Universal Credit

What is universal credit?

Universal credit is a new monthly benefit that replaces (or if not yet, soon will) six means-tested benefits: income support, income-based jobseeker's allowance, income-related employment and support allowance, housing benefit, child tax credit and working tax credit. It's designed for people both in and out of work.

Universal credit was first proposed back in 2010 by the then Work and Pensions Secretary Iain Duncan Smith with the hope that this would simplify the system and make it easier to claim.

It's paid monthly, rather than the usual weekly or fortnightly that many existing benefits are being paid.

Here's a brief rundown of what each of the six benefits that universal credit encompasses of help with, to give you an idea of who might be able to claim the new benefit...

Income support

This is paid to people who are not expected to look for work, for example, carers or lone parents with children under the age of five.

Housing benefit

Housing benefit is help for those on a low income who struggle to pay their rent. While it can't be used to help with your mortgage costs, some other benefits may. Citizens Advice has some guidance on how to get help with these.

In social housing (from a council or Housing Association) you'll get a reduction in the amount of rent you pay.

In private rented properties you'll be given the cash to pay your rent yourself.

Ensure you put a claim in for Council Tax Support

If you claim housing benefit then your application will automatically include council tax support. However, it's NOT automatic under universal credit.

This means when you move to universal credit you must remember to make a separate claim to your local council for council tax support.

Use the Gov.uk local council finder to find contact details for your local authority so you can ask them what council tax support scheme exists in your area.

Income-based jobseeker's allowance

Given to those looking for work if their household is on a low income. It's paid for as long as you show you are trying to find a job. (Note that this is a separate benefit to contribution-based jobseeker's allowance).

Income-related employment and support allowance

This is paid if you are sick/disabled, your household is on a low income and you are unable to work, or have limited capacity to work. You will need to pass a capability for work assessment.

Child tax credit

This is paid to anyone who has children aged 16 or under (under 20 if in education or training) and anyone whether working or not can apply to get them.

Working tax credit

This is paid to support those in work but with a low income.

It's paid via the tax office and anyone who works over the minimum hours for their circumstances can apply to get them.

What about other existing benefits?

Only the above six benefits have been/are going to be replaced by universal credit. There are many others which will not be affected. This includes child benefit, state pension, disability living allowance/personal independence payment and statutory maternity pay amongst others.

For more information and to work out if you're eligible for any of these, see our Benefit Checker guide.

Who can get universal credit?

In October the scheme begun to roll out to ALL eligible households nationwide  - previously, the only group of people able to get it across the country (in England, Scotland & Wales) were single, unemployed people without children (the roll out first started in May 2016 but sped up last month).

You can use this handy postcode checker to determine when universal credit will come to your area. You can also check the Government’s own guidance here (and here for Northern Ireland) to see what areas are soon to get it, but be aware that things do change so the tool will be the most up-to-date source of information.

As it currently stands, everyone making a new claim for benefits will be able to claim universal credit at some point before September 2018. The Government’s current plan is that existing benefits claimants will not be moved onto universal credit until at least 2019, unless there's a change in circumstances.

In addition, it's also a means-tested benefit. This means that the amount of income and savings you have will affect your eligibility and how much you might be entitled to. Eg, you’ll get less universal credit if you have savings over £6,000 or earn enough money to cover your basic living costs.

If you live with your partner you’ll need to make a joint claim as a couple. Your partner’s income and savings will be taken into account, even if they aren’t eligible for universal credit.

If you fulfil the basic criteria above then the best way to confirm your eligibility and also get a guidance on how much universal credit you could get is to use our 10-minute benefits check-up.

Quick questions

Here's how much you'll get

It's very difficult to give you an exact answer to this. For something that claims to be so simple, the way universal credit is calculated is actually quite complicated and there are three steps used to work out how much you'll receive.

Step 1: Work out your maximum entitlement

For everyone there's a standard allowance - currently up to £498.89/mth - although it's dependent on your age and relationship status.

You'll then get additional allowances added on for:

As this is where it starts to get complicated, the best way to see if you're entitled to additional payments is to complete our benefits checker.

Step 2: Reduce your total allowance if you have any income or savings

This will include:

Step 3: Take into account anything else that could affect you

Your final universal credit entitlement is then worked out using anything else that could affect you. This could include any sanctions (when your benefits are stopped for a set period of time) you have or benefits over/underpayments.

It'll also take into account the benefits cap. This is the total amount of benefits (some are excluded) your household can receive in a year. In London this is up to £23,000 for couples and families (£15,410 for single people without children) while outside of London it's up to £20,000 (£13,400 for single people without children).

Of course, the easiest way to work out how much you'll get is to use our 10-minute benefits checker which'll also inform you what other benefits you may be eligible for.

So how could this look for me?

Here's an example (assuming universal credit is available to her. We've excluded housing costs for ease)...

Sarah is a single-parent with an eight-year-old daughter. She's 35 and works part-time in an office for 20 hours a week, earning £13,000/yr. She pays £10/mth toward a personal pension under auto-enrolment.

She doesn't currently receive any disability or sickness benefits and she doesn't pay for childcare for her daughter as Sarah's mum looks after her daughter during the school holidays, and Sarah has scheduled her work hours so she can care for her daughter outside of school hours.

Putting Sarah's details into the universal credit calculator we discover that:

• Step 1 results: Sarah's maximum allowance would be £7,140 which includes money for the child element.
• Step 2 results: Sarah's total allowance is reduced as she earns £12,880 before tax and NIC (but after pension contributions) each year.
• Step 3 results: As there's nothing else that could affect Sarah's claim her final universal credit entitlement is £2,560 per year (£213 per month).

How to claim universal credit

You'll have to go online to claim universal credit. Unfortunately, in most instances you must make your claim online, so ask friends and family for help if you need to.

You can contact the universal credit helpline on 0800 3289344 if you do run into any difficulties or if you need to make a claim in an alternative format such as braille, large print or audio CD. For Welsh language applications, call 0800 012 1888.

You'll be asked a few basic questions to ensure you'll meet the basic criteria before being taken to the main claim page.

Quick questions

If your application's successful you'll then have an interview at your Jobcentre

After a successful online claim you'll have to visit your local Jobcentre and have an interview with your 'work coach' if you want to claim universal credit.

If you don't attend this interview, you won't be eligible for universal credit.

You'll have to sign a 'claimant commitment' at the interview to actually receive your universal credit entitlement.

Your claimant committment is an agreement that, if asked, you'll do a certain amount of work-related tasks each week such as going to interviews at your local Jobcentre, or applying for jobs.

How much you'll have to commit to is determined by which one of four group types you're placed into:

1. No work-related requirements group. You usually won't have to commit to anything.
2. Work-focused interview group. You'll have to have regular 'work-focused' interviews with your work coach at the Jobcentre.
3. Work preparation group. You'll have to do activities that prepare you for work including writing your CV, doing work experience, and having regular 'work-focused' interviews with your work coach at the Jobcentre.
4. All work-related requirements group. You'll have to look and apply for jobs and go to job interviews for a certain amount of hours every week (usually 35 hours although less if, for example, you have children at school).

Citizens Advice has a handy list of various circumstances that could apply to you and the group type you should be placed in as a result.

Your specific commitment within your group type is personalised to you. Make sure you dicuss with your work coach if you feel you've been placed in the wrong group, or you think you won't be able to meet your commitments.

It's better to sort out any issues you have at this stage, than risk being sanctioned if you miss any of your commitments.

You'll have to wait six weeks for your first payment (five from February 2018)

The universal credit payment is paid in arrears, so you won’t get your first payment until around six weeks from making your claim - this currently includes a seven-day ‘waiting period’ at the start, a four-week assessment period and up to seven days for your payment to reach your bank account at the end.

At the moment, if you won't have enough money to live on while you wait for your first payment, call 0800 3289344 to ask for an advance payment. If you’re making a new claim you can ask for up to 50% of your estimated monthly entitlement. It's interest-free but you'll repay it through your regular universal credit payments - they'll be lower until you pay it back.

However, this status quo is to change shortly after changes announced in the 2017 Autumn Budget - these followed serious concerns that payment delays were having an adverse effect on many claimants and their finances - leading to rent arrears, greater indebtedness and a rise in demand for food banks.

Here are the changes...

• The seven-day 'waiting period' will be abolished from February 2018 so it only takes five weeks for your first payment to be made.




• If you're struggling financially you can, from January 2018, get a full month's advance payment - not just half a month - within five days of applying. This will then be paid back by you, interest-free throughout the year, via lower monthly payments into your bank account.




• Anyone claiming universal credit for the first time who previously got housing benefit will - from April 2018 - continue to receive housing benefit for another two weeks after their application. Right now, the benefit stops and a claimant doesn't get anything until their universal credit begins.

What to do if you think you're not getting the right amount of universal credit

Whether you think your initial entitlement is wrong, or if your entitlement is changed after you start claiming the first thing you should do is contact the helpline (on 0800 3289344) as it may well be that a mistake has been made in your calculation.

If this is the case then the mistake should be rectified while you're on the phone.

If this isn't the case then you can appeal the decision. You must do this within one month of the date of your initial entitlement decision. This is called asking for a mandatory reconsideration.

More information on making a mandatory reconsideration can be found here.

If you do decide to appeal, make sure you gather supporting evidence before you do so.

Universal credit may cause issues for renters

When Iain Duncan Smith first proposed universal credit back in 2010 he claimed too many people were trapped on the benefits system because their income would fall when they moved from benefits to low-paid employment.

The hope was that this would make the benefits simpler to claim, fairer for many people and that it would reduce fraud.

However, universal credit hasn't been the success first hoped for...

What has plagued the launch of universal credit?

In most cases universal credit is paid directly to claimants. This is includes claimants who receive payments for rent.

There's a few issues with this that largely arise due to how frequently universal credit is paid. Tenants are not eligible for universal credit for the first week of their claim. On top of this it can take up to five weeks for your first universal credit payment to arrive.

This has contributed to the three major issues that have arisen:

The Work and Pensions Committee has begun an inquiry into the impact of universal credit on claimants such as the six-week wait for first payment, rent arrears and how it affects household finances. A spokesman for the Committee says it will regularly write to the department to ask for updates to assess the rollout and its effect.

There's help available if your universal credit benefit gets cut

If you fail to keep to your agreed claimant commitments then you could get sanctioned, which is where your benefits get cut.

A sanction is a cut to your universal credit payments for a set amount of time. As sanctions can last for as long as three years (can be as short as one week), this is potentially incredibly damaging to your finances and welfare.

I think I've been unfairly sanctioned - what can I do?

You can appeal the sanction decision with the Department of Work and Pensions using a process called 'mandatory reconsideration'.

To prepare yourself for this appeal Citizens Advice has a list of arguments you can use to challenge a sanction.

It also has guidance on checking you've actually received the correct sanction for your circumstances.

If you receive Council Tax Reduction (also called ‘Council Tax Support’) and get a sanction, contact your local council immediately. They’ll tell you what to do to continue getting support.

What can I do if I'm in severe financial difficulty because I've been sanctioned?

You can request a 'hardship payment'. This is usually a loan that you can only get if you're struggling to meet your basic needs or those of your children (such as accommodation, heating, food and hygiene costs).

To apply for this, contact the universal credit helpline on 0800 3289344 to explain that you are in severe financial difficulty.

If you're in urgent need then you may be able to get vouchers to pay for food, clothing or fuel from your local welfare assistance scheme. Charity Child Poverty Action Group lets you search if your council offers this scheme.

Your council or Citizens Advice may also be able to direct you to other help available in your area, including any food banks that operate. The Trussell Trust is one of the largest networks of food banks and you can search its website for one in your area.

Avoid getting a repeat sanction

As sanctions can be more severe if you've been previously sanctioned, then here's some tips on helping you avoid being sanctioned again.

Keep a diary

While keeping a diary can be a bit of a slog, it could be worth it as evidence if you run into any issues.

Keep a note of whenever you do something that's in your claimant commitment - such as applying for a job - as well as the date you did it and how long you spent on it.

If you also have a valid reason for not doing anything in your commitment try and also get evidence of it, eg, if you're ill then try to get a doctor's note.

Then, in the future, you can always present your diary as evidence if you need to.

Where can I find more information?

If you have questions on universal credit that aren't answered here, then many other organisations and charities offer guidance and advice. Here's just a few resources that you may find useful, please let us know in our forum discussion thread if you find any others that help you.

• Citizen's Advice: Guidance for all aspects of universal credit.
• Gingerbread: Primarily aimed at single parent families.
• Christians Against Poverty (CAP): Help with debt, finding work and free courses to get control of your finances.
• Turn2Us: Benefits help, search for grants and get access to support services.
• Entitledto: As well as providing free benefits calculators it has tonnes of guidance on benefits.