Universal Credit (UC) is a single monthly benefit payment for working age people offering financial support to anyone on a low income or who is out of work. The payment is aimed at covering basic living expenses and housing costs. How much someone receives depends on their personal circumstances and if they have any other income or savings. You can still make a claim if you have a salaried job or are self-employed. Universal Credit pulls together a range of other benefits and tax credits into a single monthly payment.
Which benefits does Universal Credit replace?
UC will gradually replace existing benefits in a phased roll-out over several years.
- Child Tax Credit
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Housing Benefit
- Working Tax Credit
Some means-tested benefits will remain outside of UC, such as child benefit, Disability Living Allowance, Personal Independence Payment and Carer’s Allowance.
Can you claim Universal Credit?
The benefit is open to working age new claimants, which typically means someone aged between 18 and 60 years and six months old. In some cases, the lower age limit can be dropped to 16. UC is not active everywhere and some people are still paid existing benefits, such as working tax credit or housing benefit, while they wait to switch to the new system. This means the UK is divided into ‘live’ or ‘full’ service areas for new benefit claimants.
Live service areas do not accept applications from everyone, while full service areas do. The roll-out is expected to cover the entire country by September 2018. You can find out what the service status is where you live by checking your postcode.
Existing benefit claimants will be switched to Universal Credit between July 2019 and March 2022.
How is Universal Credit paid?
If you believe you are entitled to Universal Credit, you should start a claim as quickly as possible to avoid payment delays, as you may not receive any money for up to six weeks.
After making a new claim, you must sit out seven waiting days while the claim is processed.
The seventh day after the claim is made becomes your ‘assessment date’, which is the date Universal Credit is paid each month.
The payment is made a month in arrears, so you will have to wait a month after your assessment date before the first Universal Credit payment is made.
The payment can then take seven days to hit your bank account.
Here’s an example of how this works:
- Josh loses his job and claims Universal Credit on March 10.
- He will wait seven days for his claim to begin, which makes his assessment date March 17
- Josh must wait until April 17 for his payment as Universal Credit is paid a month in arrears
- The payment may take seven days to reach Josh’s bank account, so the money should arrive no later than April 24
- Josh is then paid on the 17th of each following month
How to apply
Visit the government website or call the official helpline on 0345 600 0743 between 8am and 6pm Monday to Friday (Closed on bank and public holidays).
Ask for a call back if you are dialling from a mobile as the call can cost up to 45p a minute if you do not have free on inclusive minutes on your contract. The call could last around 40 minutes.
Apply for Universal Credit online – no paper applications are available.
If you cannot make a claim online, visit your local Jobcentre for face-to-face help.
Before making an application, make sure you have all the necessary information to hand – you can find a list of what’s needed online
If you are making a joint claim, only one of you need fill in the forms, but you will have to enter the personal details for both.
Try one of these Universal Credit calculators if you want to know how much you can claim.
Special Waiting Day Rules
The initial seven waiting days after a new claim do not always apply.
Your first Universal Credit payment should take five weeks to go into a bank account if you:
- Have made another Universal Credit claim less than six months ago
- Are shifting to Universal Credit from another benefit
- Are starting or ending a relationship and you or your partner are already on Universal Credit
- Are terminally ill
- Are a special case, such as a domestic violence victim or leaving local authority care
What happens if I run out of money before the first payment?
If you are waiting for your first Universal Credit payment and have no money to cover essentials, you can apply for a Universal Credit Advance. An advance is not extra money, but emergency cash made from your expected Universal Credit payment. Typically, you will have to pay the money back out of your Universal Credit claim within six months.
How much Universal Credit will I get?
The Universal Credit payment depends on your personal circumstances. The award is a payment for your household plus any relevant payments due to your circumstances.
The standard allowance depends on if you are single or in a couple and if you are over or under 25 years old.
If your household has no other income and savings of less than £6,000, the standard allowance is paid.
If someone in your household has some earnings or savings, the allowance is reduced.
The standard allowance is:
|Your circumstances||Monthly standard allowance|
|Single and under 25||£251.77|
|Single and 25 or over||£317.82|
|In a couple, both under 25||£395.20 (for a couple)|
|In a couple and one of you is 25 or over||£498.89 (for a couple)|
You may get a Universal Credit top-up under some circumstances:
|How much you’ll get||Extra monthly amount|
|For a first child||£277.08 (born before April 6, 2017)|
£231.67 (born after April 6, 2017)
|For a second child||£231.67 for each child|
|For a disabled or severely disabled child||£357.78 to £649.38 (this includes the amount for your first or second child)|
|If you need help with childcare costs||Up to 85% of your costs |
(up to £646.35 for one child and £1,108.04 for two or more children)
Extra money is only paid for more than two children if:
- A claim was already in place for two or more children before April 6, 2017
- A claim is renewed for two or more children within six months of stopping an earlier claim
Other rules can apply if you are making a Universal Credit claim for families with more than two children.
For an estimated Universal Credit payment, try one of the benefit calculators linked to from the government website.
Universal Credit and the work allowance
Unlike other benefits, Universal Credit lets claimants work as many hours as they wish.
If you are responsible for children and/or work limited hours because you suffer from illness or disability, you are entitled to a work allowance, which is how much you can earn before any Universal Credit payment is affected.
Once your earnings have passed the level of your work allowance, the Universal Credit payment goes down by 63 pence for every £1 earned above the work allowance.
This is the ‘earnings taper rate’.
How much is the work allowance?
Universal Credit comes with two work allowance tariffs –
- Higher Allowance of £397 – applied if housing costs are considered in your Universal Credit award
- Lower Allowance of £192 – for claims that do not include housing costs
What happens to Universal Credit if I receive other benefits?
Although Universal Credit will eventually replace a range of other benefits, other unearned income from sources such as pensions and statutory maternity pay are taken away from your Universal Credit award.
The deduction is a like-for-like rate, so for every £1 of unearned income, you will lose £1 of Universal Credit.
But not all unearned income with affect your award. For example, your award will not change if you have income from:
- Child Benefit
- Maintenance payments
- Disability Living Allowance
- Personal Independence Payment
- Income from boarders and lodgers
Universal Credit for the self-employed
If you run your own business, the work allowance and taper rate rules are the same as those for the employed, but a ‘minimum income floor’ is introduced.
The minimum income floor means calculating self-employed earnings as if you work 35 hours a week at the National Minimum wage for your age group.
Will my savings affect Universal Credit?
Your Universal Credit award may be impacted if you have money in the bank, shares or other investments valued at £6,000 or more.
How much you or a partner have in savings will affect your award in different ways:
- Any savings or capital below £6,000 is ignored
- If you have between £6,000 and £16,000, the first £6,000 is ignored but the rest is treated as giving a monthly income of £4.35 for every £250 or part of £250
- If either of you have £16,000 or more in savings or capital, you cannot claim Universal Credit
For example, if you had savings of £8,400
- Take away and ignore the first £6,000, leaving £2,400
- Divide £2,400 by £250 = 9.6
- Round this up to the nearest £250 = 10
- Multiply by £4.35 = 10 x £4.35 = £43.50
- £43.50 is deducted from the Universal Credit award
If you are claiming tax credits and move to Universal Credit with savings or capital of more than £6,000, you can apply for transitional protection to make sure you are not worse off.
Universal credit claim limits
From April 2017, claims are limited to families with no more than two children, unless you have a multiple birth. The first child premium no longer applies.
Universal Credit and looking for a job
If you want to claim Universal Credit, some rules about seeking work apply.
From April 2017, you must prepare to work when your youngest child turns two and to look for work when that child turns three.
|Child age||What you must do in return for your Universal Credit payment|
|Under 1||You won’t be asked to work in return for your Universal Credit|
|Between 1 and 2||You should attend interviews with a work coach to discuss your work plans|
|Between 3 and 4||You should take active steps to ready for work, such as training and mock interviews with a work coach|
|Between 5 and 12||You should look for work that fits in with your family responsibilities – for example, taking a job during school hours|
|Age 13 and over||You should to look for full-time work(up to £646.35 for one child and £1,108.04 for two or more children)|
If you are aged 18 to 21, you should take part in Youth Obligation for six months in return for your benefit. This involves support focussed on finding you a job.
If you do not have a job after six months on the program, you should apply for an apprenticeship or traineeship, learn work-based skills or go on mandatory work placement.
Appealing Universal Credit decisions
If you think your Universal Credit award is wrong, you can challenge the Department of Work and Pensions to explain why and ask for your case to be reviewed. The process is called a ‘mandatory reconsideration’ and details of who to contact will be on your Universal Credit award notice. The DWP will send you a written notice explaining what action they intend to take and why.
If you are still not happy with the decision, you can appeal to a tribunal.
You cannot appeal if you have not asked for a mandatory reconsideration.
For independent, free advice, you can contact organisations like Citizens Advice.
Changes Announced in the 2017 Autumn Budget
In the 2017 Autumn Budget, the Chancellor announced a number of changes to UC aimed at easing some of the hardship caused by the roll out of UC. We have detailed these below…
Applicants can get upto 50% of their first payment as an advance when they make a new claim for UC. An additional advance of a further 50% will also be available in the New Year
From 1st January all new applicants will be able to get an advance of 100% of the first payment within 5 working days of their initial claim being approved. The advance will not incur any interest charges and the person claiming will have 52 weeks to repay the advance
The current waiting period which lasts for 7 days will be removed, taking the current waiting period for new claims down to 5 weeks (currently 6 weeks)
Anyone who was in receipt of Housing Benefit but has been moved over to UC will continue to get Housing Benefit payments for the first 14 days of their UC claim. This will reduce the waiting time to 4 weeks (currently 6) for those people who need this money to pay their rent