Advising low income families in Scotland eBulletin - November 2024

Universal credit, free school meals, Best Start foods and more

IN THIS ISSUE:

  • Moving onto universal credit 
  • Tax credit overpayments and managed migration
  • Free school meals and local authority discretion
  • Best Start foods and households with no recourse to public funds
  • Adjudicator’s Office report
  • Referral pathways to money advice in education settings - briefing

Moving onto universal credit 

The move from tax credits to universal credit (known as ‘managed migration’) is nearing completion, with almost all households on tax credits having received a migration notice by now. This gives three months’ notice to claim UC, which may be extended with good reason. A system scan was undertaken in October, and a further scan is planned in January/February to find anyone still receiving tax credits. It is intended that the tax credits system will close by the end of the current tax year, 5 April 2025, with no possibility of extensions or renewals of tax credits after that date. HMRC has said that a specialist team will remain in place to deal with ongoing reviews, appeals and disputes relating to awards up to that date. 

Read more about the Tax Credits Consultation Forum 

Tax credit overpayments and managed migration

Under ‘managed migration’, entitlement to tax credits ends the day before entitlement to UC starts, in practice by the issuing of a ‘stop notice’ from the DWP to HMRC. However, it has become apparent that there is often a delay of up to one month between the date of the UC claim and the issuing of the stop notice, as the DWP wait for the ID verification of the UC claim. Through no fault of the claimant, this may cause an overpayment of tax credits, for any payments covering the period after the date of the UC claim. 

All tax credit overpayments are legally recoverable, with no right of appeal, but HMRC guidance COP26 states overpayments should not be recovered if the claimant met their responsibilities and HMRC has failed in their responsibilities. Claimants can ask HMRC to use its discretion not to recover, using form TC846 noting:

  • COP26 implies that if the claimant separately notifies the Tax Credits Helpline that they have just claimed UC, the overpayment should not be recovered. 
  • The migration notice tells claimants “Your tax credits award will end from the date you make your Universal Credit claim” and there is nothing that suggests they should separately notify HMRC when they claim UC, so it is unreasonable to expect them to do so.
  • It is reasonable for claimants to rely on DWP/HMRC to meet its statutory obligation to terminate tax credits in accordance with The Universal Credit (Transitional Provisions) Regulations 2014 Reg 8(2).
  • HMRC should routinely exercise discretion to waive recovery of the resulting overpayment, to put tax credits on an equal footing with other legacy benefits, which allow a two-week run-on. 

Note also that tax credit overpayments are usually transferred (after allowing at least one month to appeal entitlement or dispute recovery) to the DWP to recover from ongoing payments of UC. Transfer of overpayment debt to the DWP should not happen if there is an ongoing review, appeal or dispute concerning the overpayment. 

Free school meals and local authority discretion

Following the move from tax credits to universal credit, there are households that may have lost entitlement to free school meals. These include:

  • Families who were on child tax credit but not working tax credit, and income under £19,995 a year (£1,666.25 a month) but who are now on universal credit, with earned income more than £796 a month.
  • Families who were on child tax credit, but now get child elements included in pension credit, which is not a qualifying benefit in Scotland.
  • Kinship carers and others who qualified for child tax credit but do not get UC because they are not treated as responsible for a child under UC rules.
  • Families who were on tax credits, but failed to comply with the managed migration process, and are not currently entitled to universal credit.

In these and any other cases, local authorities have discretion to provide free school meals under the Education (Scotland) Act 1980, section 53(5). In its guidance on Good Practice Principles for School Meal Debt Management, COSLA cites examples where this discretion has been used by local authorities in cases who do not meet the nationally set criteria for free school meal provision, but where financial hardship is identified, including:

  • Earned income is only slightly over £796 a month
  • A pupil is living independently or in supported accommodation
  • Immigration status means the family cannot receive help from the government (no recourse to public funds)
  • A pupil is a refugee
  • Family is waiting for their first Universal Credit payment
  • Parent/carer qualifies for Housing, Council Tax Benefit or school clothing grant
  • Parent/carer qualifies for Pension Credit
  • A kinship care arrangement is in place
  • Recent death or illness of a parent/carer or sibling
  • Parent/carer has recently been made redundant or experienced a major unplanned loss of income
  • Parent/carer has recently received a custodial prison sentence
  • Parent/carer has vacated the family home in an emergency e.g. fire, domestic violence
  • Family relationship breakdown impacting on income

COSLA found that discretion is not exercised by every local authority, and differing approaches are in place amongst those authorities who do use it. The examples are not intended to be prescriptive but provide a reference point for local authorities to draw upon as they consider their approach. 

Families refused discretionary free school meals can make a complaint to their local authority or pursue legal advice. 

Best Start foods and households with no recourse to public funds

In February this year, income limits were removed for Best Start foods so that households on universal credit can now qualify for the payment card to buy milk, fruit and vegetables, worth over £500 in a baby’s first year, or over £250 during pregnancy and for children aged 1 or 2. 

The Scottish Government has further expanded the scheme on an ex gratia basis to include children in households with no recourse to public funds, or unable to claim benefits due to immigration status, which would include asylum seekers, for example. There are income limits for this group only: 

  • £1763.18 or less a month after tax for a single adult 
  • £2086.00 or less a month after tax for a couple

Since 5 August this year, there is no longer a requirement for the child to be a British citizen in this situation. 

See mygov.scot for more information and how to apply. 

 

Adjudicator’s Office report

 The latest report from the Adjudicator’s Office, which investigates complaints into tax credits and other HMRC services, was published in September. The Adjudicator resolved 843 complaints, of which 41% were partially or fully upheld in the claimant’s favour, and recommended payments for financial redress of £103,063 in total, including giving up recovery of overpayments. The report includes case studies which illustrate HMRC’s procedures dealing with allegations of financial abuse (Case study 2) and what happens to tax credits if a UC claim is made using a claimant’s details without their knowledge (Case study 3).  

Read the Adjudicator’s Office annual report 
 

Referral pathways to money advice in education settings - briefing

'Pathways to money and welfare rights advice from education settings' is a Public Health Scotland briefing for anyone working in a school or early years setting, in a local authority and for elected officials.

The briefing offers insights into how welfare rights advice can make a significant difference for families, examples of different pathways to advice in schools across Scotland, and makes recommendations about how we can make sure more parents or carers get access to advice.