Some benefits and tax credits are being replaced by Universal Credit. This page tells you more about how Universal Credit is different from the benefits you might be getting now and what you can do to get ready for the changes.
To find out more about how Universal Credit works and how to make a new claim for it read our guide Universal Credit explained.
Moving to Universal Credit from Child Tax Credit
Living in Northern Ireland or Scotland?
In Northern Ireland, Universal Credit works differently. Find out more on the nidirect website.
In Scotland, you might be offered some choices about how your Universal Credit is paid. Read our guide to Universal Credit in Scotland.
Your monthly Universal Credit payment will include the following elements also called additions, 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 and will be paid at either a lower or higher rate depending on the needs of your child.
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 while you’re working.
From April 2017, if you are making a claim for Universal Credit, support will be limited to the first two children (unless you have a multiple birth) and the first child premium will no longer be available.
If you’re on Universal Credit there are different rules about what you have to do in return for receiving your payment.
|Age of child
||What you have to do in return for your Universal Credit payment
||You won’t be asked to work in return for your Universal Credit
|Between 1 and 2
||You will be asked to attend interviews with a work coach to discuss plans for a future move into work
|Between 3 and 4
||You will be expected to take active steps to prepare for work, such as training and interviews with a work coach
|Between 5 and 12
||You will be expected to look for work that fits in with your responsibilities – for example, during school hours
|Age 13 and above
||You will normally be expected to look for full-time work
From April 2017, you will be expected to prepare for work when your youngest child turns two, and to look for work when your youngest child turns three, with support from Jobcentre Plus.
Moving to Universal Credit from Working Tax Credit
Your monthly Universal Credit payment will replace the help you currently get from Working Tax Credit.
It will 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’s also no limits to the amount of hours you have to work as there are with Working Tax Credit.
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 so you don’t get too much or too little Universal Credit.
Reporting your earnings if you’re employed
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.
If your employer has access to the RTI system
Ask for your employer’s PAYE scheme number and tell your work coach or phone the Universal Credit helpline.
If you have more than one employer, you’ll need to get a PAYE scheme number for each job.
Once 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 your employer doesn’t have access to the RTI system
What’s my assessment period?
Universal Credit is paid in arrears. Each month’s payment is worked out by looking at how much you earned in the previous month. This is called the assessment period. The start date of each assessment period will be the date of the month when your claim began.
You’ll have to report how much you’ve earned each month by the last day of your assessment period to your work coach or the Universal Credit helpline.
You will need to provide:
- your PAYE reference
- your gross taxable pay
- your employer’s name
- the date you were paid
- how much tax you paid
- how much National Insurance you paid
- details of any contributions made to a pension scheme (and whether they are paid from your gross or net salary or into a personal pension).
You’ll also have to report any earnings your employer won’t know about.
Find out more about claiming Universal Credit and reporting your earnings on the Entitled to website
Reporting your earnings if you’re self-employed
The impact of moving from existing benefits, such as Working Tax Credits, to Universal Credit, depends on how long you’ve been self-employed.
If your business has been running for more than 12 months, you’ll be exempt from the minimum income floor for the first six months of your claim.
If you’ve been self-employed for less than 12 months, then you’ll be exempt from the minimum income floor for 12 months.
You’ll have to report earnings yourself by contacting your work coach or the Universal Credit helpline.
How Universal Credit is different from Working Tax Credit
||What you have to do in return for your Universal Credit payment
|You are working full-time
||If you are not earning at least the equivalent of 35 hours at the minimum hourly wage you will be expected to look for better paid work (depending on your ability to work and any caring commitments you have)
|You are working part-time
||You will normally be expected to look for more work until you are earning at least the equivalent of 35 hours at the minimum hourly wage each week (depending on your ability to work and any caring commitments you have)
|You are self-employed
||You will probably have your payments calculated as if you were earning at least the equivalent of 35 hours at the minimum hourly wage each week (depending on your ability to work and any caring commitments you have)
Moving to Universal Credit from Income Support
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, and to prepare for work when they turn three, with support from Jobcentre Plus.
Moving to Universal Credit from ESA
If you’re currently getting Employment and Support Allowance (ESA) read our guide Universal Credit for sick and disabled people.
Moving to Universal Credit from Housing Benefit
Did you know?
From 11 April 2018, if you’re moving from Housing Benefit to Universal Credit, you will continue to get Housing Benefit for two weeks after your UC claim starts to reduce the risk of rent arrears.
Your monthly Universal Credit payment will include a housing costs element which will replace the help you currently get from Housing Benefit.
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 will 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 (APA) until you get back on your feet.
This means your rent could be:
- paid directly to your landlord
- paid to you weekly or fortnightly (a More Frequent Payment).
In Northern Ireland
If you’re claiming Universal Credit in Northern Ireland, your housing costs will automatically be paid to your landlord. You can choose to pay your landlord yourself.
You will have to pay your landlord directly, but you can choose to have your housing costs paid directly to your landlord.
Young people and Universal Credit
The government will amend regulations so all 18 to 21-year-olds will be able to claim supports for housing costs as part of Universal Credit. The date for this has not been announced yet.
From April 2017, if you are aged between 18 and 21, in return for receiving 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 will be expected to apply for an apprenticeship or trainee-ship, gain work-based skills or go on mandatory work placement.
Housing support for young people
If you are aged between 18 and 21 and are out of work you’ll not be automatically entitled to housing support if you make a claim for Universal Credit.
There will be some exceptions if you’re vulnerable or you were in work for at least six months before making a claim.
If you live in Scotland, the Scottish government has said it will continue to pay Housing Benefit to 18 to 21-year-olds through the Scottish Welfare Fund.
If you’re on Pension Credit
If you reach Pension Credit age and your partner is under Pension Credit age, you might not be able to make a new claim for Pension Credit – you both might have to claim Universal Credit instead.
The exact date for this change has not yet been announced.
If you are already claiming Pension Credit when the change comes in you won’t be affected (unless or until there is a break in your Pension Credit claim for some reason).
You’ll be told about this change at the time you apply for Pension Credit.
When will I move onto Universal Credit?
The DWP will let you know when it’s time to make a claim for Universal Credit.
If you’re already getting any of the benefits to be replaced by Universal Credit and your circumstances stay the same, you don’t have to do anything.
If your circumstances change, for example, you lose your job or you move in with a partner who’s already claiming Universal Credit, you might have to claim Universal Credit instead.
Watch our video Get ready for Universal Credit
Managing for money until your first Universal Credit payment
Universal Credit is a single monthly payment paid in arrears.
You will have to wait up to five weeks for your first Universal Credit payment.
If you pay rent, you’ll have to pay it directly to your landlord.
If you’re getting more than one of the benefits being replaced by Universal Credit, such as:
- Housing Benefit
- Income Support
- Child Tax Credit,
the way you budget now might be set around the dates these payments come into your bank account.
It’s important to know when you make your claim for Universal Credit these benefits will also stop as soon as you’ve made your claim. However, from April 2018, if you’re already claiming Housing Benefit you will continue to receive it for the first two weeks of your Universal Credit claim.
Think about how you will cope with these changes.