So much worse off when tax credit ends and UC starts

As the title says don't know how we will cope when tax credit ends. Are situation won't change but because of the way UC label's are income differently to tax credit, we are going to be about £550 a month worse off. Tough times ahead even thou nothing my end has changed.
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  • NedS
    NedS Posts: 3,519
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    Did you have a question, or just a statement that you will be worse off?
    Are you aware that you will receive transitional protection for 12 months if you move to UC under managed migration.
    What type of income are you talking about and how is it treated differently on UC?

  • Auti
    Auti Posts: 354
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    @Cutgrass. This is what I am finding and don’t know what to do.
  • Cutgrass
    Cutgrass Posts: 21
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    NedS said:
    Did you have a question, or just a statement that you will be worse off?
    Are you aware that you will receive transitional protection for 12 months if you move to UC under managed migration.
    What type of income are you talking about and how is it treated differently on UC?

    Hi don't really know what I wanted to achieve by posting here, maybe just someone to say no you have it wrong you want be worse off.

     I understand now that you would need more and  I'm sorry I didn't give this in the beginning. We are a couple with 2 children aged under 14. My income is from my employer but is a PHI (permanent health insurance).
    My wife is my carer.

     I was lead to believe from what I've read is that the transitional protection for 12 months if you move to UC under managed migration. Was only for the £16,000 saving part. Of course I may have that wrong. Just don't know what to do I can't be £547 a month less per month. 
  • andrewmp
    andrewmp Posts: 1,734
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    NedS said:
    Did you have a question, or just a statement that you will be worse off?
    Are you aware that you will receive transitional protection for 12 months if you move to UC under managed migration.
    What type of income are you talking about and how is it treated differently on UC?

    The 12 month thing is for savings only.

    It's irrelevant to earnings.
  • Cutgrass
    Cutgrass Posts: 21
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    andrewmp said:
    NedS said:
    Did you have a question, or just a statement that you will be worse off?
    Are you aware that you will receive transitional protection for 12 months if you move to UC under managed migration.
    What type of income are you talking about and how is it treated differently on UC?

    The 12 month thing is for savings only.

    It's irrelevant to earnings.
    Yes thanks thought I had read that somewhere 
  • peteuk
    peteuk Posts: 1,231
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    Cutgrass said:
    As the title says don't know how we will cope when tax credit ends. Are situation won't change but because of the way UC label's are income differently to tax credit, we are going to be about £550 a month worse off. Tough times ahead even thou nothing my end has changed.
    I gather from the above statement you've set things up eg a pension payment that is discredited by TC, but because UC works on your “monthly” take home you in theory earn more because it doesnt take this payment into account. 

    Some would suggest this its a tax loophole thats allowed you to claim tax credits that is somewhat being closed by the migration from TC to UC (equally owning second homes ect).  Some would suggest you’re rightfully trying to protect your future. 

    If this is the case then there are other threads on this section of the forum that may be beneficial for you to read. 

    Equally have a look at the other parts of the forum, debt and spending sections may be contain some useful information as to how to deal with the deduction.  


    Proud to have dealt with our debts
    Starting debt 2005 £65.7K.
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  • Cutgrass
    Cutgrass Posts: 21
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    peteuk said:
    Cutgrass said:
    As the title says don't know how we will cope when tax credit ends. Are situation won't change but because of the way UC label's are income differently to tax credit, we are going to be about £550 a month worse off. Tough times ahead even thou nothing my end has changed.
    I gather from the above statement you've set things up eg a pension payment that is discredited by TC, but because UC works on your “monthly” take home you in theory earn more because it doesnt take this payment into account. 

    Some would suggest this its a tax loophole thats allowed you to claim tax credits that is somewhat being closed by the migration from TC to UC (equally owning second homes ect).  Some would suggest you’re rightfully trying to protect your future. 

    If this is the case then there are other threads on this section of the forum that may be beneficial for you to read. 

    Equally have a look at the other parts of the forum, debt and spending sections may be contain some useful information as to how to deal with the deduction.  


    Thanks for the above but it's nothing to do with a pension. 
  • Cutgrass
    Cutgrass Posts: 21
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    It's to do with a PHI as said above. Thanks for the suggestions about the other parts of the forum I will have a look. 
  • NedS
    NedS Posts: 3,519
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    Cutgrass said:
    It's to do with a PHI as said above. Thanks for the suggestions about the other parts of the forum I will have a look. 
    OK, so you have PHI income, that is non-taxable and therefore not taken into account for Tax Credits, but on UC must be declared and will be deducted pound for pound as other income, thus reducing any UC you receive after transitional protection.

  • Cutgrass
    Cutgrass Posts: 21
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    edited 11 October 2023 at 1:32PM
    NedS said:
    Cutgrass said:
    It's to do with a PHI as said above. Thanks for the suggestions about the other parts of the forum I will have a look. 
    OK, so you have PHI income, that is non-taxable and therefore not taken into account for Tax Credits, but on UC must be declared and will be deducted pound for pound as other income, thus reducing any UC you receive after transitional protection.

    Hi thanks almost correct but my PHI is taxable. So going to be £560 less a month. So good for them saying you won't be worse off. 
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