What is Universal Credit and who can claim it?

Universal Credit is the new means-tested benefit for people of working age.  The structure of Universal Credit is intended to be simpler than the current system of benefits and tax credits as it is not specifically an ‘in work’ or ‘out of work’ benefit. You may be able to get it if you’re working, looking for work, sick or disabled, or caring for children or a disabled person.

It will eventually replace:

  • Income Support
  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance
  • Housing Benefit
  • Working Tax Credit
  • Child Tax Credit.

Universal Credit is being introduced in stages throughout the UK. Currently, in some places you may have to claim Universal Credit instead of the benefits listed above. However, this will depend on your circumstances – different criteria apply in different areas. You can check here whether you meet the current eligibility conditions where you live.

You can claim Universal Credit online at gov.uk or contact the Universal Credit helpline on 0345 600 0723 if you need help making your claim.

Eventually, Universal Credit will be introduced nationwide for people who would otherwise claim any of the benefits listed above. Current plans are for existing claimants of the above benefits to be transferred to Universal Credit between 2019 and 2022.

The government intends to make sure that no one ends up worse off when they transfer to Universal Credit.  Additional payments will be given if necessary so you won’t end up with less than you were previously getting in benefits. However, your transitional addition will not go up when benefits and prices go up, so its value will fall over time. It only protects your level of benefit at the point in time when you’re transferred to Universal Credit. Transitional protection may end if your circumstances change.

What about pensioners?

At the moment if one member of a couple has reached Pension Credit age, they are eligible for Pension Credit for themselves and their partner. However, this will change when Universal Credit is introduced nationally for all new claims. If you are part of a couple, you will be expected to claim Universal Credit until you both reach Pension Credit age. But if you are already getting Pension Credit when this change comes in, you can keep receiving it even if your partner has not yet reached the qualifying age.

If you are part of a ‘mixed-age’ couple, and you think that you might qualify for Pension Credit, you may want to consider applying for it now. This is because Universal Credit is paid at a much lower rate than Pension Credit and the working-age partner is also likely to have to meet the work-related requirements in order for you to get Universal Credit. Contact us for advice on your particular situation.

To find out when you will reach Pension Credit age, you can use the calculator here.

As Universal Credit replaces Housing Benefit and Child Tax Credit, and is only for working-age people, pensioners who have to pay rent and/or have dependent children will need to be supported in a different way. Therefore there will be some changes to Pension Credit so that it includes support for rent and an additional amount for those pensioners with dependent children.

What is the ‘claimant commitment’?

A basic condition of entitlement to Universal Credit is that you agree to a ‘claimant commitment’. This sets out your ‘responsibilities’ and, in particular, what work-related requirements (if any) apply to you. These requirements may also apply if you (or your partner) are working but your income is below a certain level.

Your work-related requirements will depend partly on which work-related group you’re in. Your group will depend on your personal circumstances and can’t be changed by your adviser. But you may also have some individual steps which you’ve agreed with your adviser to take in order to help you get back into work, or to find more or better paid work.

You can find information here about the different work-related groups – this can help you work out which group you should be in.

If you do not comply with the requirements of your ‘claimant commitment’ the amount of your Universal Credit may be reduced. This is called being ‘sanctioned’.

If you have any concerns about your ‘claimant commitment’ or if you are sanctioned, contact us for advice.

What are the implications for people raising a relative’s or friend’s child?

If you’re part of a couple, you will need to decide together which one of you is the main carer for the child and tell Jobcentre Plus – the main carer will be treated as the person who is responsible for the child.

If you have taken on a relative’s or friend’s child because of concerns about their welfare, you will not be expected to look for work for the first twelve months – whatever the child’s age. You will only have to attend work-focused interviews.

After the first year, you will be treated in the same way as a parent (unless you are a foster carer). Your work-related requirements will depend on the age of the child and other factors.

If you are responsible for a child aged under one you will not have to meet any work-related requirements.

If you are responsible for a child aged one, or are a foster carer for a child aged one or over, you will have to attend work-focused interviews to discuss plans for a future move into work. However, you will not have to look for work, be available for work or prepare for work.

If you are responsible for a child aged two, you will be in the work-preparation group. This can involve things like having a skills assessment, or participating in training or work experience.

If you are responsible for a child aged three or over, you will normally have to be available for work and looking for work. However, other factors may mean that you are placed in a different work-related group – for example, if you have an illness or disability, or are caring for someone who is sick or disabled.  You can find more information about the criteria for each group here  or contact us for advice on your particular circumstances.

How is Universal Credit paid and how much will I get?

Universal Credit takes the form of a single monthly payment to a household. In exceptional circumstances it may be possible for payments to be made more frequently, or to be split between a couple.

Universal Credit consists of a basic allowance with different rates for single people and couples, and additional amounts available for those with:

  • children
  • disabled children
  • caring responsibilities
  • limited capability for work
  • housing costs
  • childcare costs.

Find out more about the qualifying criteria for the additional elements here.

People without any other income will receive the basic allowance plus any additions relevant to their circumstances.  Certain income will be taken into account and will reduce the amount of Universal Credit you receive.

If you have children or you have ‘limited capability for work’, you’ll be allowed to keep part of any earnings before this affects your Universal Credit. This is called the earnings disregard or work allowance. Click here for more information about the work allowance.

Any amount above your earnings disregard limit will be taken off your Universal Credit at a rate of 63p for every £1 (net) that you earn. So if you earn an extra £10 above your earnings disregard limit, £6.30 will be taken off your Universal Credit and you’ll keep £3.70.

You can find out how much Universal Credit you’re entitled to here.

People already on Universal Credit will not receive an amount for third or subsequent children born after 6th April 2017. However, there are exceptions to this limit, including children who are living long-term with family or friends. Find out more about the exceptions and the evidence required here.

The limit will also apply to new claims for Universal Credit from November 2018, whatever the child’s date of birth – unless the household has  been receiving Child Tax Credit for that child or an exception applies. Until November 2018, families with three or more children will need to claim Child Tax Credit instead of Universal Credit.

Universal Credit can cover up to 85% of your childcare costs. Eligibility depends on your income and other circumstances, but it doesn’t matter how many hours you work. Find more information here.

If you pay rent, money to help with your rent costs is paid directly to you as part of your Universal Credit payment. You are expected to budget for your rent  and pay it in full from Universal Credit and any other money you get. This will be a new way of doing things if you are a council or housing association tenant.

In exceptional circumstances, the part of Universal Credit covering your rent can be paid directly to your landlord. Jobcentre Plus can decide to do this if you would otherwise be at risk of losing your home – for example because you already have rent arrears or will get into rent arrears if the money is paid to you rather than your landlord.

You can find more information about the housing costs element of Universal Credit here.

The benefit cap is a limit placed on the amount of Universal Credit you can get. Click here for more information about the benefit cap and who is affected by it.

Contact our advice service for more information about Universal Credit and how the changes might affect you.