Universal Credit

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.

These include:

Some means-tested benefits will remain outside of UC, such as Child Benefit, Disability Living Allowance, Personal Independence Payment and Carer’s Allowance.

Other important payments that will not come inside the UC umbrella are the State Pension, Pension Credit and any Council Tax Support.

Can you claim Universal Credit?

The benefit is open to working age new claimants, which typically means someone aged between 18 and and the State Pension age. In some cases, the lower age limit can be dropped to 16. The government has stated all claimants will be moved onto UC by the end of 2024.

How is Universal Credit paid?

If you believe you are entitled to Universal Credit, it maybe beneficial to make a claim as soon as possible to help avoid any potential payment delays, as you may not receive any money for up to five weeks. However, If someone is on a legacy benefit then they should think carefully about claiming Universal Credit, and when to claim it. For example they could miss out on a transitional addition, which for a small but significant number of people with disabilities could really matter.

The wait for payment is made up of one month of assessment plus upto 7 days after that.

How to apply

Visit the government’s own 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 or 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.

If the assessment date falls on a Bank Holiday Monday, the payment is made on the Friday before the holiday.

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 you have savings of more than £16,000 you won’t be entitled to claim. If you have between £6,000 and £16,000 your savings are treated as providing you with a monthly income of £4.35 for each £250, or part of £250.

The standard allowance is:

Your circumstancesMonthly standard allowance
Single and under 25
Single and 25 or over
In a couple, both under 25
£416.45 (for a couple)
In a couple and one of you is 25 or over
£525.72 (for a couple)

You may also qualify for some additional elements such as…

  • Child element
  • Childcare costs element
  • Limited capability for work element (abolished for most new claimants from 3 April 2017)
  • Limited capability for work-related activity element (LCWRA element)
  • Carer element
  • Housing costs element

For an estimated Universal Credit payment, try one of the benefit calculators linked to from the government website.

Universal Credit and the work allowance

Some claimants maybe able to take advantage of a work allowance, which is amount an individual can earn before their UC payment amount is affected.

Monthly work allowances are as follows….

  • £344 – If your UC award includes housing costs
  • £573 – If you don’t receive housing support

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. (see this guide for more info)

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.

If you have children

You can get additional money for your first and second child. The amount of extra money you’ll be entitled to depends on how many children you have, and when they were born.

For your first child you can get £290 if they were born before 6th April 2017 or £244.58 if they were born later than this. You’ll also get £244.58 for your second child and any other eligible children. (e.g those born before 6th April 2017) See this guide for more info

Those with disabled children are also eligible for additional money, regardless of their date of birth

You’ll get:

£132.89 if your child is disabled

£414.88 if your child is severely disabled

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 ageWhat you must do in return for your Universal Credit payment
Under 1You won’t be asked to work in return for your Universal Credit
Aged 1 You should attend interviews with a work coach to discuss your work plans
Aged 2 You should take active steps to ready for work, such as training and mock interviews with a work coach
Aged 3 to 4You will be expected to work 16 hours (or spend 16 hours looking for work), which can include training etc
Aged 5 to 12You will be expected to work 25 hours (or spend 25 hours looking for work), which can include training etc
Age 13 and overYou will be expected to work a full 35 hour week (or spend 35 hours looking for work). If you get a job you should let your work coach know as you can start to apply for help with child care costs.

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.