Universal Credit was introduced in 2013 as a new means-tested benefit. It is gradually being rolled out across England, Scotland, Wales and Northern Ireland.
It will eventually replace 6 existing benefits with a single monthly payment for those who are out of work or on a low income.
What is Universal Credit?
Universal Credit will replace the following means-tested benefits over the next few years:
- Child Tax Credit
- Housing Benefit
- Income-related Employment and Support Allowance (ESA)
- Income-based Jobseeker’s Allowance
- Income Support
- Working Tax Credit
Universal Credit has been rolled out to all Jobcentre Plus areas in England, Scotland and Wales. It will begin to be rolled out in Northern Ireland from September 2017.
In some areas, it is limited only to new claims from single people looking for work, including those with existing Housing Benefit and Working Tax Credit claims. In other areas, new claims from couples and families (including lone parents) who are fit for work will also be accepted.
You can check online whether you are eligible to claim Universal Credit, based on your circumstances and where you live.
Who can claim it?
To claim Universal Credit, you will need to satisfy the following basic conditions. You must:
- be aged 18 or over (or aged 16 or 17 in certain cases)
- be under Pension Credit qualifying age (between April 2010 and April 2020, this will increase from 60 to 66)
- live in Great Britain and not be subject to immigration control
- not be in education (see below)
- have accepted a claimant commitment (see 'Your responsibilities' section further down the page)
In addition, you must meet the financial conditions.
- You (and your partner, if you are making a joint claim) must not have capital of more than £16,000.
- Your earnings or other income (and that of your partner, if you are making a joint claim) must not be too high for Universal Credit to be payable.
If you have a partner (including a same-sex partner), you will need to make a joint claim for Universal Credit. In a joint claim, you and your partner must usually meet all the basic conditions above.
Claiming when in education
You will not normally be able to claim Universal Credit if you are in full-time education.
You may be able to claim Universal Credit in full-time education if you are entitled to Attendance Allowance, Disability Living Allowance or Personal Independence Payment (PIP) and you have been assessed as having a limited capability for work.
How do I claim?
You must normally apply for Universal Credit online. If you need help making a claim, you can ring the Universal Credit helpline on 0800 328 5644 (textphone 0800 328 1344).
You can also make a claim by phone, if the Department for Work and Pensions has provided you with a number to do so.
You should have the following information ready when you begin your claim:
- your postcode
- your (and your partner’s) National Insurance number
- details of your bank or building society account (if you have one)
- any rent agreement you may have
- details of your (and your partner’s) income, savings and capital
- details of your (and your partner’s) earnings
- details of any other benefits you (or your partner) receive
How much is Universal Credit?
The amount of Universal Credit you are paid depends on your circumstances. It is worked out on a monthly basis by comparing your financial needs with your financial resources.
Set amounts for different financial needs are added together to give you a ‘maximum amount’. This is the basic amount the law says you need to live on each month.
Your maximum amount is made up of a ‘standard allowance’ and different ‘amounts’. From this figure, deductions are made for any earnings and other income you receive – the resulting figure will be your Universal Credit for that month. This may be restricted by the benefit cap.
The standard allowance
This is the basic allowance that is always included in your maximum amount. The amount you are entitled to depends on your age and whether you are claiming as a single person or with a partner:
- single claimant aged under 25: £251.77 a month
- single claimant aged 25 or over: £317.82 a month
- joint claimants both aged under 25: £395.20 a month
- joint claimants where either is aged 25 or over: £498.89 a month
These are paid to cover different needs. Any amounts that you are eligible for will be added to the standard allowance to make up your maximum amount.
There are 5 types:
- child amount
- housing costs amount
- work capability amount
- carer amount
- childcare costs amount
These are described in more detail in the next section.
In some circumstances you are allowed to keep some of your earnings up to a certain limit before your Universal Credit is affected. This is known as the ‘work allowance’. Earnings in excess of the work allowance will reduce your Universal Credit by 63 pence in the pound.
Your earnings are calculated on the amount you receive after tax, National Insurance contributions and any contribution you make to an occupational or personal pension scheme have been deducted.
Income other than earnings
If you have income other than earnings, such as other benefits, these will usually be taken into account in full, so that your Universal Credit is reduced pound for pound.
Capital and savings
The capital limit for Universal Credit is £16,000, whether you are single or a couple. If you have savings or capital over £16,000, you cannot get Universal Credit.
If your capital is between £6,000 and £16,000, it is treated as generating a monthly income of £4.35 for each £250 (or part of £250) above the lower limit of £6,000. For instance, if you have capital of £6,300, it is treated as generating a monthly income of £8.70.
If you have savings or capital under £6,000, this is disregarded.
The child amount
This is included in your award if you are responsible for a child or ‘qualifying young person’ who normally lives with you. A qualifying young person is someone aged 16 to 18 (or 19 in some cases) who is enrolled in full-time education or approved training.
However, a 2 child limit was introduced on 6 April 2017 – you can only get a child amount for a third or subsequent child (or qualifying young person) if they were already included in your Universal Credit award at that date.
- The standard amount for each child (or qualifying young person) is £231.67 a month.
- A higher rate of £277.08 is paid for your eldest child (or qualifying young person) only if they were already included in your Universal Credit award on 6 April 2017.
An additional amount is included for each child or qualifying young person who is disabled. There are 2 different levels:
- a higher rate: £372.30 a month. This is for a child (or qualifying young person) who is entitled to the highest rate of the care component of Disability Living Allowance, the enhanced rate of the daily living component of Personal Independence Payment, or who is certified as severely sight impaired or blind.
- a lower rate: £126.11 a month. This is for a child who is entitled to any other rate of Disability Living Allowance or Personal Independence Payment (PIP).
The work capability amount
A work capability amount of £318.76 a month is included in your award if you have a limited capability for work and work-related activity.
This is determined by a Work Capability Assessment, which you can read about in our information on Employment and Support Allowance.
The carer amount
A carer amount of £151.89 a month is included in your award if you have regular and substantial caring responsibilities for a severely disabled person. You are considered to have such responsibilities if you would be entitled to Carer’s Allowance, although you do not have to actually claim that allowance.
You are not normally entitled to this amount as well as the work capability amount (see above), if you would be eligible for both. Only the highest paid amount is included in your award. However, if you have a limited capability for work and your partner is a carer, both amounts could be payable.
The childcare costs amount
This is included in your award if you pay for registered childcare in order to stay in work. You will get 85% of childcare costs met, up to a monthly maximum amount of:
- £646.35 a month for 1 child
- £1,108.04 a month for 2 or more children
If you are claiming jointly, your partner must also be in paid work, unless they are unable to look after the child because they:
- have a limited capability for work (tested under the Work Capability Assessment)
- have regular and substantial caring responsibilities for a severely disabled person, or
- are temporarily absent from your household (for example, they are in prison, hospital or a care home)
Generally the childcare must be provided by someone who is registered for childcare or an equivalent. It cannot include care provided by a close relative of the child wholly or mainly in the child’s home or care provided by a foster parent.
The housing costs amount
A housing costs amount may be included in your award if you pay rent or have a mortgage. The amount can also cover certain service charge payments.
If you own your home, the housing costs amount may cover mortgage interest on loans secured on your home.
There is normally a ceiling of £200,000 on the amount of loan that can be covered – this does not apply in the case of any loan taken out for the purpose of adapting your home for the needs of a disabled person.
There is normally a qualifying period of 9 months before the amount can be included in your Universal Credit award. You will not be entitled to the amount if you are in paid work.
If you are a private tenant, your housing costs amount will depend on where your home is situated and the number of rooms you are deemed to need.
Deductions will be made from the amount if you have non-dependants living with you. A non-dependant is someone who normally lives in your home on a non-commercial basis – usually an adult child, friend or relative who would normally be expected to contribute towards your rent.
Social housing tenants
If you are renting from the council or from a housing association, your housing costs amount may be reduced if the property you rent is considered to be under occupied.
Deductions will be made from the amount if you have non-dependants living with you.
The work allowance
Some of your earnings may be disregarded by applying a work allowance. This will only apply if you or your partner:
- are responsible for one or more children or qualifying young people (see section above), or
- have a limited capability for work (see section above)
There are 2 different rates:
- a lower work allowance: £192 a month
- a higher work allowance: £397 a month
The lower work allowance will apply if a housing costs amount is included in your award. If a housing costs amount is not included in your award, the higher work allowance will apply instead.
In each case, the same rate will apply whether you are a single claimant or are claiming jointly with your partner.
The benefit cap
There is a cap on the total amount of benefits, including Universal Credit, that you can claim. The cap varies, depending on your circumstances.
- In Greater London, the cap is £1,916.67 a month if you are a lone-parent or a joint claimant (with or without children), or £1,284.17 a month if you are single and have no children.
- Outside Greater London, the cap is £1,666.67 a month if you are a lone-parent or a joint claimant, or £1,116.67 a month if you are single and have no children.
Benefits that are taken into account when calculating the cap include:
- Bereavement Allowance and Widowed Parent’s Allowance
- Child Benefit
- Employment and Support Allowance
- Jobseeker’s Allowance
- Maternity Allowance
The benefit cap will not apply if you, your partner or a dependent child are getting certain benefits, including Attendance Allowance, Disability Living Allowance or Personal Independence Payment (PIP).
The benefit cap will not apply if your monthly earnings before tax (or combined earnings before tax if you are a couple) are at or above the ‘earnings exemption threshold’ (currently set at £520).
There is a grace period of 9 consecutive months when you will not be capped, if you were working for a year and your earnings (or combined earnings) for each month were at or above the ‘earnings exemption threshold’.
This grace period normally starts from the day after you finished working, regardless of when your Universal Credit award starts. For example, if you finish work on 21 June and claim Universal Credit in September, your 9 months starts from 22 June.
What conditions do I have to meet?
To qualify for Universal Credit, you may need to meet certain work-related conditions. These are known as ‘requirements’ and are recorded in a ‘claimant commitment’. You are likely to incur sanctions (where your Universal Credit is reduced) if you fail to meet a work-related requirement.
Limited hardship payments may be available if you are sanctioned. In certain circumstances, none of the work-related requirements will apply to you.
The work-related requirements
There are 4 types of requirement:
- work-focused interview requirement
- work-preparation requirement
- work-search requirement
- work-availability requirement
Your circumstances will determine which of these apply to you.
The work-focused interview requirement
Here you need to take part in one or more work-focused interviews. These are designed to assess your prospects and help or encourage you to move into, or stay in, work.
The work-preparation requirement
Here you are expected to take action to improve your chances of getting work. This can include taking part in training, an employment programme or work experience.
The work-search requirement
Here you are required to take reasonable action to get paid work (or more work if you are already working part-time). This can include:
- searching for work
- applying for jobs
- creating and maintaining an online job profile
- registering with employment agencies
- seeking references
You will be expected to search for work for a minimum amount of time each week – usually set at 35 hours. The work you are searching for must also amount to at least 35 hours a week.
In each case, the Department for Work and Pensions may agree to a reduced time if you have caring responsibilities or a physical or mental impairment.
The work-availability requirement
You are normally required to be able and willing to take up paid work (or more work if you are already working part-time) immediately. You must also be able and willing to attend a job interview immediately.
The Department for Work and Pensions can allow you up to 1 month to take up paid work, and up to 48 hours to attend a job interview, so that you can make alternative arrangements if you are caring for a child or someone with a physical or mental impairment.
If you have a physical or mental impairment that has a substantial adverse effect on your ability to carry out work of a particular nature or in a particular place, you cannot be expected to be available for such work or in such a place.
What if none of the work-related requirements apply?
In certain circumstances, none of the work-related requirements will apply to you. This will be the case if you:
- are responsible for a child under the age of 1 year
- have regular and substantial caring responsibilities for a severely disabled person, or
- have been assessed in the Work Capability Assessment as having a limited capability for work and work-related activity
How is Universal Credit paid?
Your Universal Credit will be paid every calendar month in arrears. In Scotland you can choose to have it paid twice a month, if you prefer.
If you have a partner, you can choose who receives the payment. Alternative payment arrangements, such as bi-monthly payments, would only be made if the Department for Work and Pensions thought that you could not manage with a single monthly payment. Such arrangements would usually only be made for a temporary period.