Universal Credit is the new benefit buzzword on the block. But it is confusing by nature and complex in the way it is paid.
But never fear, because we are here to help in our Ultimate Guide to Universal Credit.
What is Universal Credit?
Universal Credit is a new benefit for working age people that replaces a number of existing benefits and tax credits. It is designed to support people who have a low (or no) income with their basic living expenses and housing costs.
Which benefits is it replacing?
The following means-tested benefits and tax credits will be abolished over the coming years and Universal Credit will replace them:
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Housing Benefit
- Child Tax Credit
- Working Tax Credit
What if my current benefit is not means-tested?
Benefits that are not means-tested will continue to be paid separately to Universal Credit. These include:
- Disability Living Allowance
- Personal Independence Payment
- Carer’s Allowance.
Child Benefit will also continue to be paid separately.
What about benefits based on National Insurance contributions?
Benefits based on National Insurance contributions, such as contribution-based Jobseeker’s Allowance and contributory Employment and Support Allowance, will not be replaced but will be re-modelled as ‘new style’ and work alongside Universal Credit.
Benefits for those over the state pension age, such as the state pension and Pension Credit, will also not be replaced.
How much is Universal Credit?
The amount you can get depends on your circumstances and how much other income you have.
In general, you will receive:
Monthly standard allowance
Single and under 25
Single and 25 or over
In a couple and you’re both under 25
£416.45 (for you both)
In a couple and either of you are 25 or over
£525.72 (for you both)
You may get more money on top of your standard allowance if you have children.
- If you have 1 or 2 children, you’ll get an extra amount for each child.
- If you have 3 or more children, you’ll get an extra amount for at least 2 children.
You’ll also get an extra amount for any disabled or severely disabled child, no matter how many children you have or when they were born. The table below gives details of how much extra you could get:
How much you’ll get
Extra monthly amount
For your first child
£290.00 (born before 6 April 2017)
For your second child and any other eligible children
£244.58 per child
If you have a disabled or severely disabled child
£132.89 or £414.88
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 2 or more children)
If you have a disability or health condition you could also receive more:
How much you’ll get
Extra monthly amount
If you have limited capability for work and work-related activity
If you have limited capability for work and you started your health-related Universal Credit or Employment and Support Allowance (ESA) claim before 3 April 2017
Can I get extra help with housing costs?
You could get extra money through Universal Credit to help pay housing costs. How much you get depends on your age and circumstances.
If you’re a homeowner, you might be able to get a loan to help with interest payments on your mortgage or other loans you’ve taken out for your home.
Can I get Universal Credit if I work?
You can continue to get Universal Credit if you are in work but have low earnings. As Universal Credit is means-tested, you will receive a smaller award the more you earn.
How long does it take to receive Universal Credit?
When you start a claim your first payment should be made after five weeks. This payment will include your first months pay and up to seven days for your payment to reach your bank account. After this you will be paid once a month on the same date.
What if I can’t wait for the money?
If you don’t have enough money to live on while you wait for your first Universal Credit payment you can ask for an advance payment. This is a loan that needs to be paid back from future payments over 24 months.
What if both myself and my partner need to apply for Universal Credit?
If you are in a couple, you will make just the one claim, and usually receive one payment. You can, however, ask for your payment to be split between you and your partner.
Who can claim Universal Credit?
Universal Credit is payable to people who are of working age. This usually means people between the ages of 18 and Pension Credit qualifying age. Although the lower age limit may be 16 or 17 years old in some circumstances.
The benefit is available to people who are out of work, including people looking for work and people unable to work due to illness, disability or childcare commitments and to those caring for disabled people or those in work and on low incomes.
Will I need to look for work while claiming Universal Credit?
Maybe. Receipt of Universal Credit is dependent on you signing a ‘claimant commitment’ and being placed into one of four group that determines what you have to do in order to continue receiving the benefit.
The four groups include:
- All work-related requirements group. People in this group are deemed ready for work and are expected to look for and be available for work.
- Work preparation group. People in this group are not considered ready for full-time work but are expected to prepare themselves for going into work. This group includes people with a disability or health condition which means they have a limited capability for work.
- Work-focused interviews group. People in this group are not expected to look for work but are required to attend occasional work focused interviews to ensure they do not lose touch with the labour market. This group includes lone parents and primary carers for children.
- No work-related activity group. People in this group are not considered to be able to work at all. This includes people with a disability or health condition which prevents them from working or who are carers, lone parents or the primary carer for a child under the age of one.
Anyone who breaks one of the conditions of their commitment may be sanctioned and lose some or all of their benefit.
Universal Credit is a complex beast and something we hope you feel better able to understand now you have read our guide.