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Published 03 April 2024
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What is Universal Credit and How Can I Apply?

Universal credit is a means-tested benefit for people without an income or on a low income. Read on to learn who is eligible, how much the payment will be and how to apply.

Universal Credit is the means-tested benefit system paid monthly to those with low or no income.

It was first introduced in 2013 and gradually rolled out across the UK, replacing six previous benefits for workers with low incomes, those who have lost jobs, and those who are unable to work.

It is paid monthly (twice monthly to some in Scotland) and is means-tested, so the amount of money you receive will depend on things like your wages, how many hours you work, and if you have any existing savings.

Here, we explain what you need to know about Universal Credit.

What is Universal Credit?

If you are struggling with your finances, help may be available through the Universal Credit benefit system. It is available to those with low incomes or who are out of work and provides an amount of money to help pay for living costs such as rent or childcare.

The Universal Credit payment is made up of one sum of money. You may get an additional top-up, depending on how much help you need and what your circumstances are.

What benefits does Universal Credit replace?

Universal Credit replaces the following benefits, now called ‘legacy benefits’ by the Department for Work and Pensions (DWP):

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

If you currently receive any of these benefits, you don’t need to do anything and you’ll continue receiving them unless your circumstances change or you are contacted by the DWP about moving onto Universal Credit. However, if you make a new claim it must be for Universal Credit, you can’t make one for any of the legacy benefits.

Who can claim it?

In order to make a claim for Universal Credit and to start receiving the money, you need to be eligible. The main criteria for claiming are:

  • You’re out of work or have a low income.
  • You’re aged 18 or over and live in the UK.
  • You or your partner are under the age to receive your State Pension.
  • You and your partner have less than £16,000 in savings.

Do savings impact my Universal Credit claim?

When you make an application for Universal Credit any existing savings you have will be taken into account. If you have £16,000 or more in savings you won’t be able to apply for it. Those with between £6,000 and £16,000 will need to declare this money, and it will affect the amount you receive. If you have less than £6,000 in savings it won’t make a difference to your claim but you do need to tell the DWP.

» MORE: Help to Save for low-income workers

How much is Universal Credit?

If you receive Universal Credit, you’ll be paid a set amount of money once a month. You may be entitled to more money if you need help with housing costs, you care for children, you are a carer, or you aren’t able to work because of a sickness or disability.

The set Universal Credit rates for 2024/25 are:

  • if you’re single and under 25: £311.68 a month
  • if you’re in a couple and both under 25: £489.23 a month (for you both)
  • if you’re single and 25 or older: £393.45 a month
  • if you’re in a couple and either of you are 25 or older: £617.60 a month (for you both)

How do you make a Universal Credit claim?

You can make a claim for Universal Credit on the government website. You can also claim over the phone through the Universal Credit helpline. If you live with a partner, you will both need to make individual accounts that will be linked together.

How long will it take to receive the payment?

If you want to apply for Universal Credit, it’s important not to put it off as there is a time lag from your application being made to you actually receiving the money.

The date you submit an application is known as your ‘assessment date’. If successful, you’ll have to wait five weeks for the money to appear in your bank account. If this is too long, you may be able to apply for an advance payment to cover the shortfall.

It’s also important to note that you should finish any application within 28 days of account creation. If you fail to complete the application in time, you will have to start over again.

Can I apply for Universal Credit if I am self-employed?

Universal Credit isn’t just for those who earn through a pay-as-you-earn (PAYE) system, self-employed workers can apply for it too.

You will need to report their earnings monthly to the DWP and the amount of money you receive will be based on your income. 

You will also need to prove to HM Revenue & Customs (HMRC) that you are “gainfully self-employed” and that it is your main work. This may involve sharing evidence that your self-employment provides regular work and income, as well as being profitable. If you cannot demonstrate this, you may be required to search for other work in order to recieve Universal Credit.

How are tax credits affected by Universal Credit?

Since tax credits have been replaced by Universal Credit, if you or your partner makes a claim for Universal Credit, your tax credits will be automatically stopped, even if the claim isn’t successful. This will also happen if you move in with a partner who has claimed Universal Credit. 

In these situations HMRC will send you an ‘award review’ to tell you your tax credits have ended. The only exception to this is if you get disability living allowance (DLA) or personal independence payment (PIP), which you will continue to receive.

There are a number of extra benefits you might also be entitled to if you receive tax credits, such as help with prescriptions and maternity costs. There’s a full list on the website.

What Universal Credit scams should I be aware of?

There are several Universal Credit scams in operation, usually by those making false applications on your behalf and pocketing the money. Be very wary of people offering to make an application for you, as it’s free and easy to do it yourself.

Image source: Getty Images

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