Some benefits and tax credits you might be getting now are being replaced by Universal Credit. What this means for you depends on how and when you’re moving from existing benefits. This page tells you the different ways you could switch onto Universal Credit and the effect this could have on your payments.
To find out more about how Universal Credit works and how to make a new claim for it read our guide Universal Credit explained.
- Which benefits are affected by Universal Credit?
- Moving to Universal Credit because of a change in circumstances
- If you are getting legacy benefits and your circumstances don’t change
- Moving to Universal Credit from Child Tax Credit
- Moving to Universal Credit from Working Tax Credit
- Moving to Universal Credit from Income Support
- Moving to Universal Credit from ESA
- Moving to Universal Credit from Housing Benefit
- Young people and Universal Credit
- If you’re on Pension Credit
- Managing for money until your first Universal Credit payment
Which benefits are affected by Universal Credit?
Universal Credit is replacing these benefits:
- Working Tax Credit
- Child Tax Credit
- income-based Jobseeker’s Allowance
- Income Support
- income-related Employment and Support Allowance
- Housing Benefit.
The Department for Work and Pensions (DWP) calls them legacy benefits.
Most people can no longer make a new claim for legacy benefits.
If you’re currently claiming legacy benefits, how and when you move to Universal Credit depends on whether:
- you have to make a new claim because of a change in circumstances (natural migration)
- nothing changes and the DWP asks you to start claiming Universal Credit (managed migration).
Moving to Universal Credit because of a change in circumstances
If certain circumstances change in your life, you might be asked to make a new claim for Universal Credit if there is a change in:
- employment status, such as starting a new job, or increasing or decreasing your hours
- family circumstances, such as new baby, child starting school, or partner moving in or out
- housing, such as moving to a new local authority area.
Your circumstances might also change if you start or stop:
- being a carer
- a claim based on disability.
If you have to start claiming Universal Credit because your circumstances change you could get more or less money than you do now.
Your old benefits will stop when you claim Universal Credit. However, if you are getting Housing Benefit it will be paid for an extra two weeks after you make your claim to avoid the risk of rent arrears while waiting for your first payment.
If you are getting legacy benefits and your circumstances don’t change
If you’re currently claiming the benefits being replaced by Universal Credit, the Department for Work and Pensions (DWP) will ask you at some point to make a claim for Universal Credit.
This is part of the managed migration onto Universal Credit. At the moment the DWP does not intend to start moving most people onto Universal Credit until November 2020 at the earliest .
Unless there is a change in your circumstances, you don’t need to do anything until you are contacted by DWP.
Moving to Universal Credit from Child Tax Credit
Living in Northern Ireland or Scotland?
In Northern Ireland, Universal Credit works differently. Find out more on the nidirect website.
In Scotland, you might be offered some choices about how your Universal Credit is paid. Read our guide to Universal Credit in Scotland.
If there is a significant change in your circumstance, you will be asked to move from Child Tax Credit to Universal Credit
This might happen if you:
- start work
- have a child
- move in with your partner
You could get more or less money on Universal Credit than you are currently getting in Child Tax Credit and other benefits.
If you have one or two children you can claim for children until they reach 19 (or 20 in some cases) if they are in full time approved education or training, but not at university.
If you have three or more children, you will not be asked to claim Universal Credit and can still make a new claim for Child Tax Credit.
If your children were born before 6 April 2017, you will be able to claim for them all.
If one or more of your children were born on or after 6 April 2017, you will only be able to claim for the first two unless you had a multiple birth or have adopted.
The first child premium will no longer be paid under Universal Credit.
Your monthly Universal Credit payment will include the following elements and additions, which will replace the help you currently get from tax credits.
- Child element – this helps with the costs of bringing up a child.
- Disabled child addition – this helps with the extra costs of bringing up a disabled child and will be paid at either a lower or higher rate depending on the needs of your child.
- Childcare costs element – lets you claim back up to 85% of your monthly registered childcare costs up to a capped limit of £646 for one child and £1,108 for two or more children while you’re working.
If you’re on Universal Credit there are different rules about what you have to do in return for receiving your payment.
| Age of child | What you have to do in return for your Universal Credit payment |
|---|---|
| Under 1 | You won’t be asked to work in return for your Universal Credit |
| Between 1 and 2 | You will be asked to attend interviews with a work coach to discuss plans for a future move into work |
| Between 3 and 4 | You will be expected to work a maximum of 16 hours a week (or spend 16 hours looking for work) this might include some training and work-focused interviews |
| Between 5 and 12 | You will be expected to look for work that fits in with your responsibilities – for example, during school hours |
| Age 13 and above | You will normally be expected to look for full-time work |
Moving to Universal Credit from Working Tax Credit
Help to Save
If you’re working and on Universal Credit, find out if you qualify for the Help to Save account which gives you up to a 50% bonus from the government on your savings.
If you have a change of circumstances you might be asked to switch to Universal Credit from Working Tax Credit if you:
- start working less than 16 hours a week
- were on Working Tax Credit and become sick.
- have a child
- start renting a property, certainly if it’s in a new local authority area.
The amount of Universal Credit you are paid could be more or less than the benefits you get now.
Your Universal Credit payment will also adjust month by month if the amount you earn goes up or down.
This should make it easier for you to accept short-term work or take on more hours.
If you earn less during one month your Universal Credit should go up to make up for the shortfall in earnings.
There’s also no limits to the amount of hours you have to work as there are with Working Tax Credit.
If your working hours are not the same from month to month, it can mean you may need to budget more carefully now.
For the DWP to work out how much Universal Credit you should get, they need to know how much you’ve earned in the past month.
Either you or your employer need to tell the DWP how much you’ve earned so you don’t get too much or too little Universal Credit.
| Your circumstances | What you have to do in return for your Universal Credit payment |
|---|---|
| You are working full-time | If you are not earning at least the equivalent of 35 hours at the minimum hourly wage you will be expected to look for better paid work (depending on your ability to work and any caring commitments you have) |
| You are working part-time | You will normally be expected to look for more work until you are earning at least the equivalent of 35 hours at the minimum hourly wage each week (depending on your ability to work and any caring commitments you have) |
| You are self-employed | You will probably have your payments calculated as if you were earning at least the equivalent of 35 hours at the minimum hourly wage each week (depending on your ability to work and any caring commitments you have) |
Reporting your earnings if you’re employed
Make the most of your Universal Credit payment with personalised help from our Money Manager tool.
Your employer might be able to report your earnings automatically through the government’s Real Time Information system (RTI).
You’ll need to find out if your employer has access to the RTI system.
If your employer has access to the RTI system
Ask for your employer’s PAYE scheme number and tell your work coach or phone the Universal Credit helpline.
If you have more than one employer, you’ll need to get a PAYE scheme number for each job.
Once the PAYE scheme number is recorded on your claim, your earnings information should be sent automatically each month to DWP and you won’t have to report it.
If your employer doesn’t have access to the RTI system
What’s my assessment period?
Universal Credit is paid in arrears. Each month’s payment is worked out by looking at how much you earned in the previous month. This is called the assessment period. The start date of each assessment period will be the date of the month when your claim began.
You’ll have to report how much you’ve earned each month by the last day of your assessment period to your work coach or the Universal Credit helpline.
You will need to provide:
- your PAYE reference
- your gross taxable pay
- your employer’s name
- the date you were paid
- how much tax you paid
- how much National Insurance you paid
- details of any contributions made to a pension scheme (and whether they are paid from your gross or net salary or into a personal pension).
You’ll also have to report any earnings your employer won’t know about.
Reporting your earnings if you’re self-employed
The impact of moving from existing benefits, such as Working Tax Credits, to Universal Credit, depends on how long you’ve been self-employed.
If your business has been running for more than 12 months, you’ll be exempt from the minimum income floor for the first six months of your claim.
If you’ve been self-employed for less than 12 months, then you’ll be exempt from the minimum income floor for 12 months.
You’ll have to report earnings yourself by contacting your work coach or the Universal Credit helpline.
If you’re circumstances change and you’re self-employed
If you switch to Universal Credit and have been self-employed for 12 months or more, the minimum income floor will apply to your earnings.
If you’ve been self-employed for less than 12 months you will be classed as being in the start-up period and the minimum income floor won’t apply during this time.
Moving to Universal Credit from Income Support
If you move from Income Support to Universal Credit you won’t be limited to working a maximum of 16 hours a week so you might be able to increase your hours of work and still get Universal Credit.
If you have children and you move on to Universal Credit you’ll be expected to discuss future plans for work when your youngest child turns one, and to prepare for work when they turn three, with support from Jobcentre Plus.
If your circumstances change
You might be asked to move from Income Support to Universal Credit if you:
- stop full-time education
- start renting a new property, certainly if it’s in a new local authority area
- stop being a carer
- loan parent and youngest child turns five
- start working enough hours to meet Working Tax Credit conditions
Moving to Universal Credit from ESA
If you’re currently getting Employment and Support Allowance (ESA) read our guide Universal Credit for sick and disabled people.
Moving to Universal Credit from Housing Benefit
Did you know?
If you’re moving from Housing Benefit to Universal Credit, you will continue to get Housing Benefit for two weeks after your UC claim starts to reduce the risk of rent arrears.
If your circumstances change
You might have to move from Housing Benefit to Universal Credit if you::
- are claiming Child Tax Credits and start work
- have your first child
- move home, certainly if it’s in a new local authority area.
You could get more or less in Universal Credit than you get now.
Your Universal Credit payment will include a housing costs element which will replace the help you currently get from Housing Benefit.
In England and Wales
If you have your rent paid directly to your landlord at the moment, this will change under Universal Credit.
The money for your rent will be paid to you as part of your monthly Universal Credit payment.
You will be responsible for using this money to pay your landlord.
However, if you have significant support needs (for example, with budgeting) either you or your landlord could ask for an Alternative Payment Arrangement (APA) until you get back on your feet.
This means your rent could be:
- paid directly to your landlord
- paid to you weekly or fortnightly (a More Frequent Payment).
In Northern Ireland
If you’re claiming Universal Credit in Northern Ireland, your housing costs will automatically be paid to your landlord. You can choose to pay your landlord yourself.
In Scotland
You will have to pay your landlord directly, but you can choose to have your housing costs paid directly to your landlord.
Young people and Universal Credit
Important
All 18 to 21-year-olds will be able to claim support for housing costs as part of Universal Credit on or after 31 December 2018.
From April 2017, if you are aged between 18 and 21, in return for receiving your benefit you’ll be expected to take part in a Youth Obligation for the first six months after you make a claim for Universal Credit.
This will include intensive support to help you get the skills you need to move into work.
After six months, you will be expected to apply for an apprenticeship or trainee-ship, gain work-based skills or go on mandatory work placement.
Housing support for young people
If you are aged between 18 and 21 and are out of work you will be automatically entitled to housing support if you make a claim for Universal Credit on or after 31 December 2018.
If you’re on Pension Credit
If you are in a couple and either you or your partner reach Pension Credit age,you won’t have to claim Universal Credit for the time being if you have a change of circumstances.
You will not be asked to do this until Universal Credit has been fully rolled out across the country.
Managing for money until your first Universal Credit payment
You will have to wait up to five weeks for your first Universal Credit payment.
The way you budget now might be set around the dates your current benefit payments come into your bank account.
When you make your claim for Universal Credit these benefits will also stop as soon as you’ve made your claim.
However, if you’re already getting Housing Benefit you will continue to receive it for two weeks after you have made your claim to avoid the risk of rent arrears while you are waiting for your first Universal Credit payment.
It’s important to think about how you will cope with these changes and the wait for your first payment.
This article is provided by the Money Advice Service.
