What is Universal Credit?
Universal Credit is a relatively new benefit designed to ensure that people of ‘working age’ (What do we mean by 'working age'?) have a minimum income for the costs of day-to-day living and to pay their rent. After a period of time people may also be able to access a loan through Universal Credit entitlement to help them with their mortgage interest payments. One of the aims of Universal Credit is to simplify the benefits system. It is going to do this by eventually replacing Working Tax Credit, Child Tax Credit, Income-related Employment & Support Allowance, Income-based Jobseekers Allowance, Income Support and Housing Benefit.
Universal Credit - Key things you should know:
You will need to apply for Universal Credit online
If you cannot use a computer there are places you can go for help
If you are unable to leave your home the Department for Work and Pensions will help you
If you are a member of a couple you will both need to claim (you will need to make a ‘joint claim’), if you do not then you will get less money
Before applying online, you should make sure you have at hand all the key information you need to complete your claim
You will need an email address and mobile phone number to claim
You will need your bank account or credit union account details
You will need to enter your landlord and rent details
As part of applying for Universal Credit you will need to make an appointment with a work coach at your local Job Centre
You will be expected to validate your claim and agree to a 'claimant commitment' when you meet with your Work Coach
You will need to verify your identity as part of your claim, if you are unable to do this online then a Work Coach at the local Job Centre will help you
When applying for Universal Credit online you will be expected to follow steps to create a personal online journal. You will be expected to use your journal to notify the DWP about changes in your circumstances and the DWP will use it to send you messages and information about your claim. Your journal will be protected by a ‘username’ and password that only you will know and must keep safe.
As part of your claim you will normally need to arrange to meet with a Work Coach at your local Job Centre and agree to a ‘claimant commitment’ highlighting what you will do to find paid employment
If you are too sick to work you will not be expected to look for work
If you are a carer then you will either not have to look for work or only expected to look for work which fits in around your caring responsibilities
If you are expected to look for work but fail to do so (without a good reason) you may be sanctioned
If you are sanctioned and do not have enough money to live off then you can apply for a ‘hardship payment’ which will need to be repaid at the end of your sanction
If you are aged 16 or 17 you will only be able to apply for Universal Credit in limited circumstances, for example if you are a lone parent, too sick to work, a carer or you need to live away from your parents
You will be expected to pay the full amount of your rent from your Universal Credit payments
No money will be included in your Universal Credit to pay your council tax
If you are getting Housing Benefit when you claim Universal Credit then your Housing Benefit will stop. You should talk to your landlord and make plans for paying your rent whilst you are getting Universal Credit.
If you need to pay the council tax then you must can make a separate claim for Council Tax Support from the council
Please contact the Council to set up payment arrangements to pay your Council tax as soon as possible to avoid falling behind with your payments and costly legal action
Universal Credit is paid monthly and in arrears
You will normally be expected to wait up to five weeks before you will get your first payment
If you cannot make ends meet whilst waiting for your first payment then you can apply for an ‘Advance Payment’ which you will then need to repay from your future Universal Credit payments.
If you are unable to manage your money then you may apply to have your Universal Credit paid weekly or fortnightly, you may even apply to have your rent paid direct to your landlord
If you are in rent arrears then you and/or your landlord can apply for your rent to be paid direct to your landlord including an amount to repay your arrears of rent
If you are in rent arrears and/or struggle to find money to pay your rent then you may be able to get financial support from the council by way of a Discretionary Housing Payment
If you need someone to talk to the Universal Credit Service Centre on your behalf then you will need to be present when they ring the Service Centre. This is because you will need to give your permission for them to do so. Alternatively, once you have applied for Universal Credit you can make an entry in your ‘Universal Credit Journal’ that you give that person your permission (known as ‘explicit consent’) to talk on your behalf. When you do this the permission you give will not be on-going. It will only apply for one enquiry, therefore you will need to give permission 'again' for any other enquiry.
Universal Credit operates to provide people with a minimum monthly income for day-to-day living. The needs assessment includes a basic allowance for single people, couples and dependent children. Added to this can be an allowance for rent and/or certain mortgage payments. However, any assistance provided towards your mortgage payments will be in the form of a loan which you will normally be expected to repay when you sell the property.
Your Universal Credit award will include an allowance towards your rent/mortgage payments. It is then up to you to pay the full amount of your rent/mortgage from your Universal Credit and other income. If you do not pay your rent/mortgage then you risk being evicted from your home. If you are in rent/mortgage arrears and face losing your home then visit our Places to go for support page to find out where you can go for help.
Under Universal Credit extra allowances may also be paid in the case of disabled people and carers. Certain types of income are then offset against the overall needs assessment amount. However, some benefits and income are fully disregarded e.g. Child Benefit, maintenance payments, Disability Living Allowance and Personal Independence Payment. If you (and/or your partner) are working then only some of the money you earn is taken into account. If you have children then you will be allowed a ‘work allowance’ enabling some of your earnings to be fully disregarded and in all cases, it is only then that 63% of any net earnings (i.e. your take home pay) that is actually taken into account. There is also an allowance for childcare if you encounter childcare cost when working. It is these rules which are intended to make ‘make work pay’ (i.e. make people better off in work than on benefit).
Universal Credit will ultimately replace all of the following benefits for people of working age:
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Child Tax Credit
- Working Tax Credit
- Housing Benefit
These are the ‘legacy benefits’. Should you be getting one or more of these benefits, at some stage in the future you will be invited by the DWP to apply for Universal Credit instead.
Please visit Understanding Universal Credit for more information.
Help with your Council Tax
Universal Credit is NOT replacing Council Tax Support, which is paid by the City of Wolverhampton Council and goes towards reducing the amount people are liable to pay for their council tax. It may be paid on top of any discount. Visit Council Tax Support or call 01902 551166 to find out more.
Universal Credit will not replace
- State Retirement Pension
- Pension Credit
- Child Benefit
- Carer’s Allowance
- Attendance Allowance
- Personal Independence Payment
- Disability Living Allowance
- Industrial Injuries Benefit
- Statutory Sick Pay
- New Style Jobseeker’s Allowance
- New Style Employment and Support Allowance
Unemployment and Sickness
Universal Credit will not replace New Style Jobseeker’s Allowance or New Style Employment and Support Allowance. These are Department for Work and Pension benefits aimed at people who have worked (and paid National Insurance contributions) but who are now out of work or unable to work due to ill health/disability. Entitlement to these benefits is not ‘means-tested’ - that means that you can apply for them even if you have substantial savings or you have a partner that is in well paid employment. If you have previously worked and now find yourself unemployed or too sick to work then you should make enquiries at your local Job Centre (or with the Department for Work and Pensions) about your entitlement to either of these benefits. It is possible for someone to get both Universal Credit and Contributory Jobseekers Allowance/Contributory Employment and Support Allowance.
Because Universal Credit is aimed at people of ‘working age’ it will not be replacing Pension Credit or State Retirement Pension. Therefore, if you are a pensioner then Universal Credit should not directly affect you. By 'working age' we mean people aged 16 or over but under the 'qualifying age for Pension Credit' - the age at which you can claim Pension Credit. This is not necessarily the same as State Pension Age (i.e. the age you can retire). Do seek further information and advice as necessary. Should you be in a relationship with a person under pension age, new rules may affect you from 15 May 2019; we advise to seek further information and advice as necessary.
If you are a member of a ‘mixed-aged couple’ (that is a couple where one of you has reached the Qualifying Age for Pension Credit and the other is under this age) from 15 May 2019 you will be required to apply for Universal Credit if you want financial assistance to help you with your day-to-day living expenses, rent and/or housing costs. When both you and your partner reach the Qualifying Age for Pension Credit, then you will be expected to end your Universal Credit claim and apply for Pension Credit. At this time, should you need help with your rent, then you will need to make a separate claim for Housing Benefit. Contact the City of Wolverhampton Council for further information about how you can apply for Housing Benefit. At present the Qualifying Age for Pension Credit is 66+. However, this is increasing each quarter until you will eventually need to be 68 to apply for Pension Credit. To see if you have reached the Qualifying Age for Pension Credit (this is now the same as your Pension Age) then click on the following link. All you need do is enter your date of birth.
Examples - How much you will receive
Salima is aged 22. She is a lone parent and lives with her parents. Her son, Zak is aged five. Her only income is £21.05 per week Child Benefit. Salima would be awarded £623.97 per month (‘maximum amount’ of Universal Credit) from which £NIL (‘assessed income’) would be deducted because her Child Benefit would be fully disregarded. Therefore, whilst getting Universal Credit Salima’s income would be £623.97 per month Universal Credit plus £21.05 per week Child Benefit. This money is intended to help Salima with the costs associated with her day-to-day living.
John and Sadie are a young couple. They live in a two-bedroom house which they rent from a private landlord. Their rent is £98.50 per week. They have two children, Noah (aged 5) and Mason (aged 2). John works part-time. His take home pay is £680.00 per month. Sadie does not work. Apart from John’s earnings the family’s only other income is £35.00 per week Child Benefit. The couple would be awarded £1,538.16 (‘maximum amount’ of Universal Credit) from which £244.44 (‘assessed income’) would be deducted. This accounts for the portion of John’s earnings which would be treated as an income. The couple’s Child Benefit would be fully disregarded as an income. Ultimately the couple would be left with a Universal Credit entitlement of £1,293.72 (£1,538.16 less £244.44 = £1,293.72) per month. This money is intended to help John and Sadie with the costs associated with their day-to-day living and to enable them to pay their rent.
Katrina is aged 23. She is a lone parent. She lives in a two bedroom flat with her 5-year-old son, Jack. Her rent is £75.50 per week. Katrina receives £67.25 per week Carer’s Allowance because she looks after her disabled mother. Her only other income is £21.05 per week Child Benefit. Katrina would be awarded £1,114.06 (‘maximum amount’ of Universal Credit) from which £291.42 (‘assessed income’) would be deducted. Her Carer’s Allowance would be treated as income taken into account in full. However, her Child Benefit would be fully disregarded. This would leave her with a Universal Credit entitlement of £822.64 (£1,114.06 less £291.42 = £822.64) per month. This money is intended to help Katrina with the costs associated with her day-to-day living and to enable her to pay her rent.
If you are getting a ‘legacy benefit’ at the moment then you need do nothing. However, should your circumstances change then you might be expected to apply for Universal Credit. If there is no change in your circumstances then at some date in the future (between 2019 and 2023) you will be contacted by the DWP and expected to apply for Universal Credit. Universal Credit will then replace whatever ‘legacy benefits’ you have been receiving.
Examples - Moving onto Universal Credit
David has been getting Income-based Jobseeker’s Allowance, Child Tax Credit and Child Benefit. He has also been getting Housing Benefit and Council Tax Support towards his rent and council tax. David has now obtained paid employment but his wages are low. David may now apply for Universal Credit as a top-up to his wages. Any award would include an amount for his children and rent payments. His Universal Credit will replace his Child Tax Credit and Housing Benefit. David will be expected to maintain his Council Tax Support claim in order to continue to get help towards his council tax. He will continue to get his Child Benefit payments. Before Universal Credit, David would have been expected to claim Working Tax Credit and depending on the size of his earnings he would have continued to get Child Tax Credit and Housing Benefit.
She had been getting Income-related Employment and Support Allowance because it has been considered that she was too sick to work. At this time, she was also getting Housing Benefit and Council Tax Reduction towards her rent and council tax. However, her health has now significantly improved. Under Universal Credit, Gina may now apply for Universal Credit. As part of her obligation under Universal Credit Gina will be expected to be available for work and look for work. Any award would include an amount to help Gina pay her rent. Gina’s Universal Credit will replace her Income-related Employment and Support Allowance and Housing Benefit. Gina will be expected to maintain her Council Tax Support claim in order to continue to get help towards her council tax. Formerly Gina would have been expected to claim Income-based Jobseeker’s Allowance. She would have continued to get Housing Benefit and Council Tax Support.