What is Universal Credit and who will it affect?

Universal Credit will replace six current benefits for those on low income or are out of work, with a single monthly payment.

The benefit system is being overhauled: since 2013, the government has been slowly bringing in the new Universal Credit system, which will aim to provide a simpler benefit to support people who are on a low income or out of work. This will mean that six existing benefits (Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit and Housing Benefit) will be replaced by a single, means-tested, monthly payment. Universal Credit is being introduced to more and more regions in the UK, and will be available across the country by the end of 2017.

 

How will it work?

The amount of Universal Credit that you are entitled to will be calculated by comparing your basic financial needs to what you need to live on with your financial resources - it can include support towards housing, children and childcare, if you’re living with a disability, or if you are caring for someone with a disability. Cohabiting partners, who are both eligible for Universal Credit, will receive one joint, monthly payment. 

You can use the benefits calculator on the GOV.UK website to estimate what benefit contributions you might be entitled to, including Universal Credit.

 

Who will it affect?

There are millions British people claiming at least one of the following benefits: Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Child Tax Credit, Working Tax Credit or Housing Benefit. If you claim for any of these, then you will be moved over to Universal Credit sometime during then next two years.

Benefits UK graph v0106
 * Statistics taken from the HMRC Child and Working Tax Credits Statistics, UK report (December 2015) and the DWP statistical summaries report (February 2016)

 

Employment and Universal Credit

Universal Credit is designed to make sure that you are better off in work than not, to support you in your preparation and search for employment, and help you to become financially independent. It will also support those who are unable to work. Below we’ve listed the most common scenarios of people affected by Universal Credit.

Jobseekers:

To claim Universal Credit, jobseekers will in most cases have to wait seven days before any contribution is paid (please see this GOV.UK page for a list of exceptions). Similarly, when you claim Universal Credit, you will have your Claimant Commitment, which will lay out your responsibilities in return for the payments you receive, and you will need to attend regular appointments at the Jobcentre.

Work and receive low income support:

If you are in employment and receiving support for low income, there will no longer be a limit to how many hours you can work. Your Universal Credit payments will reduce as your income increases - you will not lose all your benefit at once and will continue to get top-up contributions if you are not earning enough.

Self employed:

If you are self-employed you won’t be eligible to claim Universal Credit. However, if you are already claiming and then decide to start your own business, Universal Credit will be provided to support you while you grow your venture. 

 

Already self-employed Not Eligible for Universal Credit
Unemployed or on low income and become self-employed 0 - 12 months You may still claim Universal Credit to support you while you develop your business
12+ months

If you become gainfully self-employed, your Universal Credit includes a Minimum Income Floor (MIF).

  • When you earn below the MIF value, the MIF value will be used to calculate your Universal credit award.
  • Should your earnings be above the MIF value, your actual earnings will be used to calculate your Universal credit award.

* Gainful self-employment: a trade, profession or vocation that is your main occupation, as well as being organised, developed, regular, and carried out in expectation of profit. Assessed by your Work Coach at the Jobcentre.

** Minimum Income Floor: the expected earnings of someone like you in similar circumstances, calculated using the National Minimum Wage for your age group multiplied by the number of hours you’d be expected to look for and be available for work. 

 

Young adults (18-21 years old)

From April 2017, young adults, who claim Universal Credit, will be expected to attend a Youth Obligation programme for six months. After this, you will be expected to apply for apprenticeships, traineeships or work placements.

 

Tax Credits 

If you are receiving tax credits, you do not need to do anything unless your circumstances change (please see this GOV.UK page for more details). If you live in a Universal Credit region and become unemployed, your tax credits will stop when you start claiming Universal Credit. Similarly. If you start living with a partner who is receiving Universal Credit, your tax credits will also stop and you will be considered as joint claimants. 

Child Tax Credits and Tax Credits towards childcare will become part of your monthly Universal Credit payment - these includes contributions towards the costs of raising a child, disable child additions, and contributions towards childcare if you are working, which could be up to 70% of the costs of registered childcare.

 

Housing Benefit

If you are receiving benefit payments towards your rent or mortgage, this may be included in your Universal Credit.

If you are renting, when you are moved to Universal Credit, your will receive monthly payments into your own bank account rather than directly to your landlord, and it will become your responsibility to pay your landlord.

However, if you are receiving contributions towards mortgage repayments, these will be paid directly to your mortgage lender. It’s important to remember that once you or your partner starts earning, mortgage contributions will no longer be included in your Universal Credit. 

 

In order to claim Universal Credits, you will first need to have your identity checked through GOV.UK Verify – this service uses Certified Partners to carry out these checks, and CitizenSafe is a Certified Partner.

The first time you login to GOV.UK services via Verify, you'll be asked to choose an Identity partner and to provide some basic personal information with details from you driving license and passport. This will be followed by some questions that only you would know the answers to, just to check that you are who you say you are. Here at CitizenSafe, we are 100% dedicated to verifying identities, so you can be 100% confident that we will make it as easy as possible to prove your identity, while our very thorough checks will keep your identity safe and secure.

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