How does Universal Credit work?
Universal Credit is a new government benefit system, replacing six existing benefits with one overall payment. The scheme is gradually being rolled out across the UK, and is for those who are out of work or on a low income.
The benefits being replaced are housing benefit, income-related employment and support allowance, income-based jobseeker’s allowance, child tax credit, working tax credit, and income support.
If you receive the Severe Disability Premium in a legacy benefit, you will not be able to move onto Universal Credit unless it's through managed migration. We explain this further down the page.
The amount you’ll be paid from Universal Credit depends on your circumstances. You can claim whether you’re working or unemployed, and you’ll usually receive one payment each month.
You might be able to get extra payments if you’re responsible for children, are disabled or have a health condition, care for a disabled person or need help with housing payments – whether that’s rent or a mortgage.
Video: What is Universal Credit?
Watch our short video below to find out what Universal Credit is, how the payments work and whether you could be eligible. For further information on all of these topics, keep reading the rest of the guide.
Who is eligible to claim Universal Credit?
The first thing to consider is whether Universal Credit is available in your area, as it hasn’t yet been rolled out across the whole of the UK.
You can use HMRC's Universal Credit postcode checker to see if it's available where you live. If Universal Credit hasn't reached your area, you’ll still be able to apply for the existing benefits it replaces.
If you live in an area with 'full service' for Universal Credit, you must meet the following criteria to claim:
- aged 18 or over (although there are exceptions).
- under Pension Credit age.
- living in Great Britain.
- not be in education.
- have accepted a claimant commitment.
How much will you receive?
If you’re eligible to receive Universal Credit, you’ll qualify for the standard allowance.
How much you get depends on your age and circumstances, as shown in the table below:
|Your circumstances||Universal Credit monthly standard allowance (April 2021 to September 2021)*||Universal Credit monthly standard allowance (October 2021 to March 2022)|
|Single, aged under 25||£344||£257.33|
|Single, aged 25 and over||£411.51||£324.84|
|In a couple, both aged under 25||£490.60||£403.93|
|In a couple, both aged 25 and over||£596.58||£509.91|
*Rates have been temporarily increased under coronavirus measures
You may also qualify for additional elements. These will be paid on top of the standard allowance if they apply to you.
|Universal Credit additional elements||Extra monthly amount|
|Child element - if you have one child (if born before 6 April 2017)||£282.50|
|Child element - second child/ also first child if born on or after 6 April 2017||£237.08|
|Disabled child element||£128.89|
|Severely disabled child element||£402.41|
|Limited capability for work and work-related activity element||£343.63|
|Limited capability for work and started health-related Universal Credit and Employment and Support Allowance claim before 3 April 2017||£128.89|
|Carer for a severely disabled person element - must be for at least 35 hours a week||£163.73|
|Housing element||This depends on the type of housing and your circumstances|
You'll need to add up the maximum elements you're entitled to, then make reductions for your income, savings and other benefits.
The amount you receive could be affected by any sanctions ordered against you. You can find out more in our guide to Universal Credit sanctions.
You may also hit the benefits cap, which is the maximum amount of benefits a household can receive in one year. Throughout most of England, the benefits cap is £20,000 for couples and families and £13,400 for single people without children. In London, it’s £23,000 for couples and families or £15,410 for single people without children.
Calculating your payments is a complicated process, but we explain how to make an estimate in our guide to calculating your Universal Credit payment.
That said, it's very difficult to arrive at an accurate result, so you may need to wait until the Department for Work and Pensions (DWP) confirms how much you’re entitled to.
How to apply for Universal Credit
You can apply for Universal Credit online on the gov.uk website. If you don’t have a computer, you might be able to use one at your local job centre, library or local council.
Alternatively, you can apply over the phone on the Universal Credit helpline on 0800 328 9344.
Once you’ve started your claim, you’ll usually be asked to go to an interview at your local job centre.
You’ll need to explain your circumstances and show documents such as bank statements and payslips. You’ll also be told what you need to do in order to claim Universal Credit payments, known as your claimant commitment.
You’ll also be assigned a work coach, who will make sure you’re doing the things outlined in your claimant commitment.
When to apply
If you think you’re eligible to claim Universal Credit in your area, you should make a claim as soon as possible.
It will take several weeks to set you up on the system, and you won’t receive your first payment for at least five weeks from the date you make the application.
There have been reports of people getting into financial difficulties during this waiting period while they’re not receiving any money, so it’s best to make the claim as promptly as possible.
You can apply for a Universal Credit Advance Payment if you face financial hardship during the waiting period. If you qualify, you’ll be given a loan of up to 100% of your estimated entitlement before your regular Universal Credit payments kick in.
You’ll have to pay this back, though, which will usually mean reducing your Universal Credit payments over the following year.
Migration from the old benefits system
If you currently claim any of the benefits being replaced by Universal Credit, you’ll be moved onto the new system as and when it launches in your area. The process for this is being called ‘managed migration’.
This process is due to begin in small numbers from July 2019, with an aim for completion by December 2023.
If it turns out you’ll be worse off by moving to Universal Credit, you can get a ‘transitional top-up payment’, which should continue until any changes in circumstances mean you’re entitled to less, such as if your child or a partner moves out of the home.
The transitional top-up payment is only available to those on the managed migration scheme.
How is Universal Credit paid?
You usually receive Universal Credit payments once a month, paid into your bank, building society or credit union account. If you’re claiming as part of a couple, you’ll get one payment each month for your household, so you’ll have to choose one account to receive the payment.
If you don’t have a bank account and can’t set one up, a different way of getting paid can be arranged through the Universal Credit helpline on 0800 328 5644
If you have monthly payments, you’ll be paid on the same day every month. If this date falls at the weekend or on a bank holiday, you’ll be paid on the working day before. So, if your usual pay date is on a bank holiday Monday, you’ll be paid on the Friday before.
You’ll receive a monthly statement to tell you how much Universal Credit you’re going to receive for that month.
What if you're paid weekly?
Your Universal Credit payments can be affected by how often your employer pays your wages, due to the Universal Credit assessment periods.
The assessment period runs for a full month, so could be 28, 30 or 31 days long depending on how many days are in the month.
This means that if you’re paid every four weeks, every two weeks, or every week, there will be some instances where you get an ‘extra’ payment within the monthly assessment period.
See the table below for how this works:
|How often you're paid by your employer||The impact|
|Every four weeks||Once a year, you'll get two sets of wages in one assessment period (rather than one)|
|Every two weeks||Twice a year, you'll get three sets of wages in one assessment period (rather than two)|
|Every week||Four times a year, you'll get five sets of wages in one assessment period (rather than four)|
In the assessment periods where you’re paid more than usual, it could mean you receive too much money to be eligible for Universal Credit.
You’ll be told if your earnings are too high and whether you’ll need to reapply.
Universal Credit in Scotland and Northern Ireland
The rules we've described in this guide apply to England and Wales. There are a few differences to be aware of if you want to claim Universal Credit in Scotland or Northern Ireland.
If you live in an area of Scotland where Universal Credit has been rolled out, the process is similar to in England and Wales.
You will, however, get some extra choices about how the money is paid to you.
While claimants in England and Wales receive their Universal Credit payments once a month, in Scotland it’s possible to be paid twice a month.
If you’re eligible to receive the housing payment, you can also choose whether you want this to be paid into your bank account, or directly to your landlord.
You’ll be given these choices through your online Universal Credit account once you’ve received your first payment. If you change your mind, you can also make requests to have your payments changed through your online journal.
In Northern Ireland, Universal Credit is usually paid twice a month, but you can request to have a monthly payment.
There are also slightly different eligibility rules. To claim Universal Credit in Northern Ireland, you must:
- live in an area where Universal Credit has been introduced for new claims
- be aged 18 or over (you can be 16 or 17 in certain circumstances)
- be under state pension age
- not be in full-time education or training
- not have savings of more than £16,000.
You’ll be expected to make your claim online, and if you’re eligible for the housing payment this will be paid directly to your landlord – but in some circumstances, you’ll be able to opt-out of direct payments and receive the money yourself.
There’s a quick test to see how ready you are for Universal Credit in Northern Ireland.
Changes in circumstances with Universal Credit
As Universal Credit is paid based on your circumstances, any changes could affect your payments and you should report them to the DWP.
If you face other changes that aren’t on the list, it’s always best to report them just in case.
Changes that should be reported include:
- leaving a job or getting a new one – even if you’re doing voluntary work and don’t get paid.
- changing your bank details.
- claiming any new benefits, even if they’re not paid yet.
- if you stop getting a benefit.
- getting a one-off payment, such as inheritance or compensation.
- getting new income that isn’t from work.
- your rent going up or down.
- someone moving out of or into your home, or someone in your household going to prison.
- if you move home.
- moving in or splitting up with your partner.
- any of your children leaving full-time education, leaving home, going into local authority care, are disabled, having a child of their own, or becoming responsible for another child.
- you or your partner reaching Pension Credit age.
- you get ill or injured.
- the death of someone close to you, such as your partner, child, someone you were caring for, or anyone over the age of 18 who was living with you.
- any changes to your immigration status.
How to report a change in circumstances
If you have an online Universal Credit account, you can report a change by sending a message to your work coach.
You can also call the Universal Credit helpline on 0800 328 5644.
It’s best to call from the phone number you supplied when you set up your Universal Credit account, as you’ll have a shorter wait to get through and should be able to talk to the same person who handled your previous calls.
You should report a change as soon as you can. If you end up being paid too much because you failed to report sooner, your future Universal Credit payments may be reduced to recoup what you owe.
What if your payment isn't enough?
There are forms of financial support available if you’re still struggling to afford essentials with your Universal Credit payments.
Alternative Payment Arrangements
If you’re behind on your rent, you or your landlord can apply for an Alternative Payment Arrangement (APA), although it’s best to speak to your work coach first.
An APA could get your rent paid directly to your landlord, make it so you’re paid more frequently or allow you to receive split payments if you’re part of a couple.
This can help with emergency household costs, such as repairs to vital items, or to help you get a job or stay in work if finances are affecting your ability to do so.
You’ll have to pay this money back, which means your future Universal Credit payments will be reduced.
From October 2019, the maximum deductions that can be taken from your Universal Credit payments to pay back an advance will be reduced. Currently, payments can be reduced by up to 40%, but this will be cut to 30%.
From October 2021, the period you'll be given to pay back advances will be extended from 12 to 16 months.
You have to borrow at least £100. Single people can get up to £348, while couples can get £464 and those with children can get up to £812.
Local council help with housing costs
Your local council may be able to reduce your council tax payments and may grant you Discretionary Housing Payments if your Universal Credit payments aren’t enough to cover your rent.
Other financial support
There are several other benefits and extra schemes that Universal Credit claimants may be able to receive – but it depends on where you live and your individual circumstances. These include:
- cold weather payments
- disabled facilities grant
- energy company obligation affordable warmth
- WaterSure bills cap if you have a water meter
- free early education for two-year-olds
- free school meals
- funeral expenses payment
- Healthy Start vouchers
- help with prescription and dental treatment costs
- help with costs for prison visits
- help with costs of using courts or tribunals
- Help to Save scheme
- Legal aid
- Sure Start Maternity Grant.
Universal Credit: your questions answered
Can Universal Credit payments be backdated?
A Universal Credit claim can be backdated by up to one month, and only if you or your partner could not have reasonably been expected to make a claim earlier, and if any of the following circumstances apply:
- you previously claimed Jobseeker’s Allowance or Employment Support Allowance and weren’t told that your entitlement was going to end.
- you have a disability.
- you were unwell, which prevented you from claiming earlier. You’ll need to have medical evidence to prove this.
- you had a joint claim, which stopped due to a breakdown in the relationship.
- you made a joint claim turned down because your partner did not accept the claimant commitment, and you have now stopped being a couple and are claiming at a single person.
Will Universal Credit be scrapped?
Philip Hammond, the former Chancellor, confirmed in the autumn Budget 2018 that Universal Credit would not be scrapped, and the government will continue to roll out the benefits model across the UK.
He also announced extra funding to help those transitioning from legacy benefits and increased the work allowance so that people who are eligible can earn an extra £1,000 a year before their benefits are tapered by 63p by every £1 they earn over the threshold.
This taper was reduced to 55p on 24 November 2021.
When does Universal Credit start in my area?
If you’re on the old benefits model, you’ll then be moved onto Universal Credit. It’s estimated that everyone in the country who is eligible will be on Universal Credit by 2023.
Can Universal Credit be paid on a Sunday?
No. If your payment day falls on a weekend or a bank holiday, you’ll be paid on the working day before.
So if your usual payment day falls on a Sunday, you’ll receive the money on the Friday beforehand instead.