Universal Credit

What is Universal Credit?

Universal Credit is a new means-tested benefit for people of working age. It replaces 6 existing benefits with a single payment for those who are out of work or on a low income.

Universal Credit is currently being phased in across the UK. It replaces the following benefits:

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

Since January 2019, anyone making a new claim for a working-age means-tested benefit usually claims Universal Credit rather than the older benefits listed above.

People on these benefits are now being transferred to Universal Credit under 'managed migration'. If you already get paid income-related Employment and Support Allowance the government's current intention is to move you to Universal Credit by December 2025.

Who can claim Universal Credit?

To claim Universal Credit, you need to meet the following basic conditions. You must:

• be aged 18 or over (or 16 to 17 in certain cases)
• be under Pension Credit qualifying age (State Pension age). Couples where 1 is below pension age and the other over pension age will claim Universal Credit
• be in Great Britain and not be subject to immigration control
• not be in education (unless you're claiming a disability benefit, see below), and
• have accepted a claimant commitment (see 'Your responsibilities' section below).

In addition, you must meet the financial conditions:

• You (and your partner, if you're making a joint claim) must not have combined capital of more than £16,000, and
• Your earnings or other income (and that of your partner, if making a joint claim) must not be too high for Universal Credit to be payable (see section 'How much is Universal Credit?' below).

Joint claims

If you live with a partner, you'll 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.

In education

You can still qualify for Universal Credit when you're in full-time education if you get a disability benefit such as Disability Living Allowance or Personal Independence Payment, and before you make your claim you have been assessed as having a limited capability for work. This is tested under the Work Capability Assessment (see below).

How do I claim Universal Credit?

You should normally claim Universal Credit online.

If you're unable to apply online or need help, contact the Universal Credit Helpline on 0800 328 5644 (textphone 0800 328 1344).

You should have the following information available when you begin your claim:

• your postcode
• your (and your partner's) National Insurance number
• details of your bank or building society account
• any rental 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 that you (or your partner) receive
• if you have children, their Child Benefit reference.

The initial interview

Once you've made your claim, you'll need to participate in an interview. This is to confirm the information you gave when you made the claim and to discuss what you'll need to do to receive the benefit.

If you have a disability or health condition that means you'll find it hard to attend or take part in the interview, you can ask the Jobcentre to make 'reasonable adjustments'.

For example, it may be possible to hold the interview somewhere you can get to more easily, or do the interview over the phone.

You may also want someone with you at the interview for support or assistance, such as a friend, relative or professional.

At the interview, a work coach will discuss your work prospects with you, and the support you may need to help you find work, or agree an exemption from looking for a job.

The work coach will draw up a 'claimant commitment' outlining the responsibilities and work-related requirements that you must meet to keep getting the benefit in full (see 'What conditions do I have to meet?' section below). You'll have to agree and sign this commitment. 

If you can't show good reason for not fulfilling your claimant commitment then you'll be sanctioned. You can ask for this commitment to be reviewed if you struggle to meet the commitments.

How much is Universal Credit?

The amount of Universal Credit you're paid depends on your circumstances. It's worked out on a monthly basis by comparing your financial needs with your existing income from other benefits and earnings. 

Set amounts for different needs are added together to give a 'maximum amount' – 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' (see below). From this figure, deductions are made for any earnings, other benefits you receive, debts from old benefits and arrears for utility costs and council tax. The resulting figure will be your Universal Credit for that month.

The standard allowance

This is the basic allowance that's always included in every claim. The amount you're entitled to depends on your age and whether you're claiming as a single person or with a partner.

The standard allowance per month is:

• single claimant aged under 25 - £311.68
• single claimant aged 25 or over - £393.45
• joint claimants both aged under 25 - £489.23
• joint claimants where either is 25 or over - £617.60

The additional amounts

These are paid to cover different needs. Any amounts you're eligible for will be added to the standard allowance to make your maximum amount.

There are 5 types:

• The limited capability for work-related activity amount - you may be eligible for an amount of £416.19 a month if you're unable to work because of a disability or health condition such as Parkinson's. This is tested under the Work Capability Assessment (see below).
• The carer amount - an amount of £198.31 is included if you have regular and substantial caring responsibilities for a severely disabled person.
• The housing costs amount - this may be included in your award if you pay rent. It can also cover certain service charge payments.
• The child amount - this is included in your award for each child (or qualifying young person) who lives with you up to a maximum of 2 children (unless you're exempt from this restriction). An additional amount is included for every child who is disabled.
• The childcare costs amount - this is included in your award if you pay for registered childcare in order to stay in work.

Winter Fuel Payment

If you receive Universal Credit and were born before 22 September 1958, you’ll automatically receive the Winter Fuel Payment in 2024. This is a one-off payment of £200 if you were born between 23 September 1944 and 22 September 10 1958. It’s £300 if you were born before this.

Capital and savings

The capital limit for Universal Credit is £16,000, whether you're single or a couple. If you have savings or capital over £16,000, you can't get Universal Credit.

If you have savings or capital under £6,000, this is disregarded (which means you can receive Universal Credit in full).

If your capital is between £6,000 and £16,000, it is treated as generating a monthly income of £4.35 per month 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.

Earnings and income

If you're employed, your Universal Credit reduces gradually as you earn more. For every pound you earn (after tax and any deductions such as National Insurance or pension contributions) your Universal Credit payment reduces by 55p.

In some situations, you're 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'.

You may be eligible for a work allowance if you have limited capability for work, or responsibility for children.

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.

Some benefits are completely ignored, for example, Disability Living Allowance, Attendance Allowance and Personal Independence Payment.