How will moving to Universal Credit affect me?

Universal Credit is replacing these benefits:

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

The Department for Work and Pensions (DWP) calls them legacy benefits.

You can no longer make a new claim for legacy benefits.

If you’re claiming legacy benefits, how and when you move to Universal Credit depends on whether:

• you have to make a new claim because of a change in circumstances
• nothing changes and the DWP asks you to start claiming Universal Credit.

If certain circumstances change in your life, you might be asked to make a new claim for Universal Credit. For example, you might have a change in your:

• employment status, such as starting a new job, or increasing or decreasing your hours
• family circumstances, such as a new baby, child starting school, or partner moving in or out
• housing, such as moving to a new local authority area.

Your circumstances might also change if you start or stop:

• being a carer
• a claim based on disability.

You might also be asked to claim Universal Credit if your income has reduced due to the coronavirus outbreak. Or if you can’t work because you’re sick, self-isolating or shielding as a result of coronavirus, and you don’t qualify for Statutory Sick Pay.

When you claim Universal Credit, your existing benefits will stop.

However, if you get Housing Benefit, Income Support, or income-related Employment and Support Allowance they will be paid for an extra two weeks after you make your claim. This is to help you manage while waiting for your first Universal Credit payment.

It’s important to understand that you could get either more or less money than you do now when you move from legacy benefits to Universal Credit.

For this reason, it’s best to check in advance how your income will be affected. In some circumstances, delaying your claim for Universal Credit could make sense.

Find out more about changes that might mean you have to start a Universal Credit claim on the entitledto website

To find out if you would be better or worse off on Universal Credit, use the Benefit and Budgeting Calculator on the Benefit and Budgeting calculator website

If you’re claiming the benefits being replaced by Universal Credit, the Department for Work and Pensions (DWP) will ask you at some point to make a claim for Universal Credit.

Unless there’s a change in your circumstances, you don’t need to do anything until the DWP contact you.

The DWP expect all households claiming legacy benefits and tax credits to have moved across to Universal Credit by September 2024.

If there’s a significant change in your circumstance, you’ll be asked to move from Child Tax Credit to Universal Credit.

This might happen if you:

• start work
• have a child
• move in with your partner or they move out.

You could get more or less money on Universal Credit than you’re currently getting in Child Tax Credit and other benefits. 

The way savings are counted are different than the rules for tax credits. If you have savings of more than £16,000 you won't qualify for Universal Credit. And if you have savings of over £6,000 the amount you get could be affected. It's important to get specialist benefits advice before you claim Universal Credit if you think this will affect you.

If you have one or two children, you can claim for children until they reach 19 – or 20 in some cases – if they’re in full-time approved education or training, but not at university.

If your children were born before 6 April 2017, you’ll be able to claim for them all.

If one or more of your children were born on or after 6 April 2017, you’ll only be able to claim for the first two – unless you had a multiple birth or have adopted.

The first child premium will no longer be paid under Universal Credit.

Your monthly Universal Credit payment will include the elements and additions listed below, which will replace the help you currently get from tax credits:

• Child element – this helps with the costs of bringing up a child.
• Disabled child addition – this helps with the extra costs of bringing up a disabled child. It will be paid at either a lower or higher rate, depending on the child’s needs.
• Childcare costs element – lets you claim back up to 85% of your monthly registered childcare costs up to a capped limit of £646 for one child and £1,108 for two or more children (for 2021-22) while you’re working.

If you’re on Universal Credit, there are different rules about what you have to do in return for receiving your payment.

Your Universal Credit payment will also adjust month by month if the amount you earn goes up or down.

This should make it easier for you to accept short-term work or take on more hours.

If you earn less during one month, your Universal Credit should go up to make up for the shortfall in earnings.

There are also no limits to the number of hours you have to work, as there are with Working Tax Credit.

If your working hours aren’t the same from month to month, it can mean you might need to budget more carefully now.

For the DWP to work out how much Universal Credit you should get, they need to know how much you’ve earned in the past month.

Either you or your employer need to tell the DWP how much you’ve earned. This is so you don’t get too much or too little Universal Credit.

*The minimum income floor has been temporarily abolished during the coronavirus outbreak, until 31 July 2021.

The minimum income floor will gradually come back from August. However, if your income is still affected by coronavirus, then your work coach will have the option not to apply the minimum income floor. This is on an individual case-by-case basis so talk to your work coach in good time if you’re worried.

Download a leaflet on ‘Universal Credit and work’ at GOV.UK

Download a leaflet on ‘Universal Credit and self-employment’ at GOV.UK

Download a leaflet on ‘Universal Credit and tax credits’ at GOV.UK

Your employer might be able to report your earnings automatically through the government’s Real Time Information system (RTI).

You’ll need to find out if your employer has access to the RTI system.

Ask for your employer’s PAYE scheme number and tell your work coach. You can do this through your online account, or call the Universal Credit helpline:

Telephone: 0800 328 5644

Textphone: 0800 328 1344

Find more contact details at GOV.UK

If you have more than one employer, you’ll need to get a PAYE scheme number for each job.

When the PAYE scheme number is recorded on your claim, your earnings information should be sent automatically each month to DWP and you won’t have to report it.

If you move from Income Support to Universal Credit, you won’t be limited to working a maximum of 16 hours a week. So you might be able to increase your hours of work and still get Universal Credit.

If you have children and you move on to Universal Credit, you’ll be expected to discuss future plans for work when your youngest child turns one. You need to prepare for work when they turn three, with support from Jobcentre Plus.

Your Income Support will be paid for a further two weeks after you make your claim for Universal Credit before it will stop. You won't have to pay this money back.

You might be asked to move from Income Support to Universal Credit if you:

• stop full-time education
• start renting a new property, especially if it’s in a new local authority area
• stop being a carer
• are a single parent and your youngest child turns five
• start working enough hours to meet Working Tax Credit conditions.

If you have your rent paid directly to your landlord at the moment, this will change under Universal Credit.

The money for your rent will be paid to you as part of your monthly Universal Credit payment.

You’ll be responsible for using this money to pay your landlord.

However, if you have significant support needs – for example, with budgeting – either you or your landlord could ask for an Alternative Payment Arrangement until you get back on your feet.

This means your rent could be:

• paid directly to your landlord
• paid to you weekly or fortnightly.

If you’re claiming Universal Credit in Northern Ireland, your housing costs will automatically be paid to your landlord. But you can choose to pay your landlord yourself.

You’ll have to pay your landlord directly, but you can choose to have your housing costs paid directly to your landlord.

If you’re aged between 18 and 21, in return for getting your benefit you’ll be expected to take part in a Youth Obligation for the first six months after you make a claim for Universal Credit.

This will include intensive support to help you get the skills you need to move into work.

After six months, you’ll be expected to:

• apply for an apprenticeship or traineeship
• gain work-based skills, or
• go on mandatory work placement.

If you’re aged between 18 and 21 and are out of work, you’ll be automatically entitled to housing support if you make a claim for Universal Credit.

If you’re in a couple and either you or your partner reach Pension Credit age, you’ll now have to claim Universal Credit if you have a change in circumstances. This might mean you will get less money.

Find out how much Universal Credit you might get by using the Benefit and Budgeting Calculator on the Policy in Practice website

You’ll have to wait up to five weeks for your first Universal Credit payment from the date of your claim.

When you’ve made your claim for Universal Credit and you're getting one or more of these benefits:

• Housing Benefit
• Income Support
• income-related Employment and Support Allowance 
• income-based Jobseeker's Allowance.

They will continue to be paid for an extra two weeks before they stop. You won't have to pay this money back.

Tax credits will stop straightaway after you make your claim.

It’s important to think about how you’ll cope while waiting for your first Universal Credit payment, especially if your budgeting is based on the dates your old benefit payments come into your bank account.

If you think you’ll struggle to make ends meet, you can apply for an advance payment. But be aware that you’ll need to repay it within 12 months.