What is Universal Credit?

Universal Credit (UC) is a means-tested benefit to help you with your living costs if you’re working and on a low income, or are currently unemployed.

Universal Credit will replace the following six means-tested legacy benefits:

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

Universal Credit will be rolled out in stages across the United Kingdom. If you currently claim one of the above benefits you are not required to do anything until you hear from the Department for Work and Pensions (DWP) about moving to Universal Credit unless you have a change in circumstances.

What are the differences between Universal Credit and the old benefits?

The Universal Credit benefit works differently to the old benefits they are replacing. We have listed the most significant differences so you can understand how Universal Credit may affect you:

• You can receive Universal Credit if you’re either unemployed or employed.
• A single payment is made monthly, rather than weekly or fortnightly.
• Your rent will be paid into your account as part of your monthly Universal Credit payment.

How does Universal Credit work?

The Universal Credit benefit is a monthly payment to help cover your living costs. The Universal Credit payment is made up of a basic standard allowance and extra payments - that may apply to you depending on your circumstances.

You may be eligible for extra Universal Credit payments if you:

• Are currently working and pay for childcare.
• Need help with your housing costs.
• Are responsible for one or more children.
• Are disabled or have a physical or mental health condition.
• Are a carer for a disabled person, or you have a disabled child.

If you live with your partner and you are both eligible for Universal Credit, you can apply as a couple. You would then receive your Universal Credit as one payment to a single bank account.

Universal Credit and rent

Your Universal Credit payment may include help with your rent, which means you will need to pay your landlord, even if you live in social housing, each month from your Universal Credit payment.

If you’re in debt or struggling to manage your money, you can ask the DWP to pay your rent directly to the landlord from your monthly payment.

Universal Credit and work

Universal Credit allows you to work and still receive the benefit - this will reduce gradually the more you earn or increase if you earn less or your job ends.

When working self-employed, any Universal Credit payment can be affected by the amount the DWP expect you to earn each month - this is called your minimum income floor.

Claiming other benefits on Universal Credit

If you meet the requirements, you can claim Universal Credit alongside the following benefits, and it won’t reduce the amount of Universal Credit you receive.

• Council tax reduction.
• Personal Independence Payment (PIP): If you need daily help because of a long-term illness, disability or mental health condition.
• Disability Living Allowance (DLA): If you’re responsible for a disabled child.

If you have enough national insurance contributions you might be able to claim the following benefits, but your Universal Credit will be reduced:

• New style Jobseekers Allowance (JSA): If you’re unemployed.
• Contribution-based & New Style Employment and Support Allowance (ESA): If you can’t work because of a physical or mental illness.

Contribution-based JSA

You can no longer make a new claim for contribution or income-based JSA. If you are already receiving contribution or income-based JSA, your payments will continue for as long as:

• You are still eligible and until your claim ends or
• You are moved to Universal Credit (UC)

You may be able to make a new claim for New Style JSA but you should speak to a Welfare and Benefits advisor before applying. You can also use a benefits calculator to see what you are entitled to.

Contribution-based & New Style ESA

Contribution-based ESA has been replaced with New Style ESA. They are almost identical, but you will not be able to make a new claim for contribution-based ESA.

Speak to a Welfare and Benefits advisor before you apply for New Style ESA.