Universal Credit explained

Universal Credit is a benefit payment for people in or out of work.

It replaces some of the benefits and tax credits you might be getting now:

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

The Department for Work and Pensions (DWP) call these legacy benefits and, in general, you can no longer make a new claim for them. If you need extra support you'll have to claim Universal Credit.

If you’re currently claiming legacy benefits, and nothing changes in your life, you'll continue getting them until the DWP asks you move to Universal Credit. 

If you live with someone as a couple and you’re both entitled to claim Universal Credit, you’ll get a joint payment paid into a single bank account.

If you get help with your rent, this will be included in your monthly payment – you’ll then pay your landlord directly.

Your rent can be paid directly to your landlord or you can choose to pay it yourself.

You might be able to claim Universal Credit if:

• you’re out of work or on a low income
• you’re aged 18 or over (there are some exceptions if you’re 16 or 17)
• you or your partner or spouse are under State Pension age
• you and your partner or spouse have less than £16,000 in savings
• you live in the UK.

There are some situations where you can claim Universal Credit if you’re 16 or 17-years-old, or when you’re studying.

It’s important you apply for Universal Credit as soon as you’re entitled, even if you don’t think you qualify. 

This is because you might have to wait up to five weeks after claiming before your first payment, as it’s paid in arrears.

If you find a new job, or your circumstances change before your application is complete, you’ll be able to cancel it.

But at least you won’t have to start your application from scratch, or wait for your first payment. This could help you avoid needing to take out an advance payment.

You can apply for an advance payment if you don’t have enough to live on while you wait for your first payment.

If you're already getting legacy benefits, it's worth checking with a specialist benefits adviser before you apply to check that claiming Universal Credit is the right move for you.

This is because you can't usually move back onto your old benefits once you're on Universal Credit.

The date you submit your claim is the date of the month your Universal Credit payment will be paid. This is called your assessment date.

Universal Credit is paid monthly in arrears. So you’ll have to wait one calendar month from the date you submitted your application before you get your first payment. This is called your assessment period.

You then have to wait up to seven days for the payment to reach your bank account.

This means it can take up to five weeks before you get your first payment.

• Ben has lost his job and makes a new claim for Universal Credit on 22 July.
• This makes his assessment date 22 July. It means he’ll be paid on the 22 of each month.
• He needs to wait one assessment period (one calendar month) to 21 August – as Universal Credit is paid monthly in arrears.
• He then needs to allow up to seven days for the money to reach his account.
• He can expect his first payment no later than 29 August.
• If 29 August is a bank holiday Monday, he should get payment on the last working day (Friday) before the holiday.

Universal Credit is paid monthly in arrears in England, Wales and Scotland.

However, in Scotland, you can ask for fortnightly payments instead.

In Northern Ireland, the default payment period is every fortnight. But you can choose to get monthly payments.

Universal Credit is made up of a basic allowance plus different elements for things like housing costs, bringing up children, caring or sickness and disability.

The amount you get in Universal Credit can go down or up, depending on what income you get from:

• working
• a pension
• other benefits
• savings and capital above £6,000.

There are no limits on how many hours a week you can work if you’re claiming Universal Credit.

Instead, the amount you get will gradually reduce as you earn more – so you won’t lose all your benefits at once.

Our Benefits Calculator can help you get a more accurate figure for how much you might be able to claim. It only takes a few minutes to fill out. 

If you’re entitled to the work allowance, you can earn up to the threshold for your circumstances.

Your Universal Credit payment will then go down by 55p for every £1 you earn above this amount. This is called the earnings taper.

If you don’t qualify for the work allowance, your Universal Credit payment will go down by 55p for every £1 on all your earnings.

Employer-paid benefits are treated as earnings. For example, Statutory Maternity, Paternity, Adoption and Sick Pay. These are affected by the taper.

Take a look at the Department for Work and Pensions (DWP) video to find out more.

Usually, £1 will be deducted from your Universal Credit payment for every £1 of unearned income.

Unearned income that won’t be taken off your Universal Credit payment includes, but isn't limited to:

• Child Benefit
• child maintenance payments
• Disability Living Allowance
• Personal Independence Payment
• income from boarders and lodgers.

If you have savings or capital – such as investments or shares – this might affect how much Universal Credit you’ll get. Your pension pot won’t affect the amount of Universal Credit you’re entitled to while you’re below State Pension age. 

If you’re worried about using a computer to make your claim, it’s important you get help. This is because your claim won’t start until you’ve sent your online form. There’s then a five-week wait for your first payment. Any delays can mean you have to wait longer.

If you don’t have access to a computer at home, you might be able to use one for free at:

• your local jobcentre
• library
• Citizens Advice
• council.

Many jobcentres now offer extra support for people who are struggling to claim online. They can also help you get all the paperwork you need together.

You can also ask the Citizens Advice Help to Claim service to help you fill out the form online.

If you’re new to computers or haven’t felt confident about using them in the past, now is a good time to start building your confidence and knowledge.

You can find free digital skills support in your area at National Careers ServiceOpens in a new window or, call 0800 100 900.

Find out more about free online courses to help beginners develop digital skills at Learn My Way.comOpens in a new window

You’ll have to pay this money back within 24 months and the first repayment is usually taken from your first Universal Credit payment. So, it’s important to only ask for what you need.

If you’ve been claiming Universal Credit for six months, you might be able to claim a Budgeting Advance for essential costs.

If you apply for an advance payment, you (and your partner if you are claiming jointly) will need to:

• explain why you need an advance
• provide bank account details where the advance should be paid
• have had your identity checked at a Jobcentre.

Benefit claimants are being targeted by scammers offering low-cost loans or grants from the government.

You might be called by someone claiming to work for Jobcentre Plus, or contacted through social media ads. Many of the scammers have convincing websites, with government logos and testimonials.

They might ask for your ID and bank details. Then offer to make a claim for Universal Credit and apply for an advance payment on your behalf – taking some of this money as their fee.

However, the full amount of advance payments need to be repaid out of future Universal Credit payments. So you’ll end up paying back the whole amount borrowed.

It’s also important not to be tempted by these offers if you’re already claiming any of the benefits that are being replaced by Universal Credit. For example, tax credits or Housing Benefit.

This is because your old benefits will stop, and the money you get on Universal Credit might be less than you’re getting now.

If you’re offered a government loan and asked to give your ID and bank details, the scammer might be trying to make a Universal Credit application without your knowledge. It’s important to not give out these details – as you might not be entitled to Universal Credit and this could be seen as benefit fraud.

Are you waiting for your first Universal Credit payment and need help applying for an advance payment? Then the Citizens Advice Help to Claim Service will help you get the payment you need for free.

For details, see the ‘Help with an online application for Universal Credit’ section in this guide.

Read our blog post on Universal Credit scams.

If you need help with your claim, call the Universal Credit helpline free on:

• Telephone: 0800 328 5644
• Textphone: 0800 328 1344

8am to 6pm, Monday to Friday (closed on bank and public holidays). Calls are free.

If you live in Northern Ireland, contact the Universal Credit Service CentreOpens in a new window instead:

• Telephone: 0800 012 1331
• Textphone: 0800 012 1441