Universal Credit Universal Credit (UC) is a new benefit for people of working age. You can get it if you have a low income or do not work. Some people started getting it in April 2013. In this factsheet you can find out what benefits are being replaced by UC, who can get it and how much you could get. Universal Credit (UC) is a benefit for people aged between 18 and 65 years old (some people aged 16-17 will also be able to claim). UC is replacing a number of other benefits including incomerelated Employment & Support Allowance, income-based Job Seekers Allowance, Tax Credits and Housing Benefit. You can claim UC if you are in or out of work. Earnings and savings will lower the amount of UC you can get. You will get a single monthly payment instead of a number of different benefits. Most people who claim UC must agree to do certain things. This is called a claimant commitment. If you do not follow the rules in your claimant commitment, you could lose some of your benefit. 1
This factsheet covers: 1. What is Universal Credit (UC)? 2. How much can I get? 3. What if I am working or studying? 4. What if I care for someone or have children? 5. What about my housing costs? 6. How will income, savings and property affect my UC? 7. How much could I get? 8. How do I claim? 9. How will I be paid? 10. What is the claimant commitment? 11. Can I appeal if I disagree with a decision? 12. When will I have to claim? 1. What is Universal Credit? Universal Credit (UC) is a new benefit that will be paid monthly. It will replace all of the following benefits: Housing Benefit Income Support Income-based Job Seekers Allowance Income related Employment & Support Allowance Child Tax Credit Working Tax Credit Budgeting Loans You can get UC if you have little or no income and low levels of savings and capital. Who can claim? When Universal Credit (UC) comes in fully, you will be able to claim if you are: a single person, a couple, a parent, disabled or too unwell to work, a carer, looking for work, or in low paid work (including self employed). 2
At the moment, only single people in certain parts of the country can claim. Basic conditions of entitlement To receive UC you must: a) Be an adult but not a pensioner Usually to receive UC you must be aged 18 or over, and below the qualifying age for Pension Credit. However if you are a 16 or 17 years old you can claim UC if any of the following apply: You have limited capability for work You qualify for Carers Allowance You are responsible for a child You don t have support from your parents You can get UC if you are over Pension Credit age and your partner is younger than you. Your Pension Credit age depends on exactly when you were born. You can check by using this online calculator: https://www.gov.uk/calculatestate-pension b) Be habitually resident in the UK You must be in the UK, have the legal right to be here and intend to stay. If you are a part of a couple and one of you does not meet the residence or immigration conditions, you will get a lower rate. c) Be on a low income and have low savings and capital Universal Credit (UC) is a means-tested benefit. This means that savings, capital and household income affect how much you will get paid. You will only get UC if you have low-levels of savings and capital and have a low income or no income at all. You can find out more about this in section 14. 2. How much can I get? There are a number of different elements of Universal Credit (UC). These elements will be paid instead of other benefits such as Housing Benefit, Employment & Support Allowance and Tax Credits. The more elements you qualify for, the more money you can get. 3
The elements are: Standard allowance This is the basic amount of benefit paid. If you are younger than 25 you will get a lower personal allowance. Any other elements are added on top of this. Single person under 25 251.77 Single person over 25-317.82 Couple (both under 25) - 395.20 Couple (1 or both people over 25) - 498.89 Limited capability for work element For people who are too unwell to work. If you get this element you must take part in certain activities that could help you return to work. 126.11 Limited capability for work and work-related activity element For people who are too unwell for work and work-related activities, like doing courses or CV workshops. 315.60 Carer element For people who spend at least 35 hours a week caring for a person that receives certain disability benefits. 150.39 4
First child - 277.08 Other children - 231.67 Child element For people who have children. Disabled child addition A payment on top of the child element for each child that you get a disability benefit for. 367.92 or 126.11 DLA (high rate care) or PIP (enhanced daily living) 367.92 Any other rate of DLA or PIP 126.11 Child care costs element For people who work and have to pay for professional child care. 70% of child care costs up to: One child - 532.29 Two or more children - 912.50 Housing costs element for people who are responsible for the rent or mortgage payments of their home. The amount you can get varies depending on area that you live in, the size of your household and standard interest rates. 3. What if I am working or studying? Work You can still claim Universal Credit (UC) if you work, but your earnings may reduce the amount of UC you get. If you pay tax using Pay As You Earn (PAYE), Her Majesty s Revenue and Customs (HMRC) will tell the Department for Work and Pensions (DWP) about your monthly earnings. If you are self-employed, you must tell the DWP how much you earn every month. No matter how much you earn, the DWP will assume you earn at least: 5
227.05 if you are aged 21 and over 178.05 if you are 18-20 132.65 if you are under 18 This is known as the minimum income floor. This is worked based on the national minimum wage, if you work a 35 hour week. The DWP will use your actual earnings if you are in the first 12 months of setting up a new business and they think you are trying to increase your income. Studying You cannot usually claim UC if you are a full-time student studying for: A degree A postgraduate degree A diploma of higher education A higher national diploma Any other qualification which is above advanced GNVQ or A level standard However, you can if; You have a child, or You receive Disability Living Allowance or Personal Independence Payment (any rate, any component) and have limited capability for work If you are studying part-time you can claim UC as long as you can meet the conditions that are set out in your claimant commitment. 4. What if I care for someone or have children? Caring You can get the carer element of UC if you spend at least 35 hours per week caring for someone who gets: Attendance Allowance Personal Independence Payment (standard or enhanced daily living component) Disability Living Allowance (high or middle rate care component) Carer element up to 150.39 each month Only one carer per disabled person can get the extra payment. So if two people are caring for the same person, only one will be able to get the carer element. 6
If you are a couple and both of you care for two or more different people you could get an additional carer element If you care for someone and you are unwell, you cannot get the carer element and the elements for being too ill for work at the same time. If are entitled to both, you will get whichever is higher. What if I have children? You can get more UC for each child younger than 16 that you look after. This is called the child element. You can also get the child element for children younger than 20, if they are studying at least 12 hours per week in school, college or certain other organisations and they are not studying at degree level or higher. They are called qualifying young people. First child or qualifying young person - 277.08 each month Each subsequent child or qualifying young person - 231.67 each month Disabled children You can get a further amount for each disabled child or qualifying young person you are responsible for. This is called the disabled child element. If you get the high rate care component of Disability Living Allowance or the enhanced daily living component of Personal Independence Payment for the child or they are registered blind - 367.92 each month If you receive any other rate of Disability Living Allowance or Personal Independence Payment for the child 126.11 each month Childcare costs If you are in paid work you may be able to get help with up to 70% of your child care costs. The maximum amount payable for these costs is: One child up to 532.29 each month Two or more children up to 912.50 each month To receive this element: The childcare costs must be for a child under 16 years old, or before 1 st September following their 16 th birthday The childcare must help you to take up or continue with paid work You must have a paid job or be about to start a paid job before the start of the next UC assessment period, or 7
If you are a couple, your partner must also be in paid work or have a limited capability for work, be a full time carer or be temporarily absent from the household You will only be able to get help with childcare from a registered childminder or a school or local authority on school premises out of school hours. You must tell the DWP how much your childcare costs are every month. 5. What about my housing costs? Renting If you rent a house or flat, you may get the housing costs element of Universal Credit (UC) to help with the rent and other associated costs. If you rent from the council or a housing association If your only income is from benefits and you live in a council or housing association property, your Universal Credit (UC) will usually cover the whole of your rent. But you may have to pay towards your rent if: you have other income or savings, the local authority thinks you have more bedrooms than you need, part of your rent pays for bills or services (such as electricity, meals or laundry services), or you have an adult child, friend or relative living with you. He or she will need to pay towards the rent. 1 Your housing costs element will be reduced by 69.37 per month for each non-dependent adult that lives with you. This will not apply if the person that lives with you: Is under 21 years old Is under 25, claiming UC and who has no earned income 2 Receives pension credit Could or does receive the middle or high rate care component of Disability Living Allowance Could or does receive the daily living component of Personal Independence Payment Could or does receive Attendance Allowance Receives Carer s Allowance Is responsible for a child under 5 years old 8
You will not get all of your rent paid if you have more bedrooms in your property than the government thinks that you need. This has been called the 'bedroom tax' by some people. The rules say that: All adults and couples need a bedroom to themselves. Boys under 16 should share a room. Girls under 16 should share a room. Boys and girls under 10 should share a room (although if one of your children is disabled and your children need their own room this is possible). 3 Disabled people who need someone extra to stay overnight to provide care need an extra bedroom for this person. If you have more bedrooms than the rules say you need, you will be classed as under-occupying and your housing costs element will be reduced. If you have one more room than the rules say you need, your housing costs element will reduce by 14%. If you have two or more rooms than the rules say you need, the element will reduce by 25%. Renting from a private landlord If you live in a house or flat that is owned by a private landlord you will get a different amount of help with housing costs depending on where you live, the number of people in your household and the size of your accommodation. This can range from a single room in a shared house to a property with four bedrooms. If you are single and under 35 you will normally only be able to get enough to cover the cost of a room in a shared house. However, you will be able to get more help if you get: the care component of Disability Living Allowance at the middle or highest rate, Attendance Allowance, the daily living component of Personal Independence Payment (any rate), or regular overnight care from a carer who needs a separate room. 4 What if I have a mortgage? If you live in a house or flat with a mortgage and have no earned income you may be able to get help with your mortgage. UC will help with the interest part of a mortgage up to the value of 200,000 (for the loan) 5. It will not help pay back the amount you 9
borrowed. The rate that this element is paid at is based on the Bank of England s standard interest rate. You can find out how much the rate is at any time by checking the 'support for mortgage interest' webpage at www.gov.uk. There is a 3 month waiting period from the time you claim until you get your first payment and you will not receive any help with your mortgage during this period If you have a repayment mortgage you will either have to find another way to top up the mortgage payments, or ask your lender to switch to an interest-only mortgage. What if I live in supported housing? If you live in supported housing where a local council, housing association, registered charity or voluntary organisation which also provides care, support or supervision as well as housing, you will need to claim housing benefit. You will not get your housing costs paid through Universal Credit. 6 6. How will income, savings and property affect my UC? What if I have savings or capital? Capital means the value of any assets you own such as property, shares and investments. Your home and any business assets you own will not be taken into account. Savings means money you have in your bank, building society or post office accounts, cash and ISAs. The total value of your capital and savings may impact the amount of Universal Credit you get. We have set out the rules in a chart on the next page. 10
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What if I get some money from working? You will get less UC if you earn some money from: Working for someone else (employed) Working for yourself (self employed) Statutory sick / maternity / paternity and adoption pay You can earn some money without it affecting how much UC you get per month. This is called the work allowance. For every 1 you earn above the work allowance, you will get 65p less UC. The amount you can earn before your money is reduced will depend on whether you are single, in a couple; have children and whether you get help with your housing costs. If you get help with housing costs: Circumstances Work Allowance You are single without children 111 You are single, with children 263 You are single and too ill or 192 disabled to work You are a couple without children 111 You are a couple with children 222 You are a couple and either of you 192 are too unwell to work If you don t get help with housing costs: Circumstances Work Allowance You are single without children 111 You are single, with children 734 You are single and too ill or 647 disabled to work You are a couple without children 111 You are a couple with children 536 You are a couple and either of you 647 are too unwell to work What if I get other benefits? Disability Living Allowance and Personal Independence Payment do not affect your UC. But the following benefits will be taken off your UC: Contribution-based Jobseekers Allowance Contribution-based Employment & Support Allowance Carer s Allowance Bereavement and widow s payments Maternity Allowance Industrial Injuries Benefit Money from an ex-husband or wife 13
7. How much could I get? There is a limit on the amount of money you can get from the following benefits. This is called the benefits cap. Universal Credit Job Seekers Allowance Employment and Support Allowance Child benefit Carer s allowance Maternity allowance Bereavement and widow s allowance The maximum monthly amount is: If you are single, able to work or do work related activity and earn less than 430 each month If you are a couple, both able to work or do work related activity and earn less than 430 each month If you earn 430 or more each month If you or your partner cannot do work or work related activity If you, your partner or your child gets DLA or PIP 1517 2167 No limit No limit No limit To work out your Universal Credit, follow these steps. Step 1 Add up all the different parts of UC you should get. Step 2 Work out how much your UC will reduce because of savings or capital. Step 3 Check the amount is not above the benefit cap. Will I be worse off on UC? The government has promised that people who claim Universal Credit (UC) will not be worse off than they were before. If your UC is less than what you were getting before, you will get extra money to make up the difference. This is called transitional protection. If you get this extra money you will not get the normal yearly increases (called up-rating ) in your benefit until this amount has been used up. 14
You will lose this extra money if you stop claiming UC, or if: your partner leaves the household, you start to earn more, or you start to get more UC, for example if you have a child. 8. How do I claim? You will usually need to claim online. If you can t do this, you might be able to claim by phone. You cannot claim by post. To claim Universal Credit (UC) online go to: https://www.gov.uk/applyuniversal-credit If you need help claiming UC online call the UC helpline: Universal Credit Helpline Telephone: 0845 600 0723 Textphone: 0845 600 0743 9. How will I be paid? Your Universal Credit (UC) will go into your bank account monthly. If you claim as a couple, you can choose which of your accounts it will be paid into, or you can have it paid into a joint account.. If you are struggling with monthly payments, you might be able to get your UC weekly or fortnightly. This is called personal budgeting support. You can find more information about this in the Personal Budgeting Support Guidance: https://www.gov.uk/government/uploads/system/uploads/attachment_da ta/file/181400/personal-budgeting-support-guidance.pdf 10. What is the claimant commitment? If you are able to look for, or prepare for work, the Department for Work and Pensions (DWP) will expect you to do this to claim Universal Credit (UC). If you have a part-time job, you may be expected to look for more work. If you are in a low paid job you may be expected to look for a higher paid one. If you claim UC and are looking for work, you must agree to a list of conditions called a claimant commitment. This will set out: Details of what you have to do to prepare for, or look for, work Information about what will happen if you don t do these things What information the DWP needs you to give 15
Depending on your situation, you might have to: Show that you are looking for full-time work Take some steps to prepare for work if you are too unwell to work You will have to go to work focused interviews unless you are so unwell that the DWP does not think this should be a condition of your benefits claim. These are meetings with an adviser where you talk about the type of work you can do, what problems you would have in work and how these could be overcome. What if I have to look for work? If you have to look for work, you will have to be available to start work immediately unless you have a good reason. This is called the work availability requirement. The DWP will expect you to spend a set amount of time looking for or preparing for work. This is called the work search requirement. Your claimant commitment should say what meetings you have to go to and how long you have to spend looking for work. If you need the commitment changed, because you have child care problems or a health issues for example, speak to a personal adviser at Jobcentre Plus. What if I don t follow the rules in my claimant commitment? You could lose some of your benefit. This is called a sanction. There are four levels of sanction which can be applied for various reasons. If your UC is sanctioned at the lowest level you will lose 40% of your standard allowance until you start doing what the Jobcentre asked you to do or they say you don t have to. If you are claiming as a couple, you will lose 40% of the couple s allowance if one partner is sanctioned and 80% if both of you are sanctioned. Hardship payments If your benefit has been sanctioned you may be able to apply for help through a hardship payment. The DWP must pay you some money if you: cannot meet your essential needs for accommodation, heating, food and hygiene, have made effort to reduce expenditure and access other means of support, or have met all work related requirements in the previous 7 days. 16
You will have to apply for a hardship payment every month you need it. You will have to pay it back, and it is normally taken off UC at a rate of 15% of your personal allowance. 11. Can I appeal if I disagree with a decision? You can ask the Department for Work and Pensions to look at their decision again. This is called a reconsideration. You have 1 month from the date of the decision to ask for this, and you have to go through this process before you can appeal. You have the right to appeal against most Universal Credit (UC) decisions. There are certain things you cannot appeal against including the benefit cap and recovery of overpayments. Any appeal goes to an independent tribunal to look again at the facts. You can find more information in our Apealing Benefits Decisions factsheet, which you can download for free from www.rethink.org/factsheets or call 0121 5227007 and ask for a copy to be sent to you. 12. When will I have to claim? Universal Credit (UC) is gradually being introduced across the country. At first it will only be available to certain people in particular areas. You will be able to claim UC if your Jobcentre is taking claims for UC. From April 2015 a number of new Jobcentres started taking UC claims. Please see the following link for a list of jobcentres that accept claims for UC. These are listed alphabetically https://www.gov.uk/jobcentreswhere-you-can-claim-universal-credit At the moment you will have to claim UC if you: are single, don t live with a child, are able to look for work, and: are making a new claim for benefits. your claim is processed by a Jobcentre that accepts UC claims In some circumstances you can choose to transfer to UC if you are claiming other benefits, even if you are not single or a job seeker. Please seek advice from a welfare benefits specialist before you do this as you may be entitled to less benefit under UC. If you meet the criteria and your claim is assessed by a Jobcentre that is accepting UC claims, you will have to make a claim for UC. 17
At the moment you cannot claim UC if you are too unwell to work. If you need to claim benefits because you are not well enough to work you will need to apply for Employment and Support Allowance. You can find more information in our Employment and Support Allowance factsheet, which you can download for free from www.rethink.org/factsheets or call 0121 5227007 and ask for a copy to be sent to you. If you do not live in one of the areas where UC is available or if you do not meet the criteria (single, no children, able to look for work and making a new claim) there will be no immediate change to your benefits. The DWP are rolling out the introduction of Universal Credit in stages. It is expected that the roll out of Universal Credit will completed by 2017. From 1 st October 2013 the Claimant Commitment has been rolled out nationally. It applies to people who claim benefits, even if they do not receive Universal Credit. Rethink Mental Illness Factsheets: Employment and Support Allowance (ESA) Work Capability Assessment (WCA) Disability Living Allowance (DLA) Personal Independence Payment Appealing Benefits Decisions All of our factsheets are free. You can download them from www.rethink.org/factsheets or you can call us on 0121 5227007 and we will post you a copy. 1 Sch 4 para 13, The Universal Credit Regulations 2013 SI 376/2013. 2 Housing Benefit and Council Tax Benefit Circular. HB/CTB A8/2013. Department of Work and Pensions. 3 Burnip, Trengove and Gorry v Secretary of State for Work and Pensions [2012] EWCA Civ 629. 4 As note 1 (SI 376/2013), Sch 4 para 12 5 Support for Mortgage Interest scheme. SN06618. House of Commons Library, p 3 6 Letter from the DWP UC Policy Division to the Social Security Advisory Committee dated 21 September 2012, and issue 131 of the DWP s Housing Benefit Direct, November 2012. 18
Rethink Mental Illness 2015 Last updated April 2015 Next update April 2016 Version 3 This factsheet is available in large print. Last updated 01/10/2010