Universal Credit

VIDEO- Start out by watching this short explanation of Universal Credit

IMPORTANT FACTS- What is Universal Credit and what it replaces

The UK is currently going through a transition between two benefit systems. A new benefit called Universal Credit (UC) has been introduced and it is being rolled out on a phased basis, starting in 2013 with final implementation scheduled for 2022.

In an acceleration of the reform, Universal Credit will be rolled out to all Jobcentres and local authorities across the country from February 2015. The national expansion will only apply to new claims from single jobseekers at this stage.

These major changes have been introduced to simplify a complex (and expensive) benefit system, and to make work pay. Universal Credit is the method through which all benefit claimants will be receiving their payments going forward.

Universal Credit is a new simpler, single monthly payment for people in or out of work, which merges together some of the benefits and tax credits that you might be getting now.

Universal Credit will replace:

• Income related Jobseeker’s Allowance – contributory JSA will remain;
• Income related Employment and Support Allowance– contributory JSA will remain;
• Income Support
• Working Tax Credits
• Child Tax Credits
• Housing Benefit

The amount of Universal Credit you will receive depends on your circumstances. If you are under 25 the standard amount is £251.77 per month. If you are over 25 it is £317.82.

Case Study

An 18 year old female works 10 hours a week, earning £5.60 per hour

You can use a free online calculator to work out how much you can get.

Universal Credit Calculator

IMPORTANT FACTS- Benefit Cap

VIDEO- How the Benefit Cap works

In addition a Benefit Cap has been introduced and will be implemented whether a benefit claimant is on the existing benefit system or receiving UC.

Benefit cap is a limit on the total amount of benefit that most people aged 16 to 64 can get.

The level of the cap across the UK is (excluding London)

• £384.62 a week (£20k a year) for couples and single parents whose children live with them
• £257.69 a week (£13,400) for single adults who don’t have children, or whose children don’t live with them

The level of the cap in Greater London is

• £442.31 a week (£23k a year) for couples and single parents whose children live with them
• £296.35 a week (£15,410) for single adults who don’t have children, or whose children don’t live with them

This may mean the amount you get for certain benefits will go down to make sure that the total amount you get isn’t more than the cap level.

IMPORTANT FACTS- Main differences with the old benefits system

• Council Tax Benefits will be scrapped -it is up to Local Authorities to provide discounts or assistance.
• Housing Benefits will be included in the Universal Credit payment and it is now the responsibility of the claimant to pay for their rent.
• The existing Disability Living Allowance (for those who are disabled or long term sick- off work for more than 28 weeks) will be changed to Personal Independence Payment.
• Single monthly payment will replace weekly payments
• Claimants have to manage their accounts themselves and will be paid directly
• Couples will get a single payment

IMPORTANT FACTS- Who will be affected by these changes?

VIDEO: This gives a good outline of who and how people may be affected by the changes.

• Most people won’t be affected to start with. Right now, Universal Credit mostly affects newly unemployed people in certain areas of the country.
• However, by 2017 Universal Credit will be brought in for everyone claiming the benefits and tax credits that are being replaced.
• People should continue claiming their benefits as normal and they will be told when they need to do anything differently.
• Universal Credit is not just for people who are out of work, it will also affect those getting tax credits or help with their rent.
• 3.1 million households will be entitled to more benefits with new system and 2.8 million will receive less. (source)