Everything you need to know about Universal Credit

Millions of people’s incomes have been affected by the coronavirus pandemic with many finding themselves turning to benefits, perhaps for the first time in their lives.

Despite the introduction of government support for those who’ve been furloughed or seen their incomes fall due to coronavirus, such as the Job Retention Scheme and the Self-employment Support Scheme, large numbers aren’t eligible for this support. Universal Credit is the government’s overarching scheme to help cover living costs if you’re struggling to make ends meet.

Since March 16, more than 1.5 million new claims for Universal Credit welfare payments have been made. In normal times, there are usually around 55,000 applications submitted each week.

Here, we explain everything you need to know about Universal Credit, who’s eligible, and how to go about claiming it.

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?

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 63p. 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 £292 a month if you get help with your housing costs and £512 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 previously used to have their Universal Credit entitlement worked out based on an assumed level of earnings known as the ‘minimum income floor’. This meant that anyone with low earnings may have their entitlement calculated using higher earnings than they actually have. Since April 6, the minimum income floor has been temporarily scrapped, so that Universal Credit payments now reflect their real earnings.

How much Universal Credit can I get?

If you’re single and aged over 25, the standard Universal Credit allowance is £409.89 a month. If you’re a couple and either of you are 25 or over, the standard allowance for both of you is £594.04.

However, depending on your circumstances, you may be entitled to additional payments on top of this. 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 up to £200,000 of your mortgage if you have been claiming Universal Credit for 39 weeks or more, with no breaks or earned income in that time. The amount you’ll get will depend on the size of your mortgage and is worked out using a standard interest rate, currently 1.3%. 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.

If you’re struggling to pay your mortgage, you may want to consider taking a three-month mortgage payment holiday, although this will only defer your payments. For more information read our full guide on Everything you need to know about taking a mortgage payment holiday.

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 £143.84 per week, whilst the rate for a three-bedroom property in Eastbourne is £218.63 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 £281.25. This falls to £235.83 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 £235.83 a month per child. If your child is disabled, you’ll get an extra amount on top of this of £128.25 a month, or £400.29 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 £646.35 for one child and £1,108.04 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 £341.92 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, but you won’t be expected to visit a Job Centre during the current lockdown.

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, but given current demand for the service it may take longer than this.

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 currently inundated 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.

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.

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. You can also read more about other forms of help you might be able to get in our article Financial support for those affected by coronavirus.

Have you recently made a benefits claim for the first time or do you have any tips for those applying for Universal Credit? If so, we’d be interested in hearing from you. You can comment below, get in touch via [email protected] or post on the Rest Less Community forum.

3 thoughts on “Everything you need to know about Universal Credit

  1. Avatar
    Dennis Warrington on Reply

    I am 68 and had to retire because of the coronavirus. My wife is 61 and not worked for 31 years. It doesent seem right that she cannot get her pension until she is 66. At no time has she had a letter or email informing her of this.
    I applied for universal credit but could not get it, because I have put savings away for the future, it is not a lot, but seems wrong that for the next five years we will have to live of our savings.

Leave a Reply

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Get the latest ideas, advice and inspiration​

No spam. Just useful and interesting stuff, straight to your inbox. Covering finance, learning, jobs, volunteering, lifestyle and more.

By providing us your email address you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time by following the link in our emails.

Join Rest Less for free

Rest Less is the UK’s fastest growing site for the over 50s, focusing on finance, learning, careers, volunteering, lifestyle and more. 

Good luck with your application

Before you go, we’d love to stay in touch to find out how you get on. Sign up to Rest Less today to get the latest volunteering, careers, learning, financial planning and lifestyle resources sent straight to your inbox.

By providing your email you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time through the link in our emails.

Good luck with your application

Before you go, we’d love to stay in touch to find out how you get on. Sign up to Rest Less today to get the latest jobs, learning, volunteering, financial planning and lifestyle resources sent straight to your inbox.

By providing your email you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time through the link in our emails.