Below are a number of frequently asked questions about Universal Credit. These are collated based on feedback on the calculator and other posts on the blog. If you have questions, or see something that is missing or unclear in the blog below, please post your comments at the bottom of this page.
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Universal Credit is a single monthly payment for households on low to middle incomes whether they are in-work or out-of-work, as long as capital is less than £16,000. Universal Credit replaces the following 6 current benefits:
- Housing Benefit
- Working Tax Credit
- Child Tax Credit
- Income support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
The combination of in-work and out-of-work benefits means that Universal Credit will be available to households with a wide range of incomes.
Universal Credit is being introduced to address some problems with the current benefit system, namely making things simpler for claimants by rolling multiple benefits into one single application and one single payment. Because there are no hours rules to claiming, and in-work benefits and out-of-work benefits are combined, it makes it easier for people as they move between jobs or their situation changes. It also enables claimants to retain more of their earned income so they will always be better off as earnings rise.
The DWP states that Universal Credit aims to make work pay, makes it easier for people to move in and out of work, makes the system easier to understand, reduces fraud and error, and saves taxpayer money.
Universal Credit is being introduced gradually throughout the UK with roll-out by JCP areas and is expected to be in all areas by December 2018.
Where Universal Credit has been introduced, all new claims must be for Universal Credit rather than legacy benefits. Households that are currently in receipt of other in-work and out-of-work benefits will move to Universal Credit if they have a significant change of circumstances. The exception to this is households with 3 or more children who will remain in receipt of legacy benefits until 1st February 2019. Changes of circumstances that would trigger a move to Universal Credit include:
- A change in employment status
- Partner joining or leaving the household
- Someone becoming, or no longer being, a carer
- Moving from contributory ESA to income-based ESA
- Failing the work capability assessment
- Moving home to another local authority
Any households remaining in receipt of legacy benefits in July 2019 will be moved to Universal Credit at some point between July 2019 and March 2022 under managed migration.
Universal Credit is made up of a standard allowance per household (which is dependant on household circumstances) plus additional elements for housing, being a carer, childcare, incapacity for work, and child disability. The sum of the allowance and elements is the maximum Universal Credit.
The Universal Credit award will be the maximum amount if you have no other income and you have savings or capital of £6,000 or less. If you have income or savings, deductions are made from this maximum. The maximum award is reduced by:
- The amount of non-earned income (e.g. contributory ESA)
- 63p for every pound of net earned income
- Notional income derived from savings over £6,000
Not all income is taken into account. Some types of non-earned income are ignored (such as disability benefits or Child Benefit) and earned income may be subject to a work allowance – this is the amount that can be earned before maximum Universal Credit is reduced. A work allowance is applied if you have children or have limited capability for work because of illness or disability.
Employer-paid benefits, such as Statutory Maternity, Paternity, Adoption and Sick Pay are treated in the same way as earnings.
Unearned income that will be taken into account includes Carers Allowance, New style Jobseeker’s Allowance (JSA), New style Employment and Support Allowance (ESA), and income from pensions.
You cannot claim Universal Credit if you have savings, capital or investments over £16,000. This does not include the house you live in but does include any other property or capital you may own. You can deduct 10% of the costs of any capital if there would be a cost associated with realising that capital (e.g. if you had to sell an investment or property). If you currently receive tax credits and have savings, capital or investment over £16,000 you will no longer receive any support under Universal Credit.
Universal Credit must be claimed online. You can apply here. Application takes about 40 minutes and you will need to ensure all your documentation (your National Insurance number, bank details, employer details, immigration status etc) are at hand.
If you have difficulty applying online, you can call the Universal Credit helpline who can guide you through the process or tell you where other help may be available.
As part of the claim process you will need to verify your identity. This is done with reference to other accounts you may hold (such as bank accounts). Sometimes it is not possible to verify your identity online. In which case, you will need to do this at your local JCP. You will be told if this is the case when you make your claim.
Your claim will start from the day you complete your online application.
After you have completed your application you will need to make an appointment within 7 days at your local JCP to discuss your situation and your job search (if you are expected to look for work). Details of how to book an appointment at your local JCP are shown at the end of the claim process. If you are disabled and cannot get to your local JCP, a visit can be arranged.
If you have any questions about making a claim you can call The Universal Credit helpline, or visit your local Jobcentre.
Universal Credit helpline
Telephone: 0800 328 9344
Textphone: 0800 328 1344
Monday to Friday, 8am to 6pm
In general, Universal Credit will be paid in one monthly payment to the bank account of a designated person for the whole household. Payment will arrive in the bank account up to 7 days after the end of the assessment period. Universal Credit will be paid in arrears which means that a successful claimant will receive their first Universal Credit payment 1 month and 7 days after they’ve made their claim..
If you need money before the payment is made you can request a payment in advance. The DWP will need to know why this is required. If you receive a payment in advance your Universal Credit will be reduced for 12 months whilst this is paid back.
The DWP can make different arrangements for payment if there is a good reason. For example, if you need your benefit paid more frequently, or you need the payment split between you and your partner, or you don’t have a bank account. You would need to discuss your reasons with the DWP.
For most tenants, Universal Credit will include a rent element. This may not the same as the amount of rent you have to pay. You will need to make your own arrangements to pay your full rent to your landlord.
For some local authority or Housing Association tenants the rent element can be paid directly to your landlord. If you would like this to happen, you will need to explain the reason to the DWP. If you have rent arrears above a certain level, your landlord can request direct payment. Where payment is made directly to your landlord it may not cover all your rent and you may still have to pay some of your rent from your Universal Credit.
If you live in temporary accommodation because of previous homelessness, or your housing contains an element of support (eg you live in a hostel) your rent will be met through Housing Benefit which is administered by the local authority. You will still receive Universal Credit for your personal allowance.
Universal Credit is designed to make the transition in and out of work, and between jobs, easier. Under Universal Credit you will always be able to keep a proportion of your earned income. This means you will be better off if you earn more. To find out how your Universal Credit entitlement would be affected by moving into work, try our free Universal Credit calculator.
Any change of benefit scheme will have implications for claimants; there will always be some that lose support and some that gain support.
If you move to Universal Credit before July 2019 you will not be eligible for any transitional protection. This is because you made a new claim or had a change of circumstances. Any households moved to Universal Credit after July 2019will receive transitional protection to ensure that they do not lose any benefit support. This protection will last until they have a significant change of circumstances or make a new claim.
If you are self-employed and move to Universal Credit after July 2019 transitional protection may not make up all the loss in support.
Households earning below a certain threshold will be asked if they can take reasonable steps to increase their earnings. For claimants without any caring responsibilities, fully able to seek work, this will mean earnings of at least 35 hours x the national minimum wage.
You will need to discuss how many hours you are able to work when you have your interview at the start of your claim. If you need to look for work, or increase the hours you work, this will be recorded in your claimant commitment together with the steps you agree to take to make this happen. If you do not fulfil your claimant commitment you could be sanctioned.
If you own your home or you are in a shared ownership properties you may be able to claim mortgage support under Universal Credit if both you and your partner (if relevant) are out of work. If you or your partner have any earned income you will not be able to claim mortgage support. If you are eligible, then you can claim mortgage support 9 months after you first claimed Universal Credit. Mortgage support is in the form of a loan at low interest rates. You will need to repay this loan when you sell your house.