169 0190) or check your online Universal Credit journal if you’re already partially migrated. Claimants in Scotland, Wales, and Northern Ireland may face different timelines, but this article focuses on England’s rollout.
What Are the Payment Amounts?
The transition to Universal Credit will change how much you receive and how often. Universal Credit is paid monthly in arrears, unlike the weekly or fortnightly payments of some legacy benefits. Below is a table comparing the 2025 payment rates for Tax Credits, Income-Related ESA, and their Universal Credit equivalents:
|
Benefit Type |
2025 Monthly Amount (Approx.) |
Universal Credit Equivalent (2025) |
|---|---|---|
|
Working Tax Credit (Basic) |
£175–£300 |
Standard Allowance: £292.11 (single, under 25) to £578.82 (couple, over 25) |
|
Child Tax Credit (Per Child) |
£235–£545 |
Child Element: £287.92 (first child), £242.45 (additional children) |
|
Income-Related ESA (Single) |
£335–£450 |
Limited Capability for Work: £146.31–£354.28 (depending on assessment) |
|
Income-Related ESA (Couple) |
£500–£650 |
Couple with Limited Capability: £578.82–£732.59 |
Note: Universal Credit amounts vary based on income, housing costs, and additional elements (e.g., childcare, disability). Use the Policy in Practice calculator to estimate your entitlement. Transitional protection ensures your payments don’t drop immediately if you’re migrated by DWP instruction, but voluntary movers lose this safeguard.
How to Migrate to Universal Credit
If you receive a Migration Notice, you must apply for Universal Credit within three months to avoid losing benefits. Here’s a step-by-step guide to ensure a smooth transition:
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Read Your Migration Notice: The letter specifies your deadline (typically three months from receipt) and includes instructions for applying online at gov.uk/apply-universal-credit.
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Set Up a Universal Credit Account: You’ll need an email address, phone number, and bank account details. If you struggle with digital applications, call the Universal Credit helpline (0800 328 5644) for support or visit a local Jobcentre.
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Provide Evidence: Submit details of your income, savings, rent, and health conditions. For ESA claimants, you may need a recent medical assessment or fit note.
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Wait for Assessment: Universal Credit applications take about five weeks to process. You’ll receive your first payment in arrears, so budget for a potential gap.
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Request Transitional Protection: If your Universal Credit payment is lower than your legacy benefits, transitional protection tops up the difference until your circumstances change.
If you miss the deadline, you can request an extension by contacting the DWP immediately, explaining your circumstances (e.g., illness, lack of access to digital services). Pensioners or those with disabilities can seek help from charities like Citizens Advice or Age UK. For example, Jane from Birmingham successfully applied for Universal凑
System: Universal Credit after receiving her migration notice in February 2025, ensuring her payments continued uninterrupted.
Challenges and Concerns
The transition to Universal Credit has raised concerns among claimants and advocacy groups. Key challenges include:
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Digital Exclusion: Many claimants, particularly older or disabled individuals, struggle with online applications. The DWP offers telephone support, but delays can occur.
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Payment Gaps: The five-week wait for the first Universal Credit payment can leave families without funds, especially if legacy payments stop abruptly.
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Reduced Entitlements: Some claimants, particularly those on Income-Related ESA, may receive less under Universal Credit due to stricter Work Capability Assessments. Campaigners like Scope have expressed “huge anxiety” over tightened disability benefit criteria.
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Fraud Risks: The DWP has warned of scams targeting claimants with fake Migration Notices or phishing links. Always verify messages by forwarding texts to 60599 or contacting the DWP directly.
To address these, the DWP is implementing a “test and learn” approach to ensure proportional use of new powers, such as bank account checks starting in 2026. However, civil liberties groups like Big Brother Watch have raised concerns about privacy violations, arguing these measures disproportionately affect vulnerable claimants.
How to Avoid Scams
The DWP has reported a surge in fraudulent texts and emails claiming to be Migration Notices or offering “unclaimed benefits.” On 7 June 2025, the DWP warned 23.7 million benefit claimants to avoid sharing personal or financial details via unsolicited links. To stay safe:
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Verify Sources: Never click links in unexpected messages. Contact the DWP via gov.uk or 0800 169 0190.
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Report Scams: Forward suspicious texts to 60599 or report to Action Fraud.
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Secure Details: Store banking information safely and avoid sharing it publicly.
What This Means for England
The shutdown of Tax Credits and Income-Related ESA marks a pivotal shift in England’s welfare system. While Universal Credit aims to simplify benefits and promote employment, the transition poses risks, particularly for low-income and disabled households. The DWP’s £3 billion welfare cut plan over four years, starting in 2025, has sparked debate, with critics arguing it may reduce support for those in need. The government insists reforms will improve efficiency and fairness, but claimants must stay proactive to protect their income.
For support, contact the DWP, visit gov.uk, or reach out to charities like Turn2us, which offers a grant search tool. If you’re struggling, Samaritans (116 123) and Mind (0300 102 1234) provide emotional support.
Looking Forward
The DWP’s urgent warning about the shutdown of Tax Credits and Income-Related ESA is a wake-up call for millions in England. By acting promptly, checking your Migration Notice, and applying for Universal Credit, you can avoid losing vital support. Stay vigilant against scams, seek assistance if needed, and use official channels to verify information. The transition to Universal Credit is a significant change, but with the right steps, you can navigate it successfully.