A guide to Universal Credit
Nadia Hossen Mamode, founder and CEO, Bee Accountancy
What is Universal Credit?
Universal Credit is a means-tested benefit for people of working age who are on a low income or out of work.
Universal Credit is gradually replacing what is known as 'legacy benefits', and anyone in receipt of the following benefits will move onto Universal Credit by 2023:
- Income Support
- Income-based Jobseeker's Allowance
- Income-related Employment and Support Allowance
- Housing Benefit
- Child Tax Credit
- Working Tax Credit
If you are currently in receipt of any of these benefits, you can continue to claim them until there is a change of circumstances. You can also choose to move to Universal Credit at any time. If there is no change of circumstances, you will not usually need to claim Universal Credit until the Department for Work and Pensions (DWP) sends you a letter.
Universal Credit eligibility
You may be eligible for Universal Credit if:
- you're on a low income or out of work
- you're aged 18 or over (there are some exceptions if you're 16 - 17)
- you're under Pension Credit qualifying age (or your partner is)
- you and your partner have £16,000 or less in savings between you
- you live in the UK
How much can you earn on Universal Credit?
Your Universal Credit payment is made up of a standard allowance, plus any extra amounts that apply to your circumstances, e.g. if you have children, a disability or a health condition which prevents you from working and contributing to rent payments.
Standard allowance
| Your circumstances | Monthly standard allowance |
| Single and under 25 | £251.77 |
| Single and 25 or over | £317.82 |
| In a couple and you're both under 25 | £395.20 (for you both) |
| In a couple and at least one of you is 25 or over | £498.89 (for you both) |
Extra amounts
You may get more money on top of your standard allowance if you're eligible. The government website has a list of independent calculators to help you work out how much you can earn on Universal Credit.
How to apply for Universal Credit?
The application process for Universal Credit is completed online. If you live with a partner, then you have to apply as a couple.
After you apply, you will be told if you also need to phone the Universal Credit helpline to book an interview with a work coach.
How is Universal Credit paid?
Universal Credit is paid once a month directly to your bank account. The payment can include an amount for housing, which you will usually need to pay to your landlord.
When is Universal Credit paid?
It usually takes around five weeks to get your first payment. This wait includes a one-month assessment, followed by seven days for the payment to reach your account.
If you need help with your living costs while you're waiting for your first payment, you can apply for an advance.
After the first payment, you will be paid on the same date of every month. If your payment date is on a weekend or a bank holiday, you will be paid on the working day before.
How to report a change of circumstances?
You can report a change of circumstances by signing in to your Universal Credit account. It's your responsibility to report any changes to your circumstances so you keep getting the right amount of Universal Credit each month. Your claim might be stopped or reduced if you do not report a change of circumstances straight away.
Changes can include:
- finding or finishing a job
- having a child
- moving in with your partner
- starting to care for a child or disabled person
- moving to a new address
- changing your bank details
- your rent going up or down
- changes to your health condition
- becoming too ill to work or meet your work coach
- changes to your earnings (only if you're self-employed)
Click here to start a Universal Credit claim.
If you're self-employed, you can find more business and finance tips here.