What is Universal Credit and how it works

What is Universal Credit?

Being rolled out since 2013 to substitute other income based benefits, Universal Credit is a welfare benefit for people of working age paid for those in and out of work, depending on their earnings.

Universal Credit merges these 6 benefits and allowances:

  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Child Tax Credit
  • Working Tax Credit
  • Housing Benefit

How does Universal Credit work?

Universal Credit is paid once a month into a bank, building society or credit union account of your choice. If you receive Housing Benefit, that will also be paid into your account and you will be responsible for paying the landlord. If you and your partner share a house and are both eligible for Universal Credit, you will receive a joint payment every month.

The amount you will receive depends on your circumstances and income. If you are in work, there are no limit of hours you can work a week to be able receive Universal Credit, but the amount you get will decrease gradually as you start earning more. You can use this calculator to know how much you’ll get.

Once you claim Universal Credit, it might take several weeks until your claim is processed, with reports of up to 7 weeks wait. When you receive the first payment, you will also get a letter informing you when you’ll normally be paid, how much you’ll be paid and which account your Universal Credit will be paid into.

Your benefits won’t be paid within the first 7 days of your claim if you fit into the ‘all-work requirements group’:

  • you are attending work-focused interviews
  • carrying out work preparation activities
  • searching for work
  • available for work

These are called ‘waiting days’ and you’ll be exempt of it in the following special circumstances:

  • you were claiming Universal Credit as a couple and are now claiming by yourself
  • you were claiming Universal Credit by yourself and are now claiming as a couple
  • you claimed Universal Credit within the last 6 months but left because you earned too much to continue claiming
  • you are terminally ill
  • you have been the victim of domestic violence within the last 6 months
  • you are a carer
  • you are 16 or 17 years old and have no parental support
  • you have left prison in the last month
  • you were entitled to contribution based Jobseekers Allowance (JSA) or Employment and Support Allowance (ESA) within the last 3 months
  • you were entitled to income related JSA, ESA or Income Support within the last 3 months and stopped claiming to start working
  • you were entitled to income related JSA, ESA or Income Support within the last month
  • you were entitled to Working Tax Credit, Child Tax Credit or Housing Benefit within the last month

Are you eligible for Universal Credit?

Universal Credit is being rolled out gradually, you can check your eligibility here and see if you live in a qualifying area. If you are claiming benefits already, you will be told by the  the Department of Work and Pensions (DWP) when to claim Universal Credit.

To know more about Universal Credit: