Universal Credit misconceptions explained as payment rules change

Universal Credit is continuing to change meaning some claimants may not be clear about how it works.

People on older legacy benefits are being gradually moved onto the benefit while rules about the tasks claimants have to do have also recently changed, which may lead to some confusion for claimants.

Here are five misconceptions about how Universal Credit that people may find helpful to have clarified.

Universal Credit is not based on the number of hours a person works

The amount a person receives in Universal Credit payments is not based on how many hours they work but rather how much they earn.

A person will receive a standard allowance and additional payments depending on their situation.

These are the current monthly standard allowance payments:

  • Single under 25: £292.11
  • Single 25 or over: £368.74
  • Joint claimants both under 25: £458.51
  • Joint claimants, one or both 25 or over: £578.82.

If a claimant works, there is a taper rate which gradually reduces their maximum payment as their earnings increase.

The taper rate is 55 percent meaning 55p is deducted from a person’s Universal Credit payment for each £1 they earn.

Some claimants get a work allowance, a set amount they can earn before their Universal Credit payment reduces.

The allowance is usually only available to claimants who have responsibility for a child or who have a disability or health condition that affects their ability to work.

These are the current work allowance rates:

  • £379 a month – for claimants who get help with housing costs
  • £631 a month – for claimants who don’t get help with housing costs.

‌Not all Universal Credit claimants have to try and find work

Each person gets a Claimant Commitment which outlines what they have to do to get Universal Credit.

This will depend on a person’s circumstances including their health and whether they are currently working.

In some situations, a person will be put into the no work-related requirements group and not have to look for work.

A person may be put into this group if they have limited capability to work or if they care for another person, or look after a young child.

A claimant can find out if they are expected to look for work by checking their Claimant Commitment.

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Universal Credit isn’t replacing all other benefits

Universal Credit is only replacing these legacy benefits:

  • Child Tax Credit
  • Housing Benefit
  • Income Support
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Working Tax Credit.

Households on these legacy benefits will be moved onto Universal Credit by the end of 2024.

There is one exception to this – people on income-related ESA who do not get tax credits will not be moved over until 2028.

When a person is to be moved over to the new benefit, they will get a ‘migration notice’ letter in the post.

A person will be automatically moved onto Universal Credit if they report a change in their circumstances, such as starting a new job or changing address.

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A person moving to Universal Credit may not get less benefits as a result

People moving from legacy benefits to Universal Credit may see their payments change but some payments may increase rather than go down.

DWP figures released last year showed of the 2.6 million claimants it was moving over to Universal Credit, 1.4 million people would be better off while 900,000 would be worse off.

A person can check how much benefits they are entitled to using a benefits calculator, such as the one on the Turn2us website.

Extra help is available to Universal Credit claimants who are struggling to get by

It can take up to five weeks for a Universal Credit claim to be processed and in the meantime, a person’s existing benefits will stop.

An individual who is struggling during this time can request an advance payment of their first Universal Credit payment, up to the full amount they would usually receive for their award.

However, the claimant will have to pay back this amount out of their future Universal Credit payments.

People on Universal Credit are also receiving a one-off £900 cost of living payment this financial year, which is being paid in three instalments.

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