What is Universal Credit?

Curious about Universal Credit and the eligibility criteria surrounding it? Dive into our guide for insights on how much Universal Credit is, who can claim it, and information on how to apply.

What is Universal Credit?

First things first, exactly what is Universal Credit? Well, Universal Credit is a monthly benefit for people who have a low income, are out of work, or are unable to work (perhaps due to a disability or a health condition).

It is paid by The Department of Work and Pensions and is designed to help with living costs. Universal Credit is typically paid monthly (but if you live in Scotland, you may receive payments twice monthly).

Universal Credit was established to replace other benefits and tax credits, such as:

• Child Tax Credit

• Housing Benefit

• Income support payments

• Working Tax Credit

• Jobseeker’s Allowance (income-based)

• Income-related Employment and Support Allowance

Universal credit eligibility criteria

To claim universal credit, you must be 18 or over (although there are some exceptions if you are 16-17), and also be under state pension age. You must live in the UK, and have less than £16,000 in savings and investments.

You may be eligible for Universal Credit if you are out of work (perhaps due to a health condition) or are working but have a low income (including self-employed or part-time workers).

You will also need to sign a Claimant Commitment, a document setting out the terms you’ll need to follow to receive the payments. This is based on individual circumstances, and may include terms such as a commitment to look for work or increase your earnings.

If you fail to meet these terms, your Universal Credit Payments may be cut.

How much is Universal Credit?

Next, you’re probably wondering what is the maximum Universal Credit payment? Well, how much you’ll be paid depends on factors such as your standard allowance, your monthly earnings, and whether you care for any children or have any health conditions.

Your payment will be made up of your standard allowance, plus any extra circumstantial payments you qualify for.

What is the standard allowance for Universal Credit?

Typically, you’ll get one standard allowance for your household. For instance, if you’re single and under 25, this will be £311.68 monthly, and if you’re single and over 25, this rises to £393.45.

If you live with your partner and you’re both under 25, you’ll receive a combined amount of £489.83, and if either of you are over 25, this rises to £617.60.

Will I receive extra payments on top of this?

As well as this standard allowance, you may be eligible for further funds. For instance, if you have children who live with you, the extra amounts are as follows:

• For your first child: you’ll receive £333.33 (if they were born before 6th April 2017) and £272.92 (if they were born on or after this date).

• For your second child and any other eligible children: you’ll receive £287.92.

Furthermore, you’ll receive extra money if any of your children are disabled. This starts at an extra £151.11, and rises to £487.58 monthly for children with severe disabilities.

Equally, if you have a disability or health condition yourself, you may receive extra help. For those with a limited capability for work for instance, an extra £416.19 may be given.

You may also be eligible to claim Universal Credit if you’re studying in some cases. For instance:

• If you’re 21 or under, and studying without parental support.

• You’re responsible for a child, or live with a partner who is eligible for Universal Credit.

• You’ve reached state pension age and live with a partner who hasn’t.

• You’re studying a course for which there are no loans/financing options available.

The amount you’ll receive is dependent on various factors, so if you’re thinking of applying, use the GOV.UK benefits calculator to see how much you’re eligible for.

How will my wages impact payments?

If you’re currently working, your Universal Credit payment will depend on how much you earn. There isn’t a limit on how many hours a week you can work, however as you earn more, your Universal Credit payments will reduce simultaneously.

Put simply, for every £1 you earn, your Universal Credit payments will go down by 55p. Alternatively, if your wages go down or you stop working, your Universal Credit payments will rise.

If you are self-employed, dive into the GOV.UK guide to self-employment and Universal Credit for all the necessary insights.

Universal Credit work allowance

If you or your partner are either responsible for a child, or are living with a health condition that impacts your ability to work, you can earn a certain amount before your payments start to be reduced. This is called your work allowance.

Your work allowance is £404 monthly if you get help with housing costs, and £673 otherwise.

What is the threshold for universal credit?

The Administrative Earnings Threshold is the amount of gross income a claimant can earn monthly before needing to increase their hours. For single claimants, the maximum is £892 per assessment period, and for joint claimants, this rises to £1,437.

If your circumstances ever change in any way, it’s important you report this as soon as possible. You can do so by simply signing into your Universal Credit account and registering any changes.

How can I apply for universal credit?

Applying for Universal Credit involves submitting an online claim for which you’ll need to make an account beforehand. To apply, gather your details, such as your bank account number, email address, and phone number, then head to the GOV.UK page.

You’ll also need proof of identity, so it’s a good idea to gather some documents such as your driving licence, your payslip, and your P60.

When filling in your claim, you’ll also need to be prepared to provide information about your housing and earnings, as well as any savings or investments you might have.

What day is universal credit paid?

You’ll receive your Universal Credit payment each month, directly into your bank account. And from the time of application to acceptance, it’ll typically take around 5 weeks for you to receive your first payment.

The date you submit your claim is called your assessment date, and if you are accepted, you’ll be paid on this date each month. For instance, if you applied on 25th July, you’ll receive your Universal Credit payments on the 25th of each month.

Am I eligible for further benefits?

If you receive Universal Credit, you may be eligible to apply for extra financial support, such as:

• If you’re disabled, you can check your eligibility for PIP (Personal Independence Payments).

• If you care for a disabled child, there’s also the option of looking into claiming Disability Living Allowance for them.

• You could also consider looking into benefits such as childcare assistance or council tax reduction.

What happens when a universal credit claim is closed?

As mentioned, if your wages increase, your Universal Credit payments will decrease. Your account will stay open for 6 months after the final payment, meaning if your wages happen to decrease once more, you may become eligible again.

After 6 months, your claim will be deemed closed, and you’ll need to reapply and make a new claim.

Hopefully our guide on Universal Credit payments has been insightful, and you’re now clear on the eligibility criteria as well as how to apply. And, if you’re unsure whether you qualify, simply type your details into the benefits calculator to find out!

Well, that’s everything from us on the topic of Universal Credit, but if you’re looking for more insights, make sure to head over to the Moneyboat blog. There, you can dive into our guide on debt consolidation, and read about how to get out of debt if you’re struggling.

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