Universal Credit explained

Planned reforms to the UK’s welfare system begin to take effect this week, with the first Universal Credit payments being piloted in Ashton-Under-Lyne, Greater Manchester – and a wider rollout of the scheme due in the coming months.

Six benefits and tax credits are being merged under the one Universal Credit banner, in a government bid to simplify the welfare system and to save money.

Universal Credit replaces several payments such as housing benefit and Jobseeker’s Allowance with one single, monthly payment which is paid to a household rather than an individual.

Here’s a closer look at how Universal Credit will work, who it will affect and when it will be heading your way.

What is Universal Credit?

Universal Credit is a single, monthly payment for anyone on a low income, or looking for work. It replaces the following benefit payments and tax credits:

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

How will it work?

Claimants will be expected to accept a ‘Claimant Commitment’, which details all the things they must do to receive their benefit – such as registering for Universal Jobmatch, the government’s new online jobs posting service, creating a CV, or attending skills courses.

The commitment will be different for each claimant, taking their personal circumstances into account. More will be expected of claimants who are unemployed and able to work, with the government warning of “tough new penalties” for those who can work but don’t comply.

If you can’t work because you’re a carer or because you have health conditions or disabilities, you’ll still have a Claimant Commitment, but you won’t have to look for work.

Anyone who currently gets help with rent will have their benefit included in the Universal Credit and will have to pay their landlord themselves. As it stands, benefits payments covering rent are paid directly to landlords, so this will be a huge step-change for claimants who will now have to pay rent out of their benefits and budget accordingly.

How is the benefit paid?

Monthly payments will be made via direct debit into a nominated account. Couples living in the same household and claiming Universal Credit will receive one payment into a single account.

When does Universal Credit start in my area?

For now, the only people affected by Universal Credit will be a small number of new claimants in Ashton-Under-Lyne. Similar trials will begin in Warrington, Wigan and Oldham in July. Universal Credit will then start to be rolled out across the rest of the country from October this year. It’s expected to completely replace the existing welfare system by 2017.

What happens until then?

If you’re already receiving any of the six benefits being replaced by Universal Credit, you’ll continue to do so until your area is affected, and you’ll be told in advance of when things will change.

How do I apply for Universal Credit?

Most people will apply for and manage their Universal Credit account online here, though support will be offered at Jobcentres to anyone who isn’t online or comfortable using the internet. If you’re not sure whether or not you’re eligible for Universal Credit, you can check here.

Anything else I should know?

The whole idea behind Universal Credit is that you shouldn’t be able to claim more in benefits than you’d be able to earn through work, if you’re able to. This means the maximum amount a non-working household can claim per year will be £26,000.

If you get a job, or your pay improves, your Universal Credit payments will be automatically adjusted, using the government’s employer-linked Real Time Information system.

If you’re still unclear about how Universal Credit will affect you, contact the Universal Credit helpline on 0845 600 0723 or 0845 600 0743 (textphone).

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