Universal credit

Universal Credit is a new benefit for people of working age. It is paid both to people who are out of work and to those in employment. It will replace most of the current means-tested benefits for people of working age.

What benefits is Universal Credit replacing? 

  • Income support.
  • Income-based Jobseeker's Allowance.
  • Income-related Employment and Support Allowance.
  • Child tax credit.
  • Working tax credit.
  • Housing benefit.

These are known as the 'legacy benefits'.

When will Universal Credit be introduced?

New claims by families with disabled children

In most of the UK parents with a disabled child cannot claim Universal Credit.

The only exceptions to this are a number of job centre areas where the Universal Credit full service applies.

If you live in a Universal Credit full service area and you have a change of circumstances that results in you making a new claim for one of the means-tested benefit or tax credits that Universal Credit is replacing, you will be asked to claim Universal Credit instead.

This currently applies to all working age claimants in a full service area including parents of disabled children. However, from 6 April 2017 it will only apply if you have fewer than three dependent children. If you have three or more dependant children you will not be allowed to make a new claim for Universal Credit and will have to claim legacy benefits instead. 

For example, if a parent with two children loses their job and tries to claim income support, they will be asked to claim Universal Credit instead. The Universal Credit award they get will also then replace any tax credits or housing benefit that they currently receive.

However, if that parent has three or more children (and claims after 6/4/2017) they won't be able to claim Universal Credit and would get income support instead.

If someone in a full service area already gets income related Employment and Support Allowance (ESA) or Jobseeker's Allowance (JSA) but makes a new claim for contributory ESA/JSA, their income related ESA/JSA award will be abolished and a claim for Universal Credit may be needed instead. 

To find out whether you live in an area where the Universal Credit full service applies, use the postcode checker at universalcreditinfo.net

The next stages of the Universal Credit roll out are:

  • From March 2017 - Hinckley, Dalkeith, Newcastle West, Penicuik, City Tower.
  • From April 2017 - Flint, Mould, Shotton, Oldham, Yeovil
  • From May 2017 - Bedford, Dover, Burnley, Ilkeston, Long Eaton, Chippenham
  • From June 2017 - Brighouse, Halifax, Todmorden, Alloa, Weston-Super-Mare, Stirling, Salisbury

The government will gradually roll out the full service to the rest of Great Britain, a process that should be completed by September 2018. Full details of the timetable for this is available at www.gov.uk. In Northern Ireland the roll out of Universal Credit will start in September 2017.

Warning - If you live in a Universal Credit area, there is nothing preventing you from opting to move from your existing means tested benefits onto Universal Credit. However, this may not be a good idea as many families with a disabled child will be worse off under Universal Credit, and you cannot switch back.

 
Universal Credit rollout to existing benefits claimants

For the time being, existing claimants who do not try to make a new claim for one of the benefits Universal Credit is replacing will not be affected, even if they live in a full service area.

However, between July 2019 and March 2022 the government intends to move all existing claimants of means tested benefits and tax credits onto Universal Credit.

Universal Credit is not expected to be introduced in Northern Ireland until Autumn 2017.

How will your Universal Credit be calculated?

The calculation starts with a 'maximum amount' of Universal Credit you would get depending on factors such as your family size, caring responsibilities, housing costs and childcare costs.

The amount of Universal Credit you will receive is reduced depending on what other income you have coming in.

  • Earnings above certain levels will reduce your Universal Credit award.
  • Other types of income will also be deducted from your Universal Credit award unless specifically disregarded (for example DLA or child support maintenance).
  • Universal Credit will be reduced if you have capital above £6,000 and cannot normally be paid if your capital is above £16,000 (unless you are transitionally protected - see below).

Child disability addition for families with a disabled child

As part of the maximum amount calculation, a child disability addition is awarded to those who have a dependent child who gets Disability Living Allowance (DLA) (or Personal Independence Payment (PIP))

This is paid at two rates. The higher rate will be awarded for a child who:

  • is registered blind
  • gets the highest rate of DLA care component
  • gets the daily living component of PIP at the enhanced rate.

This will be an extra £84.49 per week - the same amount as is paid under the existing benefits system.

All other children on DLA or PIP will qualify for the lower rate of the addition. This will be £29.05 per week.

Will the Universal Credit be more generous than current benefits?

Some working families may find that Universal Credit work incentives leave them better off than they are under the existing benefits system. However this is now less likely as a result of cuts to Universal Credit announced by the government in the 2015 budget.

You are at particular risk of being worse off under Universal Credit if you have a disabled child who does not qualify for the higher disability addition.

This is because the lower rate of the child disability addition is set at £29.05 per week. Given that the equivalent additional payment under the existing benefits system is £60.06 per week, this represents a cut of £30.96 per week or just over £1,600 per year. Since the child disability addition is paid for each disabled child, those families with two children on the lower addition could lose twice this amount.

Visit our cuts to benefits campaign page to read Contact a Family's concerns in more detail and find out how you can campaign for a fairer Universal Credit.

Transitional protection

Even if you are worse off under Universal Credit, you can be 'transitionally protected' - but only if you are an existing claimant who has no changes in circumstances e.g. you are an existing claimant who is migrated onto Universal Credit by the government as part of their programme scheduled for 2019-2022.

Transitional protection means that if you would get less money under Universal Credit than you do on your current benefits, you receive a top-up payment so that you do not lose out. This top-up payment will be frozen so you will be gradually worse off over time as this payment is eroded by inflation. Certain changes of circumstances will bring transitional protection to an end.

If you are someone who has to claim Universal Credit because you have had a change of circumstances and tried to claim one of the benefits it is replacing, you will not get any transitional protection.

This means that families in the full service areas who have to claim Universal Credit between now and July 2019 will not be transitionally protected.

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