Universal Credit – 12 things you need to know if you’ve just applied

AS millions of workers turn to the welfare state to help them through the coronavirus lockdown, we take you through the key things that you need to know about Universal Credit. 

The Sun revealed how nearly a million Brits tried to claim benefits in the past fortnight, up from around 100,000 in a normal two-week period.

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Despite a series of measures announced by the Chancellor to help save one million jobs during the coronavirus crisis, many people are now turning to the welfare state.

The massive surge in ex-workers signing on for support has left some facing six-hour waits on the phone.

The Department for Work and Pensions says that it’s drafting in 10,000 more workers to deal with the spike in numbers, but in the meantime we’ve put together a guide to the quietest times to apply.

But the national safety-net isn’t perfect.

Over the past 18months The Sun has been campaigning for changes to the system to Make Universal Credit Work.

From slashing the five-week wait for the first payment to lowering the taper rate, to making sure parents get access to childcare funds upfront.

We’ve spoken to hundreds of claimants about their experience with the system and have a good understanding of the things you should know about if you’re applying for the first time.

Here are 12 things that you need to know about Universal Credit:

1. It rolls six benefits into one

Universal Credit is a welfare scheme designed to wrap a number of benefits into a single monthly payment.

It replaces the following benefits:

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

It’s paid monthly – or  – and paid straight into your bank account.

Usually, the benefit is paid into one person’s account but if you’re part of a couple you can request that it’s split between two.

The single payment is broken down into “elements” and what you’re entitled to depends on your individual circumstances. These elements are:

• Standard allowance
• Child element
• Housing costs element
• Capability for work elements
• Carer element
• Childcare element

The housing element is also paid directly into your bank account unless you request for it to be sent straight to your landlord under special circumstances.

You can apply to Universal Credit if you live in the UK, are aged over 18, if you or your partner are under state pension age of 65, and you have less than £16,000 in savings.

2. It’s managed online

When you apply to Universal Credit you’ll be asked to open an online journal.

This is what you’ll use to communicate with your case worker with any questions or to let them know about any changes to your circumstances that may affect your claim.

You can also see when your next payment will be on your journal.

This is also where you will be required to log evidence that you’re actively applying for work if you’re claiming the JSA element. This is known as your “to do” list.

If you’re self-employed, you will also need to update your journal with your earnings so that your welfare payment can be calculated.

To set one up, you’ll need to create a username and password as well as provide an email address. You’ll then have 28 days to register a claim.

Normally, once you’ve opened a journal you will be required to attend a Jobcentre interview to assess whether you’re eligible to claim and what you’re entitled to.

But under the current lockdown rules, these are being carried out over the phone and tend to last around an hour.

You will be asked questions about your current circumstances, finances and other personal details.

The phone lines have been inundated will callers over the past week so the DWP is asking claimants to book an appointment by writing a note in their journal.

The interviews are being booked in as soon as possible but some people are being told that they will need to wait up to two weeks for the next available slot.

3. There’s a five-week wait for your first payment

It can take up to five weeks from the moment you’re accepted onto the scheme for your first payment to be processed.

The wait time is made up of a one month assessment period and up to seven days for the payment to reach your account.

It begins once you have had your Jobcentre interview, not from when you open an online account.

The Sun has been campaigning for this time to be reduced to two weeks to help seven million families.

Many experts and charities have warned that the current wait time pushes hard up families further into debt.

Trussell Trust found that cash-strapped Brits are relying on food banks up to two years after they applied for the benefit system due to the wait.

The Sun has spoken to hundreds of claimants who’ve been put in this position because of the wait, including Sam Evans, 39, who found herself at a food bank after she was made redundant from her call centre job.

Lynne and Richard Williams also found themselves living off tinned carrots and meatballs from the food bank after being rolled onto the system.

4. You can ask for an advance payment but it’s actually a loan

To get you through the wait period, you can take out whats called an “advance payment” equivalent to one month’s entitlement.

The DWP call it a payment but it’s actually a loan and you’ll need to pay it back over 12 months.

The first repayment will be automatically deducted from your first welfare payment, tightening budgets even further for hard-up families already asking for help.

You can ask for the repayments to be paused for up to three months if you’re really struggling without the cash but often this only delays the problem.

It’s this debt that contributes to households falling further into poverty due to the five-week wait.

The Chancellor announced that the payback time for advance loans will be extended to 24 months but these changes won’t come into effect until October 2021.

5. If you live with your partner you have to make a joint claim

If you’re married, in a civil partnership, or live with your partner as if you were then the DWP counts you as a couple and you’ll need to make a joint claim

The first person in the couple will be given a partner code after they’ve set up their online account.

The partner will then have to enter that code when registering their own online account.

Neither of you will be eligible for help if one of you doesn’t fulfil the relevant criteria, for example your partner earns a high income or you have more than £16,00o in savings combined.

6. You can’t get it if you have £16,000 in savings

The benefit system isn’t available to those who already have £16,000 in savings, including your partner’s savings if you’re applying for a joint claim.

The DWP says that families should rely on those savings to get them through before turning to Universal Credit for help.

Your payments will be reduced by £4.35 for every £250 you have in savings if you have a £6,000 or more nest egg.

Stocks and shares than can be sold count towards your saving limit, as well as cash in ISAs for first-time buyers such as Help to Buy and Lifetime ISAs.

Pensions won’t count towards the £16,000 cap unless you’ve taken out a lump sum worth 25 per cent or that they were being used for income.

7. You get less money if you’re under 25

How much money you’re entitled to in total depends on your independent circumstances.

But everyone who is accepted on the scheme is entitled to the standard allowance element – this is the basic rate and you may be able to claim other elements on top of this.

This rate is different depending on how old you are and whether or not you’re in a couple. The current rates are:

• Single and under 25 – £251.77
• Single and over 25 – £317.82
• In a couple and both under 25 – £395.20
• In a couple and one or both of you are 25 or over – £498.89

Two weeks ago, Chancellor Rishi Sunak announced that the he will be temporarily raising the the standard allowance for 12 months to help families get through the coronavirus crisis.

From April 6, it will increase by £20 a week on top of an annual increase worth 1.7 per cent that came into effect from yesterday.

Single claimants over 25 will see their payments go up to £481.85 a month and joint claimants will see payments rise to £576.55.

8. The amount can change every month

Universal Credit is calculated based on how much income you get during your assessment period.

This is the same every month but depends on when you made a claim.
For example, if you applied for the benefit on September 1, your assessment period will run until September 30.

A new assessment period will begin on October 1, but you won’t receive September’s payment until October 7.

This can make it difficult for households to budget as they don’t know what they will be paid until they receive it.

Self-employed workers whose income changes every month has a knock on effect to what you are entitled to every month.

People who are paid on different days every month, such as the last Friday of the month or every four weeks, may find that they have two wages paid into their account during the same assessment period.

This then takes them over the monthly earnings threshold as it looks like they’ve earned twice as much this month.

We’ve heard from many claimants who are sometimes left with nothing in their Universal Credit payment some months because of this problem.

Unfortunately, the DWP says there is nothing that can be done to rectify this even though the amount of cash earned by the claimant hasn’t changed.

Your payments are also affected by any debts you may be paying back, such as rent arrears, advance loans and budgeting loans.

9. 63p is deducted for every £1 you earn over a certain amount

Universal Credit payments are also affected by the taper rate – an idea that is supposed to encourage people to get back into work.

This is were 63p is deducted from your benefit payment for every £1 you earn over a certain amount.

If you’ve got a job and a child who depends on you or you can’t work as much because of an illness then you may be qualify for a work allowance.

This is the amount you can earn every month before the taper rate kicks in.

If you get help with your housing costs then this will be set at £287, or £503 if you don’t.

For example, if you earn £350 a month and you don’t get help with your rent then your benefits will go down by £39.69.

If you don’t get a work allowance then all of your salary is subject to the taper rate.

So if you’re on the same £350 earnings, your Universal Credit payment will be reduced by £220.50.

The Sun wants the taper rate to be slashed to 50p to help at least four million struggling families.

10. You can claim up to 85 per cent of childcare costs

Under Universal Credit, parents can claim up to 85 per cent of childcare costs, up to a maximum of £646 a month for one child or £1,108 for two children, but they need to pay for it themselves first.

The way it works is that parents submit a receipt on their journal once the bill has been paid for.

Three quarters of it is then reimbursed through your next Universal Credit payment.

These upfront costs can create a barrier to getting parents back into work, with just 38 per cent of the one million households with children who are entitled to the help actually claiming it.

The Sun has been calling for childcare costs to be handed to parents upfront as part of our Make Universal Credit Work campaign.

It comes as one mum told us how she was forced to take out payday loans to fund childcare, while another says she can only afford £1 pizza and chips due to sky-high childcare costs.

11. Payments will be deducted if you’ve ever been overpaid benefits

More than half a million new claimants have noticed that deductions for historical benefit overpayments have been automatically been taken from their first welfare payments.

These include overpayments for benefits such as working tax credits or child tax credits.

Many households don’t even know that they owe this cash and the deductions can leave them without enough cash to live off.

On average, each claimant has £1,560 worth of outstanding tax credit debt.

The maximum amount that can be deducted from your Universal Credit is 30 per cent of your standard allowance, down from 40 per cent in October last year.

Deductions also include loan repayments, rent arrears and other debt repayments.

It means that for example, if you’re entitled to £317.82 standard allowance (the rate for a single claimant over 25), the most that can be taken off to repay debts is £95.35.

Around 850,000 people face these reductions every month, with 238,000 of them losing the maximum amount, according to government figures.

Desperate mum Samantha Evans, 39, was left to rely on foodbanks after the family, who were entitled to £510 a month, received nothing because it turned out she’d been overpaid £4,000 in child tax credits over the previous year.

12. All Jobcentre appointments are currently suspended

In normal circumstances, claimants would be expected to attend Jobcentre meetings and face being sanctioned if they miss them.

But due to the current circumstances, the DWP has suspended all face-to-face appointments for three months starting from March 19.

The procedures will run as normal, but those using the system no longer need to attend any meetings in person.

Instead, people can still make applications for benefits online.

The Jobcentres remain open and will continue to provide services for those lacking phones or the internet, such as the homeless.

The DWP has also temporarily suspended all Universal Credit sanctions, disability reviews and assessments for three months.