Steep living costs continue to put millions of people under financial pressure, and many are turning to benefits, perhaps for the first time in their lives.
Universal Credit is the government’s overarching scheme to help cover living costs if you’re struggling to make ends meet. According to latest government statistics, as of February 2024, there were more than 6 million people claiming Universal Credit, up from 3m before the pandemic. The five weeks up to the count date in January saw an average of 49,000 claims each week.
Here, we explain everything you need to know about Universal Credit, who’s eligible, how to go about claiming it, and how the changes to the Universal Credit taper might affect you.
What we’ll cover
- What is Universal Credit?
- Who is eligible for Universal Credit?
- Can I claim Universal Credit if I still have some income coming in?
- How much Universal Credit can I get?
- How do I claim Universal Credit?
- What information will I need to submit when I make a claim?
- When do I start receiving Universal Credit?
- Where to go for more help
What is Universal Credit?
Universal Credit is a means-tested benefit which is paid monthly and is designed to help you cover your living costs if you’re on a low income, unemployed, or off work due to sickness or disability.
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
If you’re receiving any of these benefits already, the DWP should have contacted you about moving to Universal Credit. Although you don’t need to make a separate claim for Universal Credit, you should report any change in circumstances that might increase or reduce your entitlement.
Who is eligible for Universal Credit?
If you’re under state pension age and you’re on a low income or out of work and you have £16,000 or less in savings, you may be eligible to claim Universal Credit. If you have more than £6,000 in savings (but less than £16,000) you will still be eligible, but it will have an impact on the amount you can claim.
If you live with your partner, their income and savings will also be taken into account when your entitlement to Universal Credit is assessed, even if they themselves aren’t eligible for it.
If you’re self-employed and have more than £16,000 in savings because you’ve been putting this money aside specifically to pay tax bills, this cash won’t affect your entitlement to Universal Credit. However, you will need to be able to prove that you’ve been setting this money aside to cover your tax costs.
If you’re in a couple and one of you is under state pension age, you and your partner can claim Universal Credit, but once you both reach state pension age you won’t be able to continue claiming it. At this point, you may be able to apply for Pension Credit or other benefits to top up your income. Find out more about how Pension Credit works in our article Pension Credit explained.
Can I claim Universal Credit if I still have some income coming in?
You don’t need to have zero income to be able to claim Universal Credit, but bear in mind that the more you earn, the less Universal Credit you’ll be able to claim, and if your income is over a certain amount you won’t be able to claim anything. For every £1 you earn, your Universal Credit payment reduces by 55p. The amount you get is based on your household income, so if your income has fallen but your partner’s income hasn’t, you might not be eligible to claim.
If you are living with a disability or health condition that affects your ability to work, or are responsible for a child or young person, you may be allowed to earn a certain amount of money each month without it affecting your entitlement to Universal Credit. This is known as the ‘work allowance’ and is £404 a month if you get help with your housing costs and £673 if you don’t get help with your housing costs. You can find out more about how your earnings affect your payments here.
Those who are self-employed have their Universal Credit entitlement worked out based on an assumed level of earnings known as the ‘minimum income floor’. This means that anyone with low earnings may have their entitlement calculated using higher earnings than they actually have.
It’s also important to note that the amount of money you earn will affect the responsibilities you are expected to carry out while claiming Universal Credit. The government introduced the Universal Credit’s Intensive Work Search Regime in September 2022 meaning that, depending on your circumstances, if you earn less than £892 a month as a single claimant or £1,437 if you have a joint claim, that you might need to take part in more intensive work search activities to continue receiving your UC payment. These activities are likely to include actively searching for work and attending weekly or fortnightly appointments at a job centre, with the aim of finding more, or better paid work.
Additionally, in September 2023, the government started a phased rollout of their In-Work Progression scheme which will require over 600,000 Universal Credit Claimants that are in work to regularly meet with a dedicated work coach so that they can increase their hours or earnings.
How much Universal Credit can I get?
If you’re single and aged over 25, the current standard Universal Credit allowance is £393.45 a month in the 2024/25 tax year. If you’re a couple and either of you are 25 or over, the standard allowance for both of you is £617.60.
The Chancellor Rachel Reeves announced in her autumn budget that Universal Credit would increase by 1.7% in the 2025/26 tax year, in line with September’s inflation rate. She also said that the government is creating a new Fair Repayment Rate which caps deductions made through Universal Credit at 15% of the standard allowance. Before this Budget, it was 25%.
The government claims that this change means around 1.2 million households will keep more of their Universal Credit payment each month, with households expected to be better off by an average of over £420 a year.
Depending on your circumstances, you may be entitled to additional payments on top of the standard payments. These may include:
Help with housing costs
The housing allowance element of Universal Credit may help you cover your rent or mortgage costs.
1. Your Mortgage
You’ll only be eligible for help with mortgage interest costs on up to £200,000 of your mortgage if you have been claiming Universal Credit for 3 months in a row. The amount you’ll get will depend on the size of your mortgage and is worked out using a standard interest rate, currently 3.66%. The housing allowance element of Universal Credit is usually paid straight to the bank, building society or lender and you’ll be notified of the amounts paid through your online account.
Bear in mind that help with mortgage payments like this are provided as a loan. You’ll have to pay back this loan when the property it was claimed for is sold, or you can choose to pay it back earlier if you can.
2. Your rent
If you’re renting, the amount you can get will be determined by your age, circumstances and the Local Housing Allowance rates by postcode or local authority where you live. For example, the rate for a two-bedroom property in Birmingham is £172.60 per week, whilst the rate for a three-bedroom property in Eastbourne is £249.24 a week. You can search for Local House Allowance rates by postcode or local authority here.
Help with the cost of children
If you’re looking after children or grandchildren aged under 16, you might be eligible for an extra payment to help with the costs.
For the first child, if they were born before April 6, 2017, you can get an extra monthly amount of £333.33. This falls to £287.92 if they were born on or after this date.
For the second child and any other eligible children, you should be able to claim an extra £287.92 a month per child. If your child is disabled, you’ll get an extra amount on top of this of £156.11 a month, or £487.58 if they are severely disabled.
You may also be able to claim up to 85% of your childcare costs, up to a maximum monthly amount of £1,014.63 for one child and £1,739.37 for two or more children.
Help if you have a disability or health condition
If you have an illness or disability that stops you from working, or reduces your ability to work, you might be able to claim the limited capability for work and work-related activity (LCWRA) element of Universal Credit, which is worth up to £416.19 per month.
You might also be eligible for ‘New Style’ Employment and Support Allowance (ESA) which is paid fortnightly and can be claimed at the same time as Universal Credit or on its own.
You’ll only be eligible for ESA if you’ve paid or been credited with enough National Insurance contributions in the two full tax years before the year you submit your claim. Find out more about ESA here. Claiming ESA alongside Universal Credit might reduce your overall Universal Credit entitlement.
How do I claim Universal Credit?
You can apply for Universal Credit online here. When you set up your online account to make your claim, you’ll need to create a password. Make sure you keep this safe and don’t disclose it to anyone. You may be contacted by telephone for an interview if the Department of Work and Pensions needs to check or confirm any information on your online application.
According to the DWP, completing an online claim usually takes about 20 minutes for a single person, and around an hour if you are claiming as a couple.
If you’re unable to apply online, you can apply by phone on 0800 328 5644, but bear in mind that the telephone service is usually extremely busy so you may face long delays getting through.
According to the DWP, the best time to visit the website is in the evening or in the early hours of the morning.
If you are claiming Universal Credit as a couple you will each make your own claims, and these will be joined together at the end to make them a joint claim. Find out more in our article Claiming joint Universal Credit as a couple.
What information will I need to submit when I make a claim?
There are several bits of information you’ll need to have to hand to make a claim for Universal Credit.
These include:
- Your address
- Your email address
- Your telephone number
- Your bank account details (a claim can still be made without a bank account)
- Proof of your identity
If you have an existing ‘Government Gateway’ account, which you may use to send a tax return, check your state pension or your tax credits, you can submit your Government Gateway credentials to confirm your identity.
If you don’t have a Government Gateway account, you can confirm your identity using the government’s Verify service, which is a secure way to prove who you are online.
Once you’ve set up your Universal Credit account, you’ll be presented with a ‘to-do’ list, which will involve you answering questions about your nationality, where you live and any rent or mortgage payments you make, who lives with you, your work and earnings, savings and investments, any income other than earnings, your health, whether you’re caring for someone and if you’re in education or training.
After you’ve submitted all this information, you’ll then be asked to declare that all the information you’ve given is complete and correct. You can find more information about how to make a claim here.
When do I start receiving Universal Credit?
Universal Credit payments usually start five weeks after you applied for it, but you can request an advance loan within the first five days after applying if you need cash urgently. Bear in mind, however, that this must be paid back, and repayments will usually be automatically deducted from your future Universal Credit payouts, which can add to financial pressures later down the line.
If you’re currently receiving a legacy benefit such as child tax credit, housing benefit or income support, which is moving onto Universal Credit, you’ll get a one-off payment of your legacy benefit covering two weeks. This ‘run-on’ payment is to provide those moving to Universal Credit with a bit of extra financial support.
Where to go for more help
There are several charities and organisations which can advise you about any benefits you might be entitled to and can help you submit a claim.
These include Turn2us, which can assess your eligibility for benefits through its Turn2us benefits calculator or by phone on 0808 802 2000. The site Entitledto.co.uk also has a free benefits calculator which you can use to see what you qualify for.
Alternatively, you can get help from Citizens Advice. You can search for your local Citizens Advice here or you can telephone their customer service helpline on 0344 411 1444. Find out more about these organisations and other sources of help in our guide Five free sources of help if you’re making a benefits claim.
Rest Less Money is on Instagram. Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.