Universal Credit: What you need to know?

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What is Universal Credit?

Universal Credit is a new benefit system being introduced throughout the UK, almost every new claim for benefit’s in the United Kingdom will be placed onto the new benefit system. You may still be placed onto the old means tested benefits if you are eligible for the Severe Disability Premium.

Already receive any of the six income-based benefits? You will be transferred to universal credit any time over the next three years. All of these benefits will be replaced by universal credit by 2024.

•             Income Support

•             Income-based Jobseeker’s Allowance

•             Income-related Employment and Support Allowance

•             Housing Benefit

•             Child Tax Credit

•             Working Tax Credit

You do not need to do anything if you’re already in receipt of any of these benefits to change over to universal credit.

When your benefits stop or change for any reason, you will be transferred over to the new universal credit system. This may result in you making a brand-new claim, you will also be required to attend the job Center for an interview.

How Much Universal Credit Will I Get?

Award amounts are based on your circumstances, claiming as a couple or single person offers standard rates, take a look at our universal credit calculator for a more accurate view.

•             Single claimant aged under 25: £342.72 per month

•             Single claimant aged 25 or over: £409.89 per month

•             Joint claimants both aged under 25: £488.59 per month

•             Joint claimants either aged 25 or over: £594.04 per month

The DWP (Department for Work and Pensions) have confirmed these rates will increase from 5 April 2021 by 0.5% If you use our Universal Credit Calculator the rates will reflect the current allowance.

Additional element’s and awards are subject to the claimant’s circumstances, how many children you have and how old they are will reflect the amount of universal credit you are awarded, if you begin work or need childcare your Universal Credit payments will reflect that. If you are eligible for the work allowance the number of hours you work will affect the rate you receive.

Who Can Claim Universal Credit?

Anybody under the state pension age can claim universal credit, you must be on a low income or out of work to be eligible. You must not have savings of more than £16,000 and you must be 18 or over. There are some exceptions for care leavers.

  • You can claim universal credit if you are living in the United Kingdom.
  • You can apply for universal credit if you are out of work currently, or have a low income that is unable to fulfill your living costs.
  • The applicant must be 18 or above in order to claim universal credit. Care leavers under the age of 18 may still be eligible.
  • If you are living with your partner and the savings of both partners are £16,000 or less, then you can claim universal credit.
  • If you are working full-time or training full-time, you may still claim for universal credit. (dependent on your circumstances)
  • You will be unable to claim universal credit if you are eligible for a severe disability premium.
  • You can claim universal credit if you or your partner is still under State Pension Age.

You can also make a new claim for universal credit if:

  • You are living with a partner and your partner is eligible for universal credit.
  • You are supporting a child either as a single parent or a couple.
  • You want to pursue further education without any support of your family.
  • You have a limited capability to work due to a disability.

If your still unsure whether you may be eligible for universal credit use our Universal Credit Eligibility page to see further requirements. These are some ways which can help you to make a new claim for your universal credit. Choose any of the above-mentioned statements as per your situation and register your claim.

How to Make A Claim for Universal Credit?

To make a new claim for Universal Credit you will need to complete the application form available on the GOV.uk website, you will be required to attend an interview to complete your application. (Due to the Coronavirus Pandemic) you may receive a telephone call from your local job center in order to complete your application.

It’s important to note that the average waiting time for Universal Credit applications to be processed and active is 5 weeks, so it’s important that you act before you may require Universal Credit to ensure there is no gap and you are left in financial hardship.

Before You Apply, you will need:

  • Bank or building society account details
  • A valid email address
  • Housing details (Tenancy Agreement) Proof of rent)
  • Proof of income (Pay slips) if any.
  • Proof of savings and investments.
  • Childcare costs – If you’re applying for the childcare element.

It’s important that the information you provide is correct, incorrect or out of date information can affect when you get paid and how much.

You’ll need any of these three documents to verify your identity online:

  • Passport
  • Driving License
  • Debit or credit card

If your identity cannot be verified online, you’ll need to provide a minimum of three forms of identity to your local job center when you attend your first interview.

For example:

  • Council Tax Document
  • Permanent Residence Card
  • UK Registration Certificate

If you have any questions about your claim you can contact us or use the universal credit forum for guidance and support on anything related to universal credit, it’s a free voluntary support service.

If you’re unsure of what documents you can use to verify your identity use our free helpline.

How often is Universal Credit paid?

Universal credit is paid on a monthly basis unlike other benefit payments in which you usually get your payment weekly or fortnightly.

Once you get your first universal credit payment, you will get the remaining payments on the same date each month. However, if your payment day is on the weekend, you will get your universal credit payment on a working day before the weekend.

For example, if you plan to claim for universal credit and start your application process on 1 September. After completion of your first assessment period, you get paid your first universal credit payment on 7 October. Your future payments of universal credit will continue to be paid on the 7th of every month.

·         Northern Ireland

For people who are living in Northern Ireland, the default payment method of universal credit is paid fortnightly. However, you can choose to get it on a monthly basis as well.

·         Living in Scotland

If you are living in Scotland, you have the option to have your universal credit paid once or twice a month. When you make a new claim for universal credit, you’ll get the option to choose how often you want to get paid. You will get this notification after your first universal credit payment.

For example, if you are getting your first universal credit payment on 14 December, this will be a full month payment. While, if you have shifted your payment plan to twice a month, then you will receive the second payment’s half amount on 14 January, and the remaining half payment will be sent to you on 29 January.

If you are living with your partner and you both have applied for universal credit, then you have to keep in mind the fact that the entire amount will be paid to you as one payment for your living costs, including the housing element.

How is Universal Credit Calculated?

If you are eligible for universal credit you will be awarded a standard allowance, additional elements are awarded dependent on the below circumstances.

  • Children
  • Disability
  • Health condition
  • Housing costs
  • Savings

How much your universal credit award will be will also depend on your earnings.

Universal Credit and working

If you’re working and claiming universal credit your monthly payments may be different month to month than your used to. Before your payment is issued your universal credit allowance is recalculated usually 7 working days before your payment is due.

You can check what your owed by logging into your universal credit account and clicking the payments tab, you’ll see what you are owed and what date you can expect that payment. If you work part time or are on a flexi contract you may be expected to submit your payslips on your universal credit journal before your payment is calculated. If you don’t submit your monthly earnings prior to your payment date it may affect how much you get paid.

How many hours can you work without it affecting universal credit?

The work allowance in universal credit is the money that you will be able to earn without affecting your universal credit payment.

You can work up to 16 hours per week and still be entitled to universal credit, however if you earn above the minimum wage your universal credit payment may be affected.

For Example:

(Single person) You work 16 hours per week at the UK minimum wage £8.72 you will be eligible for the full standard allowance of £512. If you receive the housing element of universal credit your payments will be reduced once you earn £292 or over.

Your circumstancesMonthly work allowance
You get help with housing costs£292
You do not get help with housing costs£512

For every £1 over your work allowance £0.63 will be deducted from your universal credit payment. You’ll also need to include things like bonuses, overtime and annual leave into your calculations.

What counts as income for Universal Credit?

Any income you receive that is not from working will be deducted from the maximum award. This income is known as unearned income. For example:

  • New Style JSA (Job Seeker’s Allowance)
  • New Style ESA (Employment and Support Allowance)
  • Benefits that are not being replaced by universal credit
  • Pension income
  • Student Finance

Unearned income is deducted from your universal credit payment. However, there are some unearned income options as well that will not impact your universal credit payment.

These unearned income options include:

  • Child maintenance payments
  • Child benefit
  • Disability Living Allowance.
  • Boarders and lodger’s income
  • Personal Independence payment.

How do savings affect Universal Credit?

Your Universal Credit benefit payments can be affected with any savings you have. If either you or your partner are have less than £6,000 in terms of savings then this will not impact your universal credit at all.

Any savings above £6,000 will impact the amount of universal credit you receive, for every £250 over £6,000 £4.35 will be deducted from your monthly payment.

For example:

Stephen claims universal credit and has £8,500 in savings, he will receive a deduction of 10 x £4.35 = £43.50 per month from his total award.

However, if you or your partner or even both of you have £16,000 or more as savings, then you will not be able to claim universal credit.

So, whenever you are planning to claim universal credit, make sure to keep in mind the fact that you and / or your partner’s savings are less than £16,000.

How to apply for Universal Credit

All applications for universal credit are done online through the GOV.uk website. If you want to begin your application you can do so by clicking here. If you need help with your application you can speak to one of our volunteers who can explain what you’ll need before you start.

It’s important that you keep your application up to date and report any changes immediately to avoid a sanction on your claim.

Advance payment on Universal Credit

Once your application for universal credit has been approved you can apply for an advanced payment this service is available to everyone who

needs to pay household bills or rent while waiting for your first universal credit payment. To find out more about the Universal credit advance payment click here.

How to pay back your advance payment on universal credit?

You begin paying it back out of your first universal credit payment. You can choose the number of months you want to pay back your advance payment. However, keep in mind that the advance payment has to be paid back within 12 months.

Fortunately, the advance payment on universal credit is interest free. Therefore, you will pay back exactly what you have taken as advance.

Who Can Claim Universal Credit?

Anybody under the state pension age can claim universal credit, you must be on a low income or out of work to be eligible. You mustn’t have savings of more than 16,000 and you must be 18 or over. There are some exceptions for care leavers.

How Does Universal Credit Work?

Universal credit works by replacing all of the legacy benefits, instead of claiming separate benefits for different circumstances you will now only need to use universal credit for all your benefit needs.

Is Universal Credit Taxable?

You do not need to pay any tax on your universal credit award, there may be some additional elements that are taxable. But any amount you receive from universal credit alone is not table.