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Universal Credit for people in work

About Universal Credit

Universal Credit (UC) is a new benefit that is being introduced area by area, replacing:
  • Tax Credits - Child Tax Credit and Working Tax Credit
  • Housing Benefit
  • Income Support
  • Income-based Job Seekers Allowance (JSA)*
  • Income-related Employment and Support Allowance (ESA)*
*These benefits are based solely on your need for income. If you have been working and paying National Insurance Contributions over the 2 years until the time you need benefits, you are likely to be eligible for ‘Contributions – Based’ JSA or ESA, and should NOT be placed onto Universal Credit, although some Job Centres are trying to do this.

Check if you are eligible for contributions-based benefits instead at:
JSA: http://www.entitledto.co.uk/help/jobseekers-allowance
ESA: http://www.entitledto.co.uk/help/employment-and-support-allowance-contribution-based

What is different about Universal Credit?

  1. Most people in work will be worse off: most working people who are currently eligible for Tax Credits will be much worse off under Universal Credit (UC). The independent Resolution Foundation has predicted that working families are set to be £1,200 a year worse off under UC by 2020, even after accounting for increases in the National Living Wage, Income Tax cuts and additional hours of free childcare. However, your benefit will continue to be paid at tax credit rate until you have a major change of circumstances. These include a partner leaving or joining the household, one or both partners stopping work, or if you claim housing costs and move house to an area where UC applies.
  2. A single direct payment: Universal Credit is paid as a single monthly payment, directly into the nominated bank account of each eligible household. If Housing Benefit used to be paid to your landlord, it will now be paid to you, for you to pay your rent to your landlord yourself and it is important that tenants keep up with payments to prevent falling into arrears.
  3. No minimum hours of work: there are no minimum hours of work to claim Universal Credit, (as opposed to the Tax Credits system), however you are expected to try to earn at least the equivalent of 35 hours a week at the minimum wage – currently 35 x £7.20 = £252 per week (unless you are the primary carer for a child aged under 13 – see below).
  4. Payments based on monthly income: employers report all earnings directly to the Inland Revenue, where your Universal Credit (UC) will be calculated, based on your household’s wages in the previous month. If your income varies each month, your next UC payment will increase if your earnings drop, or reduce if your wages increase.

How will Universal Credit affect me?

You can find out the full range of benefits you are currently entitled to by completing the Benefits Calculator at https://www.entitledto.co.uk/benefits-calculator/entitlement-calculator.aspx
At the end of the calculation, there is an option to compare the amount you are entitled to now with what you would receive under Universal Credit.

When will Universal Credit come to my area?

Universal Credit (UC) has already been introduced across the country for single people who are not in work. Once you are claiming UC you stay on it if you need support when you move into work.
Universal Credit (UC) for working people is being rolled out area by area. By September 2018, all new claimants will receive UC rather than the existing benefits, and claimants of the existing benefits will be transferred onto UC if they have a significant ‘change of circumstances’, such as a partner leaving or joining the household, or one partner stopping work.
For a list of areas where working people who are new claimants or who have had a change of circumstances already have to claim UC, and new areas announced up to December 2016, see:
From July 2019, areas will start to transfer everyone on the existing benefits onto Universal Credit, so by March 2022 everyone will be claiming UC rather than the existing benefits.

How can I prepare for Universal Credit?

Universal Credit for working people has started to be rolled out, so it is important to be prepared in case you have a change of circumstances and are transferred onto it:
  1. Make sure you are claiming all benefits NOW: it is important to claim all benefits you are entitled to now, so that your rate of pay will be protected if it would be lower under Universal Credit. Check your entitlement at www.entitledto.com
  2. Make sure your current claim is up-to-date: make sure the Tax Credit or benefits office has all your up-to-date details so that you do not have to unnecessarily register a change of circumstances after you are transferred to Universal Credit, as this could reduce your claim to a lower rate.
  3. Make sure you can manage an on-line claim: the Government say that all claims for Universal Credit from working people will have to be made via the internet. If you don’t have internet access, find out where you can get it – e.g. your local library or Job Centre.
  4. Decide on your bank account for Universal Credit: Universal Credit will be paid in a single payment to each household. If you have a partner, you will need to decide which bank account it is best to be paid into, or set up a joint account.
Find out more about the problems with Universal Credit for people in work.

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