Universal Credit explained

Everything you need to know about Universal Credit, including the recent changes announced in the Autumn 2017 Budget

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What is Universal Credit?

Universal Credit is a complete re-think of the benefits system that merged six benefits into one payment.

The rollout of Universal Credit has been heavily criticized after it was revealed that claimants have been waiting for payments for up to six weeks.

In the Autumn 2017 Budget, Philip Hammond, Chancellor of the Exchequer, announced a series of measures worth £1.5 billion that aim to improve the operation of Universal Credit.

How does the Budget affect Universal Credit?

As of January 2018, new claimants will get access to advance payments much faster: 100% of the month’s advance payment will reach recipients within five days.

Until then, new claimants will only be able to get 50% of the payment in advance – but they will now receive the advance within five days.

The time period to repay the advance has been extended from six months to 12. And you’ll soon be able to apply for the advance online.

Furthermore, the seven-day waiting period will be lifted in February 2018. This means your entitlement will begin on the first day you make a claim, and it should see new claimants get their Universal Credit payments in five weeks instead of six.

Anyone receiving Housing Benefit will also get an extra two weeks’ payment when they first claim Universal Credit.

Benefits trap

Universal Credit is designed to free claimants from what’s known as the benefits trap, where people are discouraged from working because they are better off on benefits. 

It also aims to cut the amount of fraud and error in the system, potentially saving billions of pounds a year. 


Universal Credit is a means-tested benefit aimed at people of working age who are either looking for work or who earn a low income. You don’t have to be out of work to claim the credit, and you might also be entitled to the benefit if you currently receive tax credits, or financial assistance with your rent.

Merging benefits

The idea behind Universal Credit is to simplify the benefits system by merging six benefits and tax credits into one payment. Universal Credit is replacing:

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

Unlimited hours

Unlike with Jobseeker’s Allowance, there’s no limit to the number of hours a week you can work while claiming Universal Credit. The more you earn, the less credit you will receive – but the reduction is gradual, so you don’t lose all your benefits at once. Instead, the payment will adjust month by month as the amount you work fluctuates.

Benefit Cap

The Benefit Cap applies to Universal Credit and limits the total amount you can get from the credit and certain other benefits.

How much is the benefit cap?

  • A couple, with or without dependent children, living in Greater London is capped at £442.31 per week. If you live outside Greater London, it’s £384.62 per week.
  • A lone parent with dependent children will be capped at £442.31 per week in Greater London, or £384.62 per week if living outside Greater London.
  • A single person without children is capped at £296.35 per week in Greater London, or £257.69 outside Greater London.

Figures according to Citizens Advice

Monthly payments

Most benefits now are paid weekly, or fortnightly. But Universal Credit will be paid monthly, like a normal wage.

Rent payments will now continue to be sent directly to landlords rather than tenants, thanks to the post-budget u-turn on Housing Benefit. However, claimants will be able to opt-out if they wish to receive rent directly.

Recipients will therefore have to learn to budget. If you want to improve your budgeting skills, there are lots of useful tips on the government website www.moneyadviceservice.org.uk.

Understanding your buying habits can also help when it comes to reducing spending and sticking to a budget. Try our Buying Mood Index to learn how your mood affects your spending.

Bank account

Universal Credit will be sent directly to the claimant’s bank or similar account. In addition, if you live with your partner and you are both eligible for Universal Credit, the household will receive one single payment.

Anyone who doesn’t have a bank account will need to set one up, which can be a daunting process. It must be an account that can receive automated payments, such as a current account or basic bank account.

Ideally, you should also be able to make automated payments out of the account to cover household bills such as rent and utilities. Bear in mind that you might want to open a joint account if you and your partner both claim Universal Credit.

The Money Advice Service has put together a guide to choosing an account for your benefit payment, which you can read on its website.

Internet access

The government expects people to claim Universal Credit online. There is no paper form. You will also be able to check the payments and manage your budget online.

In other words, internet access is essential. If you don’t have your own computer, you can ask about access at your local library or Jobcentre Plus. 

But if you do need to call the DWP Universal Credit phone lines, you can phone for free using freephone numbers. The Universal Credit live service number is 0800 328 9344 (previously 0345 600 0723) and the Universal Credit full service number is 0800 328 5644 (previously 0345 600 4272).

Claimant Commitment

Once you have submitted your online application, you will be called for a face-to-face interview at your local Jobcentre Plus. You will be asked to accept a Claimant Commitment, which you will draw up with your work coach.

The Claimant Commitment will detail your responsibilities, such as looking for work, or making every effort to increase your earnings. It will be reviewed regularly and if you don’t keep up your side of the bargain, your Universal Credit will be cut.

Couples who receive one single Universal Credit payment will each have their own Claimant Commitment.

National roll out

The government is introducing Universal Credit in stages. It began at the end of April 2013 with the national rollout starting in February 2015.

The system was expected to be fully up and running across Britain by 2017, but it was extended to roughly just five job centres a month. In November 2017 the rollout was ramped up, with the aim of adding around 50 job centres to the scheme each month – but this has since been slowed down.

It’s hoped that by 2022 all eligible households will be moved on to Universal Credit.

Any questions?

If you have any questions about Universal Credit, or you are finding it difficult to make a claim, you can contact the Universal Credit Helpline on 0345 600 0723.   

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