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What Universal Credit Will Mean For Brits

What Universal Credit Will Mean For Brits

universal credit

Any individual in the UK who either couldn’t find a job or was working on a meagre income was getting government aid. This financial backing came in the form of various benefits. According to latest news doing the rounds, Universal Credit is rolling out. It will take the place of all existing benefits and benefit people with money for living costs. But, what exactly is it and how do you go about it? Today, we cover:

  • Explaining Universal Credit
  • How It Works
  • When You Can Get Your Payment
  • What It Is Made Of
  • Work and Universal Credit
  • Unearned Income and Universal Credit
  • Where You Can Apply
  • How You Can Apply
  • Advance Payment Option


Explaining Universal Credit

In life, mishaps happen leading to illness or disability. It’s quite difficult for such people to work or at the least find gainful employment somewhere. If there’s no money, how will they pay for day-to-day expenses? Sometimes, even if someone takes them on, the paycheck is as low as imaginable. It’s the government’s responsibility to help out these folks and they’re doing just that with Universal Credit (UC). This is a monthly sum paid out to replace long-drawn benefits and tax credits such as Housing Benefit, Income Support, Child and Working Tax Credit, Jobseekers’ Allowance (JSA) and Employment and Support Allowance (ESA).


How Universal Credit Works

UC is already in place as you’re reading this. If you’re a resident of a full-service area, chances are you’re already familiar with this new benefit. For localities that aren’t full-service, you may have to wait. Meanwhile, your existing benefits will go on as before. One major advantage of Universal Credit is that you can pay your landlord rent directly. If the case is that both partners want to claim the support, a single lump sum monthly payment is made. Note that it may take upto five weeks to receive the first payment so budget accordingly. It doesn’t mean that you stop looking for work or don’t work. As your earnings increase, the benefit will reduce gradually.


When You Can Get Your Payment

Universal Credit is a sum the government pays in arrears, so allow time for claim processing. The date on which you submit an online claim is the date you’ll get your payment every month. From this date, it can take four weeks for claim approval. One more week will likely pass before funds reflect in your bank account.


What Universal Credit Is Made Up Of

How much Universal Credit you’re eligible for depends on two things: one, a standard basic allowance plus an amount necessary for your financial situation. For example, if you have a small child, disabled dependents or live on rent, UC will be sufficient to pay off the costs of rent or medicines and treatment. Generally speaking, those individuals/families with savings south of £6,000 draw the maximum financial maintenance.

universal credit

Work & Universal Credit

Earlier existing Income Support and Working Tax Credits used to impose restrictions on the number of hours an individual could work. However, with the new wave of UC, what matters is not how many hours you clock but how much you earn. People themselves ill/disabled or having disabled dependents/ minors are eligible for work allowance. Work allowance is helpful in that there’s a threshold upto which you can earn without impacting your UC payout. Above this, UC will go down by 63p for every £1 earned. Rightly, the name for it is ‘earnings taper’ as the more you earn, the more your support weans. Included in your income are any benefits the employer may give for maternity, paternity, sickness and adoption.


Unearned Income & Universal Credit

For every £1 of unearned income, £1 will be taken away from your Universal Credit. This is that income which you didn’t get from working somewhere. Receipts which come under this head are new-style JSA and ESA, pension income and benefits not replaced by UC.


Where You Can Apply

As Universal Credit is a government initiative, you have to apply on the UK government’s website  https://www.gov.uk/apply-universal-credit .


How You Can Apply

The claim submission is only possible on the website and not by post. Therefore, if you don’t happen to have a computer or smartphone, use one at the library or jobcentre. If a couple wants to join claim UC, a single form with details of both individuals would have to be filled.


Advance Payment Option

If you find yourself short of money and have time to go for your first UC payment, phone your work coach or UC’s free helpline number. Now, ask for an advance payment on your UC. Expect to furnish details of the reason for want of money, bank and identity verification details. Usually, a decision happens on the same day and money is transferred within five working days. Note that advance comes from your UC payments of the next 12 months.


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