Skip to main content

Universal Credit: Are you better off?

26 March 2021

#ValleysMag | Money Advice | Universal Credit |

URL copied

Universal Credit (UC) helps pay your daily living costs including your rent. You may be eligible if you are out of work, or if you are in work and have low earnings.

Universal Credit has replaced 6 benefits:

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

The DWP/HMRC expects all households claiming legacy benefits and tax credits to have moved across to UC by September 2024 as part of ‘Managed Migration’.

If you are receiving one or more of the above listed benefits, the DWP will let you know when it’s time to move over to UC but some claimants may want to consider moving over to UC sooner.

One reason is the £20 per week uplift to UC, that was introduced during the coronavirus pandemic in March 2020 and has been extended until September 2021. You can find out more about this, here.

Not only could you be better off claiming UC for the additional £20 per week uplift but you could also benefit, if you fall into one of the categories, below:

  • Housing Benefit claimants who have working non-dependents living with them:

If your Housing Benefit is reduced because of the non-dependent’s earnings, or the earnings nil qualify the claimant for Housing Benefit (if you receive ESA always seek further advice), you may be better off on UC.

Non-dependant is 18 or over and works at least 16 hours a week or is entitled to Universal Credit and is working April 2020 April 2021
– gross weekly income not less than £469 102.35 102.85
– gross weekly income of £377 to £468.99 93.25 93.70
– gross weekly income of £283 to £376.99 81.90 82.30
– gross weekly income of £217 to £282.99 50.05 50.30
– gross weekly income of £149 to £216.99 36.45 36.65
– gross weekly income no more than £148.99 15.85 15.95

If you were to claim UC the non-dependent charge or ‘Housing Cost Contribution’ would only be a set amount per month regardless of the non-dependent’s earnings.

£75.15 (April 2020)             £75.53 (April 2021)

  • Housing Benefit claimants who have a non-dependent living with them:

For example, an adult son or daughter who is responsible for a child under 5, will have a non-dependent deduction of at least £15.85 per week (unless the Housing Benefit claimant is in receipt of the daily living component of Personal Independence Payment (PIP)/care component of Disability Living Allowance (DLA)).

On UC there is no Housing Cost Contribution, so no deduction of how much you get towards your rent under the same circumstances.

For example: You claim Housing Benefit and your 26-year-old daughter, and 3-year-old grandson live with you. You don’t receive PIP/DLA. Your Housing Benefit is reduced by £50.05 per week or £216 per month because your daughter works and earns over £217 per week.

If you claimed UC, there would be no deduction to the amount of money you have towards your rent (Housing Cost Element).

You would get the full amount of Housing Cost Element under the same circumstances, compared to a deduction of £216 per month on Housing Benefit.

  • Those who are working:

If you’re employed, how much UC you get will depend on your earnings. Your UC payment will reduce gradually as you earn more – for every £1 you earn your payment reduces by 63p. Compared to 65p of every £1 on Housing Benefit.

UC claimants can be flexible about working more hours or additional hours because UC has no restrictions on the number of hours worked.

It is designed so that it automatically responds to fluctuations in earnings, and allows claimants to keep receiving UC, making work pay.

Employers should supply their Pay As You Earn (PAYE) information to HMRC on or before the day employees are paid. PAYE information relating to UC claimants is sent by HMRC in real time, this is referred to as Real Time Information (RTI).

Unlike with legacy benefits or tax credits, UC claimants don’t need to report any changes to working hours, therefore it is far less likely to be underpaid or overpaid on UC.

You will be eligible for a monthly work allowance of £292 if you or your partner are either:

  • responsible for a child or young person
  • living with a disability or health condition that affects your ability to work

If you think you would be better off claiming Universal Credit make sure you carry out a benefit check first before claiming.

To check if you would be better on UC, you can use better off calculators such as www.turn2us.org.uk or www.entitledto.co.uk.

For more support around this, contact our Money Advice Team for their help.

Get benefit advice via the Advicelink Cymru Helpline: 0808 250 5700

For more information on Universal Credit, visit the Government’s dedicated page.