Tax credits and early years eBulletin - February 2023
In this issue
Missing best start foods
Best start foods replaced the healthy start voucher scheme in Scotland in 2019. It provides a payment card, worth £4.50 a week during pregnancy, £9.00 for a child under one, and £4.50 for a child aged 1 or 2 (2022/23). This is payable to families in receipt of qualifying benefits, including universal credit with earnings no more than £660 a month, or working tax credit with income no more than £7,920 a year. The Scottish Government announced in its November 2022 Budget that income limits for best start foods would be removed during 2023/24, to align with eligibility for best start grants and Scottish child payment.
More than 7,000 best start foods payment cards issued have never been activated and over 3,000 have been activated but never used, leading to a total of £2.3 million in payments that have yet to be spent. Social Security Scotland is urging families to check if they have missed out, and the card issuer, Allpay is also writing to claimants with unspent balances. Unlike with the old voucher scheme, the credit on the card does not expire within a fixed period, so unspent balances can still be used.
For more information see the Social Security Scotland website
Benefit cap
The benefit cap is a limit to the total amount of support a family on housing benefit or universal credit can receive, set under UK-wide rules. This particularly affects larger families, especially those in rented accommodation. From April 2023, the level of the benefit cap is set to rise for the first time since it was introduced, from £1,666.67 to £1,835 a month in Scotland for couples or lone parents. There are exemptions from the benefit cap in some circumstances, including families with a disabled adult or child, carer, or in work over a certain level.
The Scottish Government has committed to mitigating the benefit cap through increased funding for Discretionary Housing Payments. Families affected by the benefit cap can apply for a Discretionary Housing Payment from their local authority.
For more information see the Scottish Government website
See also our blog Welcoming increased benefit cap mitigation
Managed migration to universal credit
Managed migration is the process by which claimants are notified that their tax credits and legacy benefits are ending, and that they will need to claim universal credit instead. Claiming universal credit under this process includes transitional protection to ensure claimants are no worse of at the point of transfer if circumstances unchanged. Failure to claim universal credit within three months of notification results in tax credits and legacy benefits being terminated.
The government has announced that claimants in receipt of tax credits only will be subject to managed migration during 2023/24. It plans that the migration of the remaining tax credit claimants, who also receive DWP benefits, will be completed during 2024/25.
In ‘Learnings from the Discovery Phase’ of managed migration to universal credit in test areas, of the 499 notifications issued, 49 people had their tax credits terminated with no subsequent claim to UC.