Households receiving tax credits received an urgent warning after tens of thousands of payments were reduced to zero.
Transition to Universal Credit Sparks Benefits Suspension
The significant transition comes as the government works to shift all two million legacy benefit claimants to Universal Credit (UC) or pension credit by the end of March 2025, as part of a process known as controlled migration.
The managed migration process started in May last year, following a successful test in July 2019.
Thousands of people, however, have failed to claim UC after receiving so-called migration warnings informing them that they must do so.
As a result, their claim for legacy benefits has been suspended.
According to the Department for Work and Pensions (DWP), 31,460 families receiving tax credits had their benefits suspended after failing to act on a migration notification received between November 2022 and September 2023.
According to fresh numbers released to anti-poverty organisation Z2K by the DWP, the average household has lost approximately £4,130 per year.
This corresponds to a loss of £129.4 million in payments due to these claimants' failure to transition to Universal Credit.
Ayla Ozmen, director of policy and campaigns at anti-poverty charity Z2K, which revealed the statistics, said: "These figures show that DWP has now stopped well over £100million worth of benefits for people who've missed their deadline to move to Universal Credit.
"With hundreds of thousands of migration notices set to be sent this year, including to seriously ill and disabled people receiving employment and support allowance alongside tax credits, it's vital DWP gets this right and stops cutting off vital income.
"The Department should stop putting the responsibility on people to make a new claim for Universal Credit, even if their circumstances haven't changed at all.
"But until then, anyone who gets a Migration Notice needs to act on it as soon as possible to make sure they get everything they should."
How to Prevent Payment Loss as Tax Credits Discontinue
Acting as soon as you receive the managed migration warning is the only way to avoid missing out on payments when tax credits are discontinued.
Experts have repeatedly warned that controlled migration puts vulnerable people at danger of financial loss.
Last year, top executives at nonprofit organisations such as Mind, The Trussell Trust, Turn2Us, and the Money and Mental Health Policy Institute warned that approximately 700,000 people with mental health issues, learning disabilities, and dementia may struggle to participate in the process.
A DWP spokesperson stated: "The vast majority of Tax Credit claimants have successfully moved to Universal Credit, accessing the vital safety net provided to millions as they build towards financial independence.
"There is a range of support available to help people move, including extensions for those who need extra support."