UC Managed Migration

I'm currently receiving child tax credits and just received a letter from UC giving a UC migration notice - I have to apply for UC by mid May apparently. I know the plan was to migrate everyone by 2024, but thought HMRC/DWP were running behind schedule with it? I was aware of pilot migrations taking place previously, but not heard of any new areas being added recently? So have I got caught up in the full rollout, anyone else received these letters yet?

I'm dreading being moved onto UC as it sounds horrendously complicated in my circumstances (director of small ltd company).
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Comments

  • poppy12345
    poppy12345 Posts: 18,878 Forumite
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    The migration has now started in all areas and the expected date for it to be completed for everyone is end of 2024.  (except those claiming Income Related ESA, if they are not claiming Tax credits) Whether that date will be extended is anyones guess.

    As you've now had the letter then you will now need to claim UC by the date in the letter, if you don't then your tax credits will stop.
  • Can't comment on your circumstances but whatever you do  wait until the benefits rates are uplifted in April  before you apply for UC.
    Any transitional financial protection will last longer if you wait.
    (That is unless you are better off on UC)
    Perhaps that's why they've pushed these new migrations out now - to try and get people over before the April uplift?

    I will certainly be worse off on UC - according to Entitled To calculator I would get £30/week less on UC. But to compound matters I'll be treated as self employed by UC system, so I'll have to submit monthly accounts for my business and my UC will be adjusted depending upon my business trade (which can vary massively from month to month). So some months I'll get zero UC, and other months I'll get something, but they'll always observe the minimum income floor every single month.

    It's impossible to tell for sure, but I'm expecting to be significantly worse off. And budgeting will be impossible due to the constantly varying UC (despite me earning a fixed monthly wage PAYE from my company).

    Not to mention that it'll take me an extra day or two of admin every month to prepare monthly business accounts (my business works on accruals accounting, yet UC require monthly cash accounting statements).
  • poppy12345
    poppy12345 Posts: 18,878 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper
    With managed migration you won't be worse off. I have no idea how this will work for you as self employed, i'm sure others will know when they see your thread.
  • With managed migration you won't be worse off. I have no idea how this will work for you as self employed, i'm sure others will know when they see your thread.
    They wouldn't be worse off on the day it transferred, but if they have TP they would be worse of when benefits uplifted in April, than if they were still on original benefits. 
    Let's Be Careful Out There
  • With managed migration you won't be worse off. I have no idea how this will work for you as self employed, i'm sure others will know when they see your thread.
    I'm absolutely certain that I'll be worse off. It's not clear how much because I don't understand how transitional protection works with a varying income (business trade, not my PAYE income). Just noticed this on the Entitled To website:

    Can I lose my transitional element?

    Your transitional element will be removed if, for example:

    • your household earnings drop below a set threshold (called the administrative earnings threshold), which is based on the national minimum wage for your age. The drop is measured from your first assessment period after joining Universal Credit and should last for three assessment periods in a row.

    Once you lose the transitional element it will not be applied to any future awards. There is one exception if your Universal Credit award ends due to an increase in income and you make a new claim for Universal Credit within 3 months of your previous claim ending – in this case the new claim is considered a continuation of the old claim and the transitional element can be included again.

    My business is very seasonal, so some months (winter) it will have almost zero turnover. So despite my business saving money to pay me a regular PAYE wage through the winter, UC will ignore that and look at the business's cash trade. So I envisage loosing the transitional protection pretty quickly. To make matters worse, I also have savings that'll be taken into account and further reduce my UC.

  • HillStreetBlues
    HillStreetBlues Posts: 5,694 Forumite
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    edited 22 February 2023 at 4:13PM
    Can't comment on your circumstances but whatever you do  wait until the benefits rates are uplifted in April  before you apply for UC.
    Any transitional financial protection will last longer if you wait.
    (That is unless you are better off on UC)
    Perhaps that's why they've pushed these new migrations out now - to try and get people over before the April uplift?

    I will certainly be worse off on UC - according to Entitled To calculator I would get £30/week less on UC. But to compound matters I'll be treated as self employed by UC system, so I'll have to submit monthly accounts for my business and my UC will be adjusted depending upon my business trade (which can vary massively from month to month). So some months I'll get zero UC, and other months I'll get something, but they'll always observe the minimum income floor every single month.

    It's impossible to tell for sure, but I'm expecting to be significantly worse off. And budgeting will be impossible due to the constantly varying UC (despite me earning a fixed monthly wage PAYE from my company).

    Not to mention that it'll take me an extra day or two of admin every month to prepare monthly business accounts (my business works on accruals accounting, yet UC require monthly cash accounting statements).
    If you are £30 worse of on UC then your TP will be £130 PM

    If you switched now, come April you  won't see any rise in benefits as the 10.1% rise would be taken from the TP.
    As long as your UC is under £1300PM

    Let's Be Careful Out There
  • poppy12345
    poppy12345 Posts: 18,878 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper
    With managed migration you won't be worse off. I have no idea how this will work for you as self employed, i'm sure others will know when they see your thread.
    They wouldn't be worse off on the day it transferred, but if they have TP they would be worse of when benefits uplifted in April, than if they were still on original benefits. 

    Yes i know about the benefits uplift but completely forgot to include TP would erode over time so if claimed before the uplift they wouldn't be any better off.
    I can't remember how the benefits uplift works with UC and when it would be included from. I remember last years uplift my daughter didn't see that increase until her payment on 24th May, which was for AP 18th April to 17th May.
  • calcotti
    calcotti Posts: 15,696 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 22 February 2023 at 5:07PM
    Perhaps that's why they've pushed these new migrations out now - to try and get people over before the April uplift?
    It isn’t anything to do with that. It is true however that those migrated before April will be worse off than those migrated after April.
    They wouldn't be worse off on the day it transferred, but if they have TP they would be worse of when benefits uplifted in April, than if they were still on original benefits. 
    Which is why OP has been advised to wait until mid April before applying for UC. They will be protected on the day of transfer.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • Here's an example of how my UC will be stuffed up by my business's cash flow:

    Today I have invoiced a client for £7000, which is due to be settled by end of April, so my business bank account will show a receipt of £7000 (+vat, which can be disregarded for UC) at that point. But this invoice is for the next 12 months of a service which I am reselling to them. A service which cost's my business £500/month. So over the course of the year it will cost me £6000 to provide this service, I'm making a £1000 gross profit (£83/month).

    The way UC works, they'll consider me to have made a profit of £6500 in April, followed by a loss of £500 in each of the following months. So based on that I'm pretty sure my UC entitlement for April will be zero (and it may even terminate my UC claim completely??). And then for the following 11 months I'll be presenting an income of MINUS £500 towards my UC calculation. This is going to push me under the minimum income floor/administrative earnings threshold, so then my UC will be calculated as though I've earnt more than I actually have for that month.

    Obviously this is just one contract/client, taken in isolation to illustrate the situation simply, and my business has several others.  But it shows how variable the business cash flow can be - I could be invoicing for £20k of work one month, and then almost nothing for the next 3. Switching clients onto monthly invoice/payments isn't practical - I've already tried that, and most of them chose to stick with annual. 

    And throughout all this time, I'll have actually been paying myself a fixed regular wage via PAYE, yet UC disregards that and looks solely at my business profits.

    Treating small businesses like this is ludicrous. It might work out ok for someone who has a regular self employed income - like a window cleaner or construction labourer, but not for many others. I've discussed it with my accountant who prepares my annual business accounts, and he was shocked at how UC works for small businesses owners. Irony is that he claims child tax credits himself, so he's going to be in the same boat!
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