Universal Credit

The government are in the process of moving people on Tax Credits and other legacy benefits over to the Universal Credit system. This process is known as the Move to UC or you might hear it being called ‘managed migration’.

The government will write to you when it is your turn, to let you know that your existing benefits and Tax Credits are ending and that you will need to make a claim for Universal Credit to continue getting financial support. You WILL NOT be automatically switched over to Universal Credit. You MUST make a claim. The letter will tell you what date you need to claim by. If you don’t make a claim for Universal Credit your existing benefits and Tax Credits will stop and you will not get any extra financial support.

If you are on Tax Credits and have savings or capital of more than £16,000, you cannot usually claim Universal Credit. However, if you are moved over to Universal Credit as part of the managed migration process, there are special rules that apply for the first 12 months of your claim which mean you may still be able to get Universal Credit.

If you are moved over to Universal Credit as part of the Move to UC managed migration process, you should not be worse off than you were on your previous benefits and Tax Credits. If Universal Credit is less than what you were previously getting you should get an extra amount of Universal Credit known as ‘transitional protection’ to top-up your Universal Credit.

If you have to move over to Universal Credit because of a change in your circumstances or you voluntarily choose to move over, prior to receiving your official letter telling you that your existing benefits and Tax Credit are ending, you could be worse off on Universal Credit. You DO NOT get ‘transitional protection’ under these circumstances, unless you were in receipt of a severe disability premium in your previous benefits immediately prior to claiming Universal Credit. Even if you are worse off you cannot go back onto your previous benefits.

Some people on Tax Credits or other legacy benefits may be better off on Universal Credit. You can use a benefits calculator to work out whether you would be better off. If you think you would be better off you can choose to voluntarily move over to Universal Credit whenever you want. You don’t have to wait until you receive a letter from the government. However, even if you are better off financially, Universal Credit is very different from legacy benefits, and you may have work requirements that you didn’t have on your previous benefits. You should always try to get further advice if you are considering voluntarily moving on to Universal Credit.

Some changes in your circumstances may mean that you cannot remain on your existing benefits or Tax Credits and you will have to claim Universal Credit instead. Not all changes of circumstances will end your existing benefits. The general rule is that if a change means that you would have to make a new claim for your existing benefits or Tax Credits, you will have to claim Universal Credit.

For example, if you are on Child Tax Credit and start working enough hours to qualify for Working Tax Credit, this does not require a new claim, so you can add Working Tax Credit to your existing Child Tax Credit claim.

On the other hand, if you are claiming Tax Credits as a couple, and you separate, this would require you to make a new single person claim for Tax Credits. As it’s no longer possible to make a new Tax Credits claim you would have to claim Universal Credit instead.

It can be quite complicated to try and work out whether a change in your circumstances means you need to claim Universal Credit. There is a helpful table of examples showing when you have a choice about remaining on your existing benefits and when you have to claim Universal Credit here.

If you are unsure whether a change in your circumstances means you have to claim Universal Credit you should try to get further advice. You could end up worse off on Universal Credit and you will not be able to go back onto your previous benefits.

Universal Credit can be claimed by people in lots of different circumstances. Whether you are entitled depends on your circumstances and whether you are on a low income. You can claim it if you are unemployed, or working and on a low income, if you are caring for a disabled person, or if you are unable to work due to ill health or disability.

To get Universal Credit you must:

• Be 18 years or older (although some 16-17 year olds can claim it)
• Be under state pension age (although see below if you are in a couple and only one of you is over state pension age)
• Live in the UK (there are extra rules if you are not a British citizen)
• Not be in education (although there are some exceptions)
• Have less than £16,000 in savings or other assets (this is known as capital and doesn’t include the home you live in)

If you live with a partner, you will have to make a joint claim as a couple and both of your income and capital will be taken into account. If one of you doesn’t meet the above conditions you will still need to make a joint claim, but the person who doesn’t meet the conditions will be ignored when calculating the maximum amount of Universal Credit you could receive. However, their income and capital will still be taken into account. If this situation applies to you, you should try to get further advice.

Normally, if you are over state pension age you cannot claim Universal Credit but may be entitled to Pension Credit and/or Housing Benefit instead. However, if you live with a partner and only one of you is over state pension age you are what is known as a ‘mixed-age couple’ and you cannot claim Pension Credit or Housing Benefit and must claim Universal Credit instead.

Any state pension or other pensions received will be taken into account when working out how much Universal Credit you can get. The partner who is over state pension age will have no work requirements on Universal Credit, but the younger partner may be expected to work depending on their personal circumstances.

Most Universal Credit claims are made online. The first thing you have to do is set up an online Universal Credit account. If you are claiming jointly with a partner, you will both have to set up your own individual accounts which you can then link together later on in the application process.

Once you’ve created an account you will have 28 days to complete it, otherwise you will have to start again. However, it is really important to note that the Universal Credit claim does not start from the date you create your account. It only usually starts from the date you fully complete the application and hit the ‘submit’ button.

Universal Credit claims can only be backdated by a maximum of one month and only in certain limited circumstances, so you should not delay claiming as you could miss out.

After you’ve created your Universal Credit account you will have to go through a list of questions about your circumstances to submit the claim. This includes information about your earnings, other income and capital, who else lives with you, how much your housing costs are, how much your childcare costs are if you are working, and whether you have a health condition or disability that limits your availability for work. You’ll also need to provide bank details and confirm your identity so that you can receive your Universal Credit payments.

If you cannot claim online, because, for example, you do not have regular or reliable access to the internet, you do not know how to use a computer, or you have a health condition or disability which means you cannot make or manage an online claim you can apply for Universal Credit over the phone.

To make a telephone claim for Universal Credit you will need to call the Universal Credit helpline on 0800 328 5644 between Monday to Friday 8am to 6pm. There may be a long wait before your call is answered. You should explain why you cannot claim Universal Credit online and tell them you want to make a claim over the phone. If you have any difficulties trying to make a claim by phone the Citizens Advice Help to Claim service may be able to help you.

In some circumstances the DWP Visiting Team will visit you in your home to help you to make a claim. This only applies in exceptional circumstances, such as if you are disabled with complex needs or are a vulnerable person.

You may need to claim Universal Credit on behalf of someone else if they are unable to make the claim themselves. For example, you may need to help your disabled child make a claim if they are over 19 (or over 16 and no longer in full-time education).

If you are claiming on behalf of someone else you can ask to become that person’s appointee, which means you can mange the claim on their behalf. The DWP will arrange a home visit to assess whether an appointee is needed and whether you are a suitable appointee. This might not be necessary if you are already named as their appointee on another benefit, for example DLA or PIP.

You can either complete the claim online on behalf of the person you are claiming for, or you can make a telephone claim. If you make the claim online the information you include should be about the person who you are claiming on behalf of, not yourself. Once the online claim has been submitted you can contact the DWP through the online account to let them know you have made the claim on behalf of somebody else and you would like to start the process of becoming their appointee.

The amount of Universal Credit you will get depends on your own personal and family circumstances. Universal Credit is made up of different elements, depending on your circumstances, which are added together to give your maximum entitlement. Deductions are then made for any earnings, other income and capital you have. Other deductions, such as paying back an advance payment are then made and the benefit cap is applied, if applicable. The amount of Universal Credit left after all of these deductions is what you will be paid each month.

The Universal Credit Standard Allowance

Everybody who claims Universal Credit is entitled to a standard allowance. Your standard allowance depends on your age and whether you are claiming as a couple. You only receive one standard allowance per household.

The standard allowance rates (April 2024/25) are:

• Single claimant aged under 25: £311.68 per month
• Single claimant aged 25 or over: £393.45 per month
• Joint claimants both aged under 25: £489.23 per month between you
• Joint claimants either aged 25 or over: £617.60 per month between you
  
  

Additional Elements of Universal Credit

You may qualify for one or more additional elements of Universal Credit depending on your circumstances. These are added to your standard allowance to give your maximum Universal Credit entitlement (before the deductions mentioned above).

Universal Credit is usually a single monthly payment into your bank account, and you have to pay any bills out of that money, including your rent. If this arrangement is problematic for you, you can ask for more frequent payments and/or a direct payment to your landlord (but be aware that the payment to your landlord may not be sent to them when your rent is due). This is known as an alternative payment arrangement.

In Scotland, you should get these arrangements if you ask for them. In England and Wales, the arrangements are up to the DWP so you should explain why you need to change (for example, because it’s difficult to budget or you have rent arrears or other debts).

If you do not have a bank account you may be able to receive your Universal Credit through the Payment Exception Service.

Universal Credit is based on a monthly assessment period (AP). At the end of each AP the DWP will look at your circumstances and base your Universal Credit payment on what your circumstances have been. If your circumstances fluctuate each month your Universal Credit will adjust to accommodate this.

If your circumstances change during an AP, Universal Credit usually treat the change as though it happened from the beginning of the AP. For example, if you have a new child or your rent increases part way through an AP, provided you report the change before the end of the AP, your Universal Credit payment will increase to include a child element or additional housing element (if applicable) from the start of the AP. It is important to report changes of circumstances promptly and within the AP they occur wherever possible.

It usually takes around 5 weeks to receive your first Universal Credit payment. This is because there is a one month assessment period (AP). At the end of the AP the DWP will decide whether you are entitled to Universal Credit and how much. It then takes 7 days for the payment to reach your bank account.

You can check your payment statements at the end of each AP through your online Universal Credit account. If you have a telephone claim you should receive your payment statements through the post.

If you will find it difficult to wait 5 weeks for your first Universal Credit payment, you may be able to get an Advanced Payment. An Advanced Payment is a loan that you will have to repay through ongoing deductions from your monthly Universal Credit payments.

The amount of Advance Payment you can receive is based on your estimated Universal Credit entitlement taken from the information you provided when you made the claim. You can borrow up to 100% of your estimated monthly Universal Credit entitlement. You don’t have to borrow 100%, you can choose to take a smaller Advance Payment.

You can apply for an Advance Payment online through your Universal Credit account, by speaking to your work coach at the Jobcentre, or by calling the Universal Credit helpline. When you apply you will be told how much you can borrow, the monthly repayment amounts and when the first repayment is due.

If you are working, your earnings may reduce your Universal Credit. Your maximum Universal Credit is reduced by 55p of every £1 that you earn. This is known as the taper rate. However, some people who are on Universal Credit get a work allowance. This is an amount you can earn before your Universal Credit is reduced.

You get a work allowance if you are responsible for a child or if you have been assessed as having limited capability for work due to ill health or disability.

The amount of the work allowance depends on whether you are claiming help with housing costs on Universal Credit. The work allowance (April 2024/25) is:
• £404 per month if you are claiming help with housing costs
• £673 if you are not claiming help with housing costs

The work allowance is per household, not per individual. For example, if you are claiming jointly with a partner and are both working you do not get a work allowance each, the work allowance is what you can earn between you.

If you get a work allowance the first £404/£673 of your earnings are ignored. For every £1 you earn over your work allowance 55p is deducted from your maximum Universal Credit.

Any statutory pay you receive is treated as earnings by Universal Credit and is deducted in the same way as normal earnings. So, 55p of every £1 of statutory pay you receive is deducted from your maximum Universal Credit. The work allowance applies to statutory pay in the same way as normal pay.

Statutory pay that is treated as earnings by Universal Credit includes Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Shared Parental Pay, Statutory Adoption Pay and Statutory Parental Bereavement Pay.

Any occupational sickness, maternity, paternity, or adoption pay you receive is not differentiated from normal earnings by Universal Credit. This means it is treated as earning income in the usual way.

Maternity Allowance is not treated as earned income by Universal Credit. Instead, it is classed as unearned income which means it is treated differently to Statutory Maternity Pay. The work allowance and taper rate don’t apply to Maternity Allowance.

All of your Maternity Allowance is taken into account and deducted from your maximum Universal Credit entitlement. Universal Credit work out the deduction based on your monthly amount of Maternity Allowance. They do this by multiplying the weekly amount by 39 weeks which gives your total Maternity Allowance entitlement over 9 months. They then divide this figure by 9 to get the monthly amount to deduct from your Universal Credit.

For example, if you are receiving the flat rate of £184.03 a week Maternity Allowance (April 2024/25), Universal Credit will multiply £184.03 by 39 weeks which gives a total of £7,177.17. This is then divided by 9 months to give the monthly amount which gives a total of £797.46. So, your Universal Credit is reduced by £797.46 a month as this is how much Maternity Allowance you receive each month.

If you are paid 4-weekly by your employer there will be an assessment period (AP) once every year where you receive 2 wages in one AP. Depending on how much you are paid, this could mean that you do not receive any Universal Credit for the AP in which you have received 2 wages.

Unfortunately, you cannot challenge this decision. The Court of Appeal ruled in October 2021 that it is fair that Universal Credit is assessed on the actual income you have received in each AP. There is no basis to attribute one of the wage payments to a different AP.

The best thing that you can do is be prepared for the fact that there will be an AP once a year in which you will be paid 2 wages. If possible, you should try to work out which AP will be affected and try to budget for this in advance.

If you do not receive any Universal Credit because you’ve received 2 wages in an AP, you will have to reapply for Universal Credit the following month. The Citizens Advice website has information on what you need to do to reapply.

If you’re self-employed you will need to report your income and expenses at the end of each assessment period. You can do this online through your Universal Credit account, or by calling the Universal Credit helpline if you have a telephone claim.

You may have to prove that you are gainfully self-employed which means showing that self-employment is your main income, you get regular work, the work is organised and you expect to make a profit.

If you’re self-employed your Universal Credit payment may be worked out on an assumed level of earnings, rather than what you actually earn. This is known as the Minimum Income Floor (MIF) and is based on what somebody in similar circumstances to you would expect to make earning minimum wage.

If you earn more than your MIF, your Universal Credit will be worked out on your actual earnings.

If you earn less than your MIF your Universal Credit will be worked out as if you had earned your MIF, not what you have actually earned. For example, if your MIF is based on what you would earn working 35 hours a week at minimum wage, this would be £400.40 a week (April 2024/25 – less if you’re under 21). If you only earned £250 a week, your Universal Credit would be worked out as if you had earned your MIF of £400.40 a week.

If you earn less than your MIF you may have to look for additional work to top up your income.

The MIF does not apply for 12 months if you are new to claiming Universal Credit. It also does not apply if you have been on Universal Credit a while and you are newly self-employed. If you are not considered to be gainfully self-employed the MIF doesn’t apply, however, you may have to look for additional work.

If you have income other than earnings or statutory pay it may be taken into account when calculating your Universal Credit entitlement. Whether it is taken into account depends on what type of income it is.

Generally speaking, your Universal Credit will be reduced by the same amount of any the following types of income you receive:

• Pensions (including occupational, personal and state pension)
• Annuities
• Insurance payments
• Maintenance payments (but not including child maintenance)
• Student income
• Some benefits including Carer’s Allowance, New-Style Jobseeker’s Allowance and New-Style Employment and Support Allowance and Maternity Allowance (this is not a full list)

The rules on what counts as income for Universal Credit are complex. If you are not sure whether income you receive should be taken into account when working out your Universal Credit payments you should try to get further advice.

The following benefits are ignored by Universal Credit:

• Child Benefit
• Scottish Child Payment
• Disability Living Allowance (or Child Disability Payment in Scotland)
• Personal Independence Payment (or Adult Disability Payment in Scotland)
• Attendance Allowance
• The Sure Start Maternity Grant (or Best Start Grant in Scotland)
• The Healthy Start Scheme (or Best Start Foods in Scotland)

You can receive Universal Credit at the same time as Carer’s Allowance, however, your Universal Credit will be reduced by the amount of Carer’s Allowance you receive. Universal Credit calculate your Carer’s Allowance on a monthly basis and deduct this from your maximum Universal Credit entitlement.

For example, if you get £81.90 a week Carer’s Allowance (April 2024/25), Universal Credit multiply this by 52 weeks to give your annual amount which is £4,258.80 a year. This is then divided by 12 to give a monthly amount of £354.90. So, your Universal Credit will be reduced by £354.90 each month that you receive Carer’s Allowance.

However, Universal Credit also includes a carer element which you should receive automatically if you are getting Carer’s Allowance. So, even though your Universal Credit is reduced by the amount of Carer’s Allowance you receive, you will get an extra carer element included in your Universal Credit payment.

If you haven’t already claimed Carer’s Allowance, you have a choice whether to claim it alongside Universal Credit or not. You don’t have to be receiving Carer’s Allowance to get the carer element of Universal Credit. If you choose not to claim Carer’s Allowance alongside Universal Credit you won’t be worse off, unless your monthly Universal Credit entitlement is less than what you would receive from Carer’s Allowance. I.e. your monthly Universal Credit entitlement is less than £354.90 (April 2024/25). If this situation applies to you, you should get further advice as claiming Carer’s Allowance could mean you get £0 Universal Credit which means you may lose out on some passported benefits.

For some people it is advantageous to claim both Carer’s Allowance and Universal Credit at the same time. This is because you receive class 1 National Insurance credits through Carer’s Allowance which can help you qualify for state pension, contribution-based benefits and some bereavement benefits. You receive class 3 National Insurance credits through Universal Credit, which helps you qualify for state pension but not contribution-based benefits. So, if you are only concerned about not having gaps in your National Insurance record for your state pension you don’t need to claim both Universal Credit and Carer’s Allowance; you can claim Universal Credit on its own. If you are unsure, we recommend you seek further advice.

There are other advantages to claiming both Carer’s Allowance and Universal Credit together, such as receiving more frequent benefit payments (although this is only likely to help if you are used to budgeting weekly or fortnightly rather than monthly) and you’ll also receive a small £10 Christmas bonus if you claim Carer’s Allowance, which should be disregarded by Universal Credit. It also means if there is a problem with one of your benefit payments, you should still receive a payment from the other benefit, so you are not left without any financial support until the issue is resolved.

If you live in Scotland it it worth claiming both Carer’s Allowance and Universal Credit together as it will mean you are also entitled to a Carer’s Allowance Supplement. This is an extra payment for people in Scotland who claim Carer’s Allowance. You won’t get a Carer’s Allowance Supplement if you are only claiming the carer element of Universal Credit. You must be in receipt of Carer’s Allowance to qualify.

Savings and other assets are known as capital by Universal Credit and may affect your Universal Credit entitlement.

The home you live in does not count as capital, however, if you own a home you do not live in any equity in the property will count as capital unless an exception applies.

The rules on what counts as capital and when the value of capital can be ignored are complex. If you are not sure whether you have capital or whether your capital should be taken into account when working out your Universal Credit entitlement you should try to get further advice.

In general, you cannot claim Universal Credit if you have capital of over £16,000. However, if you are moved to Universal Credit from Tax Credits under the managed migration process, there are special rules that apply for the first 12 months of your claim which mean you may still be able to get Universal Credit.

If you have capital between £6000 and £16,000 you will be treated as having a monthly income of £4.35 for every £250 (or part of £250) of capital above £6000. For example, if you have capital of £6001 you will be treated as having a monthly income of £4.35 from it as £1 is a part of £250.

If your capital is less than £6000 it is ignored by Universal Credit.

The benefit cap is a limit on the total amount of benefits you can receive. It applies to Universal Credit (but also applies to other benefits too).

The amount of the benefit cap depends on your circumstances and whether you live in London.

If you live outside of London the benefit cap (April 2024/25) is:

• £423.46 per week (£22,020 a year) if you’re in a couple
• £423.46 per week (£22,020 a year) if you’re a single parent and your children live with you
• £283.71 per week (£14,753 a year) if you’re a single adult

If you live inside of London the benefit cap is:

• £486.98 per week (£25,323 a year) if you’re in a couple
• £486.98 per week (£25,323 a year) if you’re a single parent and your children live with you
• £326.29 per week (£16,967 a year) if you’re a single adult

Some people are not affected by the benefit cap. If you’re on Universal Credit you will not be affected by the benefit cap if:

• You (and your partner if you have a joint claim) earn £658 a month after tax and National Insurance
• You have been assessed as having limited capability for work following a work capability assessment
• You are caring for a disabled person

You are also not affected by the benefit cap if you, your partner or any of your children get certain benefits including Disability Living Allowance, Scottish Child Payment, Personal Independence Payment or Adult Disability Payment (this is not a full list)