Tax credit closure regime for state pension age claimants comes into force

The Social Security (State Pension Age Claimants: Closure of Tax Credits) (Amendment) Regulations 2024 came into force on 8 June 2024, having been made on 7 May 2024 and laid before Parliament on 9 May 2024¹. Corresponding Northern Ireland regulations, made by the Department for Communities on 24 May 2024, came into operation on the same date².

The regulations provide for claimants entitled to working tax credit to move to universal credit with transitional protection, and for claimants entitled to child tax credit to move to pension credit with transitional protection¹. The Northern Ireland rules make provision corresponding to that made by the Secretary of State for Work and Pensions for Great Britain².

Under the tax credit closure notice, the deadline day must not, subject to exceptions, fall within three months of the notice being issued¹. A shorter period may apply where the person is already entitled to state pension credit, or where the notice follows cancellation of a previous notice¹. The notice may be issued to a single person who has reached the qualifying age, a member of a couple both of whom have reached that age, a member of a protected mixed-age couple, or a person entitled to both a tax credit and state pension credit¹.

Where a qualifying claim is made by a single claimant who has reached the qualifying age for state pension credit, or joint claimants both of whom have, the benefit cap is not to apply in calculating the universal credit award¹. Notional unearned income rules are also disapplied until the assessment period following the first 12 assessment periods of an award, for claimants who have not applied for retirement pension income they might expect to be entitled to¹.

For child tax credit claimants moving to pension credit, a transitional additional amount applies where the weekly child tax credit amount combined with any state pension credit on the migration day exceeds the indicative state pension credit amount¹. The additional amount is reduced by the amount of any relevant increase after it first applies, and ceases in specified circumstances, including where the claimant's couple status changes or they are no longer responsible for a child or qualifying young person they were responsible for when the notice was issued¹.

The regulations also change housing benefit rules so the applicable amount no longer includes a maximum of two amounts for children or young persons in the same household¹. They provide that a single person does not accrue deferral benefits while in receipt of universal credit¹. The Social Security Advisory Committee agreed the proposals should not be referred to it, and no full impact assessment was produced as no significant impact was foreseen¹.

Why it matters for households

The regulations set the framework for ending tax credit awards for claimants who have reached state pension age. Working tax credit claimants in this group move to universal credit with transitional protection, while child tax credit claimants move to pension credit. The deadline day in a closure notice is generally at least three months after the notice is issued, though shorter periods apply in some cases¹.

The protections include an exemption from the benefit cap for qualifying claimants who have reached the qualifying age for state pension credit, and a 12 assessment period waiver of notional unearned income rules for those who have not claimed retirement pension income¹. For those moving to pension credit, the transitional additional amount is designed to bridge the gap between child tax credit and the indicative pension credit amount, but it reduces as relevant increases occur and ends in defined circumstances¹.

What happens next

The regulations are in force. The deadline day for any individual tax credit award will be specified in the closure notice issued to them, and the Secretary of State or the Department may change it to a later day on their own initiative or on request before the deadline if there is good reason¹.