An introduction to Universal Credit

A new benefit system known as Universal Credit will be brought in across the country in the next three years. It is a catch-all payment to cut down on the number of benefits into one lump payment. This may sound fantastic in its simplicity, but many people are unaware of what they are entitled to, and what the differences are between the current system and the new arrangements.


For many in the current welfare system, work just does not pay, as an increase in hours leads to deductions in benefits and tax credits. The new system is designed to recognise each hour of work so that people keep a higher proportion of their earnings.


Some areas of the UK have already changed over to this new system, and between 2016 and 2017 most existing claims will move over nationwide. In the meantime the government will contact anyone likely to be affected by the swap over, explaining what they must do next. Take a look at the guide at to find out more about the changes.


The credit will replace six of the most common current benefits. Child tax credit, Housing benefit, Working tax credit, Income support, Income-related employment and support allowance and Income-based jobseekers allowance will all be merged into one monthly sum to be paid directly into an account.


That sum will consist of one ‘basic’ element plus five other elements regarding caring, parents, the disabled, and housing. The last element replaces the help people currently get from housing benefit.


So those who may currently receive a number of payments throughout the month will now be responsible for one large sum, and from that they must pay their landlord for rent. It is hoped they will plan ahead and spread their money throughout the month, although some critics have raised concerns that more people will be unable to resist temptation and this could lead to an increase in payday loans: This guide from explains some of the perceived pros and cons.


The new credit will be available to people in work and on a low income, those who are out of work, and some of those who have just started a new job or increased their hours. It is responsive, changing in value as a person’s hours increase or decrease.


Some people’s benefits will go up, and some will go down, as a benefit cap has been set which should make it impossible for anyone to receive more on benefits than the average weekly wage after tax and national insurance. The Government believes that on average households will benefit by £16 a month, particularly couples with children, and that the poorest will do better.


The system will be delivered online, so anyone affected must make sure they have access to a computer, either at home or with friends or family, or in a local library. They must have a bank account into which the credit can be paid. Even if a couple are both receiving benefits only one, combined sum will be paid into an account, so consider creating a joint account if necessary.


An applicant must first fill in an online form, and they will then be invited for an interview with a Jobcentre Plus adviser. Their personal situation will then be considered before they sign a ‘claimant commitment’, which specifies certain arrangements and criteria they must fulfil to continue to receive the credit. This could include actively searching for work and attending interviews. The advice from the Citizens Advice Bureau will help you prepare for the interview.


Most areas are not affected yet so there is plenty of time to prepare for the changes, which should produce a system that is much easier to understand. Whether a claimant will find it so easy to adjust their circumstances will depend on them.

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