Universal Credit is the UK’s centralised benefit system. Previously, individuals and families entitled to financial support from the government would claim a combination of six different benefits. Now, Universal Credit as merged all of these remunerations into one monthly payment.
What Has Universal Credit Replaced?
Universal Credit has replaced the following individual payment benefits.
- Child Tax Credit – a tax credit available to families that live with dependent children below the age of 16. If your child is in approved further education, this age limit increases to 20.
- Housing Benefit – funding to help cover accommodation payments for the unemployed, disabled, pensioner or those on very low incomes.
- Income Support – a supplementary payment to increase the take-home pay of families on low incomes and help cover living expenses.
- income-based Jobseeker’s Allowance (JSA) – payable to individuals that are presently unemployed and actively seeking work. JSA eligibility is dependent on having made National Insurance contributions in the previous two years.
- Income-related Employment and Support Allowance (ESA) – ESA replaces JSA for individuals that are unable to work due to illness or disability.
- Working Tax Credits – payable to working individuals on a low income. Tax credits are designed to reduce tax payments.
Universal Credit payments vary from case to case. How much money you are entitled to depends on your personal circumstances. Use the government’s official benefits calculator to learn how much you can expect to receive. Be aware that if you may not be eligible for Universal Credit if you have savings.
Housing and Universal Credit
Universal Credit can be used to cover rental costs on your home. This may be a local authority-owned building, or a private rental. There will be a cap associated with how much you will receive. Universal Credit may not cover your entire rent. In this instance, you will be expected to cover any shortfall yourself.
Universal Credit is not typically paid straight to a landlord or landlady. You will receive the funds directly into your bank account. You will then be expected to manage your financial commitments accordingly and come to a private arrangement with the owner of your home. Failure to do so leaves you at the risk of eviction.
The exception to this is if you fall behind on rent payments. In this instance, discuss the possibility of an Alternative Payment Arrangement. This will typically see DWP pay your landlord or landlady directly, removing the sum from your Universal Credit payments.
An APA will typically be made in instalments, so your landlord or landlady will need to agree to this. They will retain the legal right to refuse this and expect repayment in full. Most homeowners that accept tenants on Universal Credit will be sympathetic and understanding of financial difficulties, though.
Temporary or emergency housing is not covered by Universal Credit. This covers shelters, or other forms of short-term accommodation. In these instances, speak to your local council about housing benefit.
Income Support and Universal Credit
Income support is payable to individuals and families on low incomes to help make ends meet. Low income is classified as a wage below 60% of the UK’s national average for three of the last four years.
Income support is paid on a sliding scale. You can expect to receive the following weekly sum if you qualify for income support.
A weekly sum of £57.90 is payable to:
- Single individuals aged 16 – 24
- Single parents aged under 18
- Couples where one parties is aged under 25
A weekly sum of £73.10 is payable to:
- Single individuals aged 25 or over
- Single parents aged over 18
- Couples where one party is under 18 and the other is aged over 25
A weekly sum of £87.50 is payable to couples where both parties are aged over 18 and are responsible for a child.
A weekly sum of £114.85 is payable to couples where one party is aged over 18 the other is over 25 and are responsible for a child.
Income support usually works in tandem with other benefits, such as tax credits. Although the sums listed are weekly, they will be collated and paid monthly.
Seeking Work and Universal Credit
You will be eligible for Job Seekers Allowance if you find yourself unable to work. You will not be eligible if you resign from a job, or if you were previously not self-employed and have not paid Class 1 National Insurance contributions for the last two years.
To claim JSA, you will need to attend a meeting with your local job centre. You will also need to attend regular meetings, typically either weekly or fortnightly. At these meetings, you will be expected to provide proof that you are looking for work. This is known as signing on. You will also need to attend any courses and interviews lined up by the job centre. Failure to meet these expectations will likely result in sanctions.
If you are unable to work due to disability or ill health, you can claim Employment and Support Allowance (ESA) instead. You will need to provide DWP with medical records and proof of your inability to work. You will also likely be assessed by a government official, who will make a decision on whether you are eligible for ESA. ESA payments are a little higher than JSA and involve more relaxed expectations of the individual.
If you are living with disability, you may also be eligible for Personal Independence Payments, or PIP. Unlike ESA, PIP is not means-tested. Savings and other earnings will not impact your eligibility for this benefit. PIP is payable to anybody that needs assistance with mobility and general day-to-day living.
How to Claim Universal Credit
Universal Credit is managed online. You will need an internet connection to claim Universal Credit. The fact that you are reading this suggests that you have online access. If you struggle, you can use the internet for free at your local library.
Use this link to apply for Universal Credit. You will likely need to attend an appointment at your local job centre to finalise your application. Note that, if you co-habit with a partner, you must apply for Universal Credit as a couple. You do not have to be married, but you must share an address.
Be aware that it will take five weeks to receive your first Universal Credit payment. This may cause financial hardship. If this is the case, you can apply for a Universal Credit Advance.
Think of this as an interest-free loan. The repayments will be taken in instalments from your future Universal Credit payments.
Universal Credit Sanctions
Receiving Universal Credit payments is dependent upon meeting certain expectations. This is called your claimant commitment.
If you fail to meet these expectations, you will be sanctioned. This means that your payments will be withheld for a set time.
Sanctions vary depending on your personal circumstances.
- Single people aged under 25 will be sanctioned £8.20 per day.
- Couples, both aged under 25, will be sanctioned £6.40 per day.
- Single people aged over 25 will be sanctioned £10.40 per day.
- Couples, in which one or both are aged over 25, will be sanctioned £8.20 per day.
Sanctions are divided into three categories. The length of the sanction varies, depending on this category.
Low Level Sanctions
Examples of low-level sanctions are:
- Failing to attend a job interview arranged by the job centre.
- Failing to attend a course arranged by the job centre.
- Failing to attend a scheduled job centre appointment to sign on.
- Failing to provide DWP with important or evidentiary documents when requested.
Low-level sanctions usually last seven days, plus the time taken to rectify the issue.
For example, if you are scheduled to sign on at 9am on Tuesday but miss the appointment, you can reschedule for 9am on Thursday. This will result in a sanction of nine days (7 days flat rate, 2 days additional.)
Medium Level Sanctions
Medium-level sanctions are typically related to the search for work. You may face this sanction if the job centre feels that you are not taking the search for work seriously enough. This could involve not providing evidence of job hunting or failing to attend work without a good reason.
The standard medium-level sanction is 31 days. If this is not your first medium-level sanction in a twelve-month period, this could increase to 91 days.
High Level Sanctions
High-level sanctions are related to behaviours that the DWP considers to be seriously violations of your claimant commitment. Examples of this could be:
- Rejecting an offer of employment arranged by the job centre.
- Leaving a job without good reason, and not agreeing this in advance with DWP.
A standard high-level sanction will last 91 days. If this is not your first high-level sanction in the same year, this period could increase to 128 days, or even 1,095 days.
Trouble Paying Bills on Universal Credit
Sanctions on Universal Credit seem counterproductive. If you are struggling to make ends meet, fining you is hardly going to help. Alas, this is the nature of the beast. Fortunately, sanctions can be appealed.
If you are struggling to meet your financial commitments on Universal Credit, make an urgent appointment with your local Citizen’s Advice Bureau. You can also seek advice online if you are unable to attend an appointment in person.
There are also a range of sources available to help anybody struggling to make ends meet.
Emergency Hardship Loans
Struggling to pay bills and meeting financial obligations is stressful. It often plunges people into debt, which can become a vicious circle. Unfortunately, there is no shortage of unscrupulous businesses offering high-risk, high-interest loans.
Before approaching a private enterprise, speak to your local council. You may eligible for an interest-free budgeting loan.
Typically, these loans will be provided for a particular expense. This may be the repair bill for a broken essential appliance, such as a cooker or a washing machine. You can also apply for this loan to pay for a child’s school uniform, or a suit for a job interview.
Even if your local council is unable to provide you with a loan, they will not refuse to help. In addition food banks, local councils may be able to provide vouchers that pay for food or furniture.
Nobody should be forced to choose between food or warmth during the winter. Reducing the expenses associated with your home will help with this.
Check if you are eligible for the government’s Warm Home Discount Scheme. Pensioners and low-income families can receive a £140 discount in their heating bill if eligible for this scheme.
If this is not applicable, use a facility like Simply Switch to find a cheaper alternative. If you do not wish to change suppliers, learn if your current supplier runs any discount schemes of their own. These include:
- British Gas Energy Trust
- nPower Energy Fund
- Scottish Power Hardship Fund
- ON Energy Fund
- EDF Energy Customer Support Fund
You could also speak to a charity, such as Charis, that specialises in offering grants to people in need.
Food and Groceries
If you are struggling to feed your family, turn to a food bank for assistance. The Citizen’s Advice Bureau will be able to advise on where your local food bank is located. Check the website of the Trussell Trust, too. This charity manages food banks all over the UK.
If you are already struggling with your finances, debt will only make things worse. If you find your levels of debt spiralling, seek help. The sooner you take action, the sooner you will regain control over your affairs.
There are numerous charitable organisations dedicated to offer debt advice. You can also contact the Citizen’s Advice Bureau, though some people are reluctant to do so. Debt is a very personal issue.
Charities to contact include:
A debt charity will be able to assist with drawing up a payment plan and may even speak to your creditors for you. By consolidating your outgoings, you will find that you have more money available for everyday necessities.
You may need to enter an Independent Voluntary Arrangement, or IVA. This means that a company will contact your creditors, drawing up a monthly repayment plan that is affordable to you and writing off the rest of the debt. Typically, this will be 1p for every pound that is owed.
Be aware that an IVA means that you will be unable to take out any credit arrangements for at least five years, and your credit rating may be impacted for a while afterward. It is an effective way to manage debt and regain control of your finances, but it is not a decision to take lightly.