Universal Credit explained

Money Advice Service

Universal Credit is a new benefit to support you if you’re working and on a low income or you’re out of work. This page explains how Universal Credit is different from existing benefits, how much you’ll be paid and how to apply for it.

What is Universal Credit?

Living in Northern Ireland or Scotland?

In Northern Ireland, Universal Credit works differently. Find out more on the nidirect website.

In Scotland, you might be offered some choices about how your Universal Credit is paid. Read our guide to Universal Credit in Scotland.

Universal Credit is a benefit payment for people in or out of work.

It replaces some of the benefits and tax credits you might be getting now:

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

The DWP calls these legacy benefits.

For more information on claiming Universal Credit, your commitments, sanctions and working while claiming download Universal Credit & You from Gov.uk.

Universal Credit key facts

Did you know?

You might have to wait up to five weeks before your first payment.

  • If you live in England or Wales and get help with your rent, this will be included in your monthly payment – you’ll then pay your landlord directly.
  • In Scotland and Northern Ireland rent can be paid directly to your landlord or you can choose to pay it yourself.
  • If you live with someone as a couple and you are both entitled to claim UC, you will get a joint payment paid into a single bank account.
  • UC is paid in arrears so it can take up to five weeks after you make your claim to get your first payment.
  • There are no limits on how many hours a week you can work if you’re claiming UC. Instead, the amount you get will gradually reduce as you earn more, so you won’t lose all your benefits at once.
  • You usually have to make your claim online.
If you’re currently claiming legacy benefits, you will have to move onto Universal Credit at some point before March 2023. Find out more about how Universal Credit will affect you.

How long does it take to get Universal Credit?

Make the most of your Universal Credit payment with personalised help from our Money Manager tool.

Don’t delay making your claim for Universal Credit and apply as soon as you are entitled to do so as it can take up to five weeks for your first payment to reach your account.

The date you submit your claim is the date of the month your Universal Credit payment will be paid. This is called your assessment date.

Universal Credit is paid monthly in arrears, so you’ll have to wait one calendar month from the date you submitted your application before your first UC payment is made. This is called your assessment period.

You then have to wait up to seven days for the payment to reach your bank account.

This means it can take up to five weeks before you get your first payment.

Example

  • Ben has lost his job and makes a new claim for Universal Credit on 22 July.
  • This makes his assessment date 22 July. It means he will be paid on the 22 of each month.
  • He needs to wait one assessment period (that’s a calendar month) to 21 August because Universal Credit is paid monthly in arrears.
  • He also needs to allow up to seven days for the money to reach his account.
  • He should expect his first payment of Universal Credit no later than 29 August.
  • If 29 August is a bank holiday Monday, he should receive payment on the last working day (Friday) before the holiday.
If you are worried about how you will manage for money until you get your first payment, read our guide Support while waiting for benefit payments.

How often is Universal Credit paid?

Universal Credit is paid monthly in arrears in England, Wales and Scotland.

However, in Scotland, you can ask for fortnightly payments instead of a single monthly payment.

In Northern Ireland, the default payment period is every fortnight, but you can choose to get monthly payments.

How much is Universal Credit?

Universal Credit is made up of a basic allowance plus different elements for things like housing costs, bringing up children, caring or sickness and disability.

The amount you get in Universal Credit can go down or up depending on what income you get from:

  • working
  • a pension
  • other benefits
  • savings and capital above £6,000.
Get an estimate of how much Universal Credit you’ll be entitled to using the calculator on the Policy in Practice website.

Universal Credit and working

Help to Save

If you’re working and on Universal Credit, find out if you qualify for the Help to Save account, which gives you up to a 50% bonus from the government on your savings.

You can work as many hours as you like when you’re on Universal Credit.

There are no limits as there are with existing benefits such as Income Support or Working Tax Credits.

If you’re in paid work you might be entitled to a work allowance.

Universal Credit work allowance

The work allowance is the amount of money you’re allowed to earn before your Universal Credit payment is affected.

You will be entitled to a work allowance if you’re:

  • responsible for dependent children, and/or
  • you can’t work as much because of illness or disability.

If you’re entitled to the work allowance, you can earn up to the threshold for your circumstances.

Your Universal Credit payment will then go down by 63p for every £1 you earn above this amount. This is called the earnings taper.

If you don’t qualify for the work allowance, your Universal Credit payment will go down by 63p for every £1 on all your earnings.

Employer-paid benefits, such as Statutory Maternity, Paternity, Adoption and Sick Pay are treated as earnings and are affected by the taper.

Find out more about the work allowance and earnings taper on the Turn2Us website

What happens to your Universal Credit when you start work or work more hours?

Watch the video from the Department for Work and Pensions (DWP) to find out.

What counts as income for Universal Credit?

Some income that you didn’t get from working can be deducted from your maximum award. This is called unearned income.

Unearned income that will be taken off your Universal Credit payment includes:

  • new-style Jobseeker’s Allowance (JSA)
  • new-style Employment and Support Allowance (ESA)
  • Pension Income
  • Some benefits that aren’t replaced by Universal Credit.

Usually £1 will be deducted from your Universal Credit payment for every £1 of unearned income.

Unearned income that won’t be taken off your Universal Credit payment includes:

  • Child Benefit
  • Maintenance payments
  • Disability Living Allowance
  • Personal Independence Payment
  • Income from boarders and lodgers.
Find out more about income that affects Universal Credit on the Turn2Us website.

How do savings affect Universal Credit?

If you have savings or capital (from things like investments or shares) this might affect how much Universal Credit you’ll get.

Find out more about how your savings will affect your benefit payment.

How to apply for Universal Credit

Did you know?

If you’re entitled to claim Universal Credit, you are expected to make your claim online on the Apply for Universal Credit website.

Find out what information you need to gather before you start your claim on Making a Universal Credit claim.

If you and your partner are making a joint claim, only one of you will need to complete the online claim form, but that person will need to enter details for both of you.

Help with an online application for Universal Credit

Help to Claim

If you’re claiming Universal Credit for the first time, Citizens Advice has a dedicated service to help you. Call 0800 144 8444 in England or 0800 024 1220 in Wales. For more information and to find your local Citizens Advice on their website

In Scotland, call 0800 023 2581, via webchat on the Citizens Advice website or contact your local bureau directly during their usual business hours.

If you’re worried about using a computer to make your claim, it’s important you get help. This is because your claim will not start until you have sent your online form. There is then a five-week wait for your first payment. Any delays can mean you have to wait longer than this.

If you don’t have access to a computer at home, you might be able to use one for free at your local Jobcentre, library, Citizens Advice or council.

Many jobcentres now offer extra support for people who are struggling to claim online and can also help you get all the paperwork you need together.

If you’re new to computers or haven’t felt confident about using them in the past, now is a good time to learn or get up to speed.

You can find free digital skills support in your area from the National Careers Service on 0800 100 900.

Visit the Online Centres Network to find your nearest training centre and LearnMyWay.com offers free online course to help beginners develop digital skills.

Advance payment on Universal Credit

Top Tip

You will have to repay the advance from your future Universal Credit payments, so only ask for what you need.

If you will have little or no money until your first payment, you can request an advance payment from your work coach or by calling the free Universal Credit helpline. You will have to pay this money back within 12 months and the first repayment is usually taken from your first Universal Credit payment.

If you’ve been claiming Universal Credit for six months, you might be able to claim a Budgeting Advance for essential costs.

Contact the Universal Credit helpline

If you need help with your claim, call the Universal Credit helpline free on:

Telephone: 0800 328 9344
9am – 4pm, Monday to Friday (closed on bank and public holidays). Calls are free.

Textphone: 0800 328 1344
8am – 6pm, Monday to Friday (closed on bank and public holidays). Calls are free.

If you already have an online account and journal you should call the Universal Credit full service helpline on:

Telephone: 0800 328 5644
Textphone: 0800 328 1344

8am – 6pm, Monday to Friday (closed on bank and public holidays). Calls are free.

This article is provided by the Money Advice Service.

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Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
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