What is Universal Credit and how much can I claim?

UNIVERSAL Credit is the government’s welfare system, which has replaced six benefits with one monthly payment. Here is everything you need to know about the new benefits system, whether you’re eligible to make a claim and how much money you could get. What is Universal Credit? Universal Credit is a welfare scheme designed to wrap […]

UNIVERSAL Credit is the government’s welfare system, which has replaced six benefits with one monthly payment.

Here is everything you need to know about the new benefits system, whether you’re eligible to make a claim and how much money you could get.

What is Universal Credit?

Universal Credit is a welfare scheme designed to wrap a number of benefits into a single monthly payment.

It replaces the following benefits:

• Child Tax Credit
• Housing Benefit
• Income Support
• Income-based Jobseeker’s Allowance (JSA)
• Income-related Employment and Support Allowance (ESA)
• Working Tax Credit

This means that instead of getting lots of little benefits, you only receive one monthly payment – or twice monthly for some people in Scotland.

Almost all new claims for benefits will automatically get Universal Credit instead of tax credits.

The only group that can’t currently make a new claim are those receiving the Severe Disability Premium who need to go through the old system.

If you already receive any of the six benefits it is replacing, you can’t claim Universal Credit as well.

You will be be rolled onto the new system when its introduced in your area, or if you have a change of circumstances.

The deadline for shifting across has been pushed back to December 2024, so you may have a long wait.

If your circumstance do change, for instance if you get a pay rise or move in with a partner, you need to let the Department for Work and Pensions know.

How much will I get?

The payment is made up of a standard allowance and then various additional payments that depend on your circumstances.

The standard allowance has been temporarily boosted by £20 per week because of the coronavirus pandemic.

If you apply between now and September 2021 you will get the higher amount, but this is expected to drop back down again after then.

Here’s how the amounts are changing:

• Single, under 25  – £342.72 (equivalent to £4,112.64 a year) – dropping to £251.77 from September 2021.
• Single, 25 or over  – £409.89 (equivalent to £4,918.68 a year) – dropping to £317.82 from September 2021.
• Couple, joint claimants both under 25  –  £488.59 (equivalent to £5,863.08 a year) – dropping £395.20 from September 2021.
• Couple, joint claimants, one or both 25 or over  – £594.04 (equivalent to £7,128.48 a year) – dropping to £498.89 from September 2021.

You have to apply as a couple if you live together – even if you are not married.

You may get additional payments, for instance if you:

• have children
• have a disability or health condition which prevents you from working
• need help paying your rent

You could also get money to help pay your housing costs. How much you are entitled to depends on your age and circumstances.

You can use a benefits calculator to see how much you’re likely to get in total.

You are assessed every month and if things change, it might affect how much you are paid for the whole assessment period.

If you start earning more, you’ll get a reduction in payments due to something called the taper rate.

Your payment reduces by 63p every pound above your work allowance.

The monthly work allowance is £287 for people who get help with housing costs and £503 for those that don’t.

As your income increases, your payment will reduce until you’re earning enough to no longer claim Universal Credit – then your payments will be stopped.

If your earnings change from month to month, you may find you need to keep reapplying for Universal Credit.

You can find out exactly how much you can earn without reducing your payments or losing them altogether with our step-by-step guide.

Am I eligible for Universal Credit?

Whether you are eligible will depend on your specific circumstances.

You may be eligible if you meet all of the following criteria:

• you’re on a low income or out of work
• you’re 18 or over (there are some exceptions if you’re 16 to 17)
• you’re under State Pension age (or your partner is)
• you and your partner have £16,000 or less in savings between you
• you live in the UK

Your partner’s income and savings will be taken into account, even if they are not eligible for Universal Credit.

There are other factors that might make you eligible for a claim, for instance if you care for a disabled person, you’re in further education or if you’ve recently had a child.

You can read the full eligibility criteria on the government’s website.

Will I be better or worse off under the new system?

The Government claimed around three million working households would see cash gains from Universal Credit.

Treasury officials said a couple with two children where one parent earns £30,000 a year would benefit by £425.

A single parent with one child and no housing costs earning £15,000 a year, will get £170 more, officials claimed.

But the Institute for Fiscal Studies has previously estimated 2.1 million families will lose while 1.8 million will gain.

And there has been controversy over five-week delays where people were left with no benefits and payments structures that leave people out of pocket.

Now, you can get an advance payment to plug some of the gap. Here’s our step-by-step guide.

You can also calculate how much you’d be eligible for under the new system and see how it compares with your current benefits here.

New rules mean some claimants can get advance payments to plug the gap when they move across.