Universal Credit – the basics

This page gives a general basic introduction to Universal Credit.

What is Universal Credit?

Universal Credit (UC) is a single benefit for working-age people. It can be claimed in or out of work.

UC may be claimed by:

  • Workers on low incomes
  • Those unfit for work
  • Those on a low income with children
  • Carers
  • Jobseekers
  • Those with housing costs, such as rent or licence fees (not most owner occupier payments or mortgages)

Which benefits are affected?

Only 6 means-tested benefits are affected by UC. The DWP refer to these as legacy benefits. They are:

  • Income related Employment and Support Allowance
  • Income based Jobseekers Allowance
  • Income Support
  • Housing Benefit
  • Working Tax Credit
  • Child Tax Credit

All other benefits continue, including contribution based benefits and disability and carers’ benefits.

Effect of making a UC claim on legacy benefits

If a person getting a legacy benefit claims UC this terminates the legacy benefit claim. (There are exceptions, so always seek advice.)

Example

Eleanor gets PIP daily living component, contribution based ESA and Housing Benefit and Council Tax Support. Because of her PIP she is entitled to a top-up of income related ESA. Eleanor moves from a council tenancy in Derby to a council tenancy in Northumberland. Moving to a different local authority area means she cannot claim Housing Benefit for the new tenancy.

Eleanor claims UC for her rent. This terminates her income related ESA. Her contribution based ESA continues (but converts to “new style” ESA, see below). If entitled, she will now get UC to top-up her contribution based ESA as well as for her rent. She will also have to make a new claim for Council Tax Support because this is not covered by UC. Her PIP is unaffected.

Contribution based Employment and Support Allowance (ESA) and Jobseekers Allowance (JSA) under UC

New claims for either of these benefits now come under the rules for “new style ESA and JSA”.

The contribution and payment conditions are exactly the same. The difference is that new style ESA and JSA cannot be topped up with income related ESA/income based JSA. If a claimant needs an income related top up, it has to be Universal Credit.

If a person getting “old style” contribution based ESA or JSA has to claim UC, their ESA/JSA claim converts to “new style” – see the Eleanor example above.

Council Tax Support

In many local authorities Council Tax Support (CTS) (may also be called Council Tax Reduction) is claimed with and on the same claim form as Housing Benefit.

This means a person whose Housing Benefit stops due to a UC claim usually needs to make a separate new claim for CTS. It is not covered by UC.

Check with your local authority what their process is.

Main differences between UC and legacy benefits

Claims

DWP want most people to claim and manage their claim online. There are no paper claim forms and DWP do not plan at present to provide them. Some people may be able to make a telephone claim.

Deputyship teams can choose whichever method is best for them. Online claims are likely to be easier to manage because you will be able to use the online account rather than phoning the UC helpline which often has significant delays.

Payments

The default option is that payments are made monthly and there is an inbuilt wait of at least 5 weeks for the first payment.

Housing costs

DWP originally intended that these should almost always be paid to the claimant and they would be responsible for budgeting for and paying their rent. It is now much easier to get housing costs paid direct to the landlord.

What has changed since UC has been fully rolled out?

There have been a number of changes in the last 6 months, some positive. The main changes are:

  • Claims for UC can now be made by people with 3 or more children
  • The Severe Disability Premium gateway came into effect from 16 January
  • It is now simpler to get direct payments of housing costs to landlords
  • Mixed age couple rules came into effect on 15 May affecting some couples where one is over and one under pension age
  • “Managed migration” has been delayed again (and again) (and it is quite likely to be delayed again)