In April 2013, a welfare benefit known as the Universal Credit, or "UC" was introduced by the Welfare Reform Act 2012.  The UC replaces seven of the main means-tested benefits and tax credits, including child and working tax credit. 

For those individuals currently on tax credits there is nothing to be concerned about as they're safe until 2019; But if an individual comes off tax credits and then later needs to make a fresh benefits application, it will be for the UC provided they meet the criteria. 

The main political parties remain committed to it's principle as it is still considered to be a simpler benefits system.

However, there are some really important changes in relation to the impact the UC has on a) unearned income, which includes pension income from early retirement, b) spousal maintenance and c) surplus capital (i.e. savings).

Currently, both spousal and child maintenance are ignored for the purposes of calculating tax credits, which is a significant benefit that is very regularly taken into account when assessing the appropriate level of order. 

With the UC, however, whilst child maintenance will continue to be disregarded, spousal maintenance will be deducted pound for pound.

In respect of capital, anything under £6,000 is ignored when assessing eligibility for UC.  

Anything between £6,000 and £16,000 is treated as if it produces a monthly income of £4.35 for each £250 or part of £250, irrespective of whether you actually achieve that return. 

There are transitional provisions for those currently on tax credits so that if they move on to UC in due course they will be no worse off due to the change and it's worth looking at the following website for further information:

If you're think this may have an impact on your circumstances, please don't hesitate to get in touch.