The Social Security (State Pension Age Claimants: Closure of Tax Credits) (Amendment) Regulations 2024

Explanatory Note

(This note is not part of the Regulations)

These Regulations make provision in relation to the abolition of tax credits for certain claimants who have reached the qualifying age for state pension credit (“the qualifying age”). They provide for claimants who are entitled to working tax credit to move to universal credit with transitional protection and for claimants who are entitled to child tax credit to move to pension credit with transitional protection. They also make provision consequential on these changes.

Regulation 2 amends the Universal Credit (Transitional Provisions) Regulations 2014 (S.I. 2014/1230).

Regulation 2(3) allows a migration notice to be issued with a deadline of less than 3 months where a previous notice has been cancelled. It also allows a migration notice issued in error to be treated as a tax credit closure notice (see regulation 3).

Regulation 2(4) provides for transitional protection to cease after an initial period of 12 months in the case of single claimants or couples who have reached the qualifying age and whose earnings have fallen below a threshold for three consecutive months.

Regulation 2(5) inserts a new regulation 60A providing for the waiver of the upper age limit in universal credit in the case of a single person or couples who have reached the qualifying age, are entitled to working tax credit, and have been issued with a migration notice. The waiver ends (thereby ending entitlement to universal credit) if the person claims state pension credit or in any of the circumstances in which transitional protection would cease under regulation 56.

Regulation 2(5) also inserts a new regulation 60B which provides an exemption from the notional income rule (treating a person as having income they have not applied for) for persons who have deferred their state or non-state pension. It also inserts a new regulation 60C exempting persons over the qualifying age from the universal credit benefit cap.

Regulation 3, which extends to Great Britain and Northern Ireland, amends the Welfare Reform Act 2012 (Commencement No. 32 and Savings and Transitional Provisions) Order 2019 (S.I. 2019/167 (C. 6) (“the No. 32 Order”).

Article 2 of the No. 32 Order commenced section 33(1)(f) of the Welfare Reform Act 2012 abolishing tax credits, subject to a saving provision in article 3 which allowed existing awards to continue and to be renewed annually.

New article 3A provides for the Secretary of State (or in Northern Ireland, the Department for Communities) to issue a notice (“tax credit closure notice”) to certain claimants who are already entitled to state pension credit or who are entitled to child tax credit but not working tax credit. The latter group includes certain claimants who are protected from the exclusion of mixed-age couples from entitlement to state pension credit.

Article 3A requires the tax credit closure notice to inform the claimant that their award will end by a specified day (“the deadline day”). It also contains provision for the deadline day to be extended and for the tax credit closure notice to be cancelled in certain circumstances. If the notice is issued in error it may be treated as if it were a migration notice under the Universal Credit (Transitional Provisions) Regulations 2014 or the corresponding provisions for Northern Ireland.

New article 3B provides for the ending of the tax credit award following the issue of a tax credit closure notice. The award is ended by the cessation of the saving provision in article 3 of the No. 32 Order. This has the effect of bringing the provision in section 33(1)(f) fully into effect for that case.

New article 3B also provides for the tax credit award to be finalised after it has been ended by a tax credit closure notice by applying the same modifications of tax credit legislation as apply to awards terminated by a claim for universal credit.

Regulation 4 contains amendments to the State Pension Credit Regulations 2002 (S.I. 2002/1792) which provide for transitional protection in state pension credit for persons issued with a tax credit closure notice.

Regulation 4(4) amends regulation 18 of those Regulations to provide a 52 week exemption from the notional income rule for persons who have deferred their state or non-state pension.

Regulation 4(5) inserts a new Schedule IIB which provides for a new transitional additional amount to be included in the guarantee element of a state pension credit award where a person entitled to child tax credit is issued with a tax credit closure notice and is either already entitled to state pension credit or claims before the final deadline. It provides for the calculation of the amount and the circumstances in which it reduces or ceases.

Regulation 5 makes provision in relation to the time for claiming state pension credit where a person is issued with a tax credit closure notice. Where the claim is made on or before the deadline day the state pension credit award starts on the day of the claim and the tax credit award ends on the day before. When a claim is made within 3 months of the deadline day the award may be backdated so it begins on that day.

Regulation 6 makes changes to the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 (S.I. 2006/214) so the applicable amount no longer includes a maximum of two amounts for any children or young persons for whom the claimant is responsible or the claimant’s partner is responsible and who are members of the same household.

Regulation 7 amends the Social Security (Widow's Benefit and Retirement Pensions) Regulations 1979 (S.I. 1979/642) (the “1979 Regulations”) and the Social Security (Deferral of Retirement Pensions) Regulations 2005 (S.I. 2005/453) (the “2005 Regulations”).

If a person defers entitlement to a state pension, that person may become entitled to a higher rate of state pension or, if they reached state pension age before 6th April 2016, a lump sum payment (“deferral benefits”), which accrue over time while the benefit remains unclaimed, provided the person is not receiving certain Social Security benefits while deferring. These Regulations amend regulation 4 of the 1979 Regulations and regulation 3 of the 2005 Regulations to provide that a single person does not accrue any deferral benefits while that person is in receipt of universal credit. This brings the provisions concerning when deferral benefits may be accrued by a single person into line with those already applicable to couples.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.