All about Universal Credit and whether you’re entitled to claim
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With the cost of living continuing to increase, more and more people are finding it increasingly difficult to afford their basic living costs on their wages alone.
There are several benefits which you could be entitled to so it’s worth checking your eligibility.
We’ve put together an outline of Universal Credit and the different elements you could be entitled to.
What is Universal Credit?
This monthly benefit is available to some people who are on low incomes, out of work or unable to work. In the UK, Universal Credit has replaced Child Tax Credit, Housing Benefit, Income Support, Income-Based Job Seeker’s Allowance (JSA) and Working Tax Credit.
This change has affected millions of people, who have not only had to adapt from receiving weekly payments to monthly payments, but in some cases found that their entitlements have changed too.
What could I receive with Universal Credit?
The Universal Credit rate changes every April, at the start of every tax year. The amount you receive will differ and is dependent on your situation.
This year (following the April 2022 change), the Universal Credit rates will be:
- Single and aged under 25: £265.31
- Single and aged 25 or over: £334.91
- In a couple and both aged under 25: £416.45
- In a couple and one or both aged 25 or over: £525.72
- First child, born before April 6, 2017: £290.00
- First child, born on or after April 6, 2017, or subsequent children: £244.58
Disabled child additions
- Lower-rate addition: 132.89
- Higher-rate addition: £414.88
Limited capability for work support
- Limited capability for work amount: £132.89
- Limited capability for work and work-related activity amount: £354.28
- Carer amount: £168.81
Childcare costs amount
- Maximum for one child: £646.35
- Maximum for two or more children: £1108.04
- Non-dependants’ housing cost contributions: £77.87
The Universal Credit taper rate explained
The Universal Credit taper rate dropped in December 2021 from 63% to 55%. The taper rate means 55 pence in every £1 will be deducted from the Universal Credit earned over the Work Allowance.
Fortunately, you won’t need to do the maths to claim this as the Department of Work and Pensions (DWP) will calculate it before you receive your Universal Credit payment.
To work out your earnings taper:
- Look at your monthly earnings figure after all tax, National Insurance and any relevant pension contributions have been taken. This will give you your ’take home’ pay (net pay)
- Subtract your monthly work allowance – this is what you can earn before your Universal Credit is affected. This will be either £335 or £577 a month
- Take the final amount and multiply it by 0.55 to find what will be deducted from your Universal Credit award
Click here to find out if you’re eligible for Universal Credit and here to start your Universal Credit claim.
What is a Universal Credit advance?
If you don’t have enough money to live on while you wait for your first payment, you can ask for an advance payment after you have submitted your Universal Credit claim. This payment will help you with your bills and other costs in the interim.
The maximum advance you can receive for an advance payment is equal to the amount of your estimated Universal Credit payment. Your JobCentre Plus work coach can help you to apply for an advance payment, or you can apply for it using your online account.
When you apply you’ll need to verify your identity, explain why you need the advance and provide your bank account details.
If you have received an advance payment, you’ll start paying it back when you get your first Universal Credit payment. The repayments for your advance are deducted from your Universal Credit, so the amount you receive for your Universal Credit will be lower than the estimated amount until you have repaid it.
Advance payments are interest-free, but you must pay them back within two years.
Find out more about Universal Credit advance payments here.
What is a hardship payment?
When you submit a claim for Universal Credit, you make an agreement with your work coach called a ’claimant commitment’. Each agreement is different, and it will require you to do certain activities based on your situation. These could be things like writing a CV, applying for jobs or going on training courses.
If you don’t comply with your responsibilities agreed in the claimant commitment – your Universal Credit could be reduced or stopped. This is known as a sanction. Sanctions are based on what you did and how often you did it. If you’re a joint claimant and only one of you doesn’t meet the responsibilities, you’ll get half a sanction. You can appeal a sanction if you think it’s wrong.
If your Universal Credit payment is reduced because of a sanction, you can ask for a hardship payment to help you pay for your rent, heating, food and hygiene costs. To dispute a sanction, you need to demonstrate you’ve tried to find the money from somewhere else and show that you have only spent the hardship payment on essential costs.
Your hardship payment will be deducted from your future Universal Credit payments, so it will be lower until you’ve repaid it.
Find out more about hardship payments here.
Alternative Payment Arrangements
If you aren’t able to manage your finances with a single monthly payment, and there is a risk of financial harm to you or your family you could be eligible for an Alternative Payment Arrangement (APA).
- Housing costs being paid straight to your landlord as a managed payment
- Receiving your payments more frequently than once a month (so instead of one large payment, two payments or, in exceptional circumstances, four payments)
- Payments split between partners on joint claims
APAs can benefit people who suffer with addiction, mental health issues, learning difficulties or those who are struggling with rent arrears and/or were previously homeless.
You can request an APA at any point while you’re claiming Universal Credit, and you can have more than one APA dependent on your personal circumstances.
Find out more about APAs here.
Support with childcare costs while you’re on Universal Credit
If you (or your partner if they live with you) are working or have a job offer, you could be able to claim back up to 85% of your childcare costs. You could get up to £646 for one child or £1,108 for two or more children.
If you’ve recently started working, in England, Scotland and Wales you can apply for a Flexible Support Fund through your JobCentre Plus work coach to help you with the upfront costs of childcare. If you’re in Northern Ireland this is called the Advisor Discretionary Fund. This is a grant that you won’t have to pay back, but if you aren’t successful in your application you might need to ask for a Universal Credit advance payment.
If you have a child aged two years old, you can get free childcare if you live in England and receive certain benefits – or your child meets certain criteria. Find out more here about free education and childcare for two year olds.
All three and four year olds can have 570 free hours of childcare per year. Most people usually spread this out at 15 hours a week over 38 weeks of the year. Find out more here.
Some three and four year olds are eligible for 30 hours of childcare a week depending on your work situation, income, your child’s age and circumstances – and your immigration status.
Find out if you’re eligible here. Claiming this could affect your tax credits, so make sure you check if you’ll be better off.
Find out what help you can get with childcare costs here.
For more support and advice
If you’re interested in learning more about making the most out of your budget and maximising your income, our Financial Wellbeing Hub is here to help.
If you’re struggling with debt repayments and want to get on top of your finances, remember you can contact us over freephone, email or via our Live Chat service.
Read the rest of our ‘What you could be entitled to’ series:
- Ways to save money using your tax relief entitlements
- Available financial support for carers and those they care for
- Available support if you’re struggling with debt and your mental health
- Financial support for help with home and utilities costs
- Where to find extra support with food, household, healthcare, funeral, prison and legal costs
 Proposed benefit and pension rates 2022 to 2023 – GOV.UK (www.gov.uk)