Are you affected by the recent changes to Universal Credit?

If you are currently on Universal Credit, or are about to apply for Universal Credit, you may already be aware that various changes were made in May which may affect you.

The government described the purpose of these changes as being necessary to get more people back into work and help to boost the economy. Their aim is to help more people on Universal Credit move into better paid jobs and move forward towards financial independence wherever possible, rather than rely on welfare.

But it’s important to be aware of the facts about Universal Credit, and the recent changes. So in this article we take a quick look at:

• What is Universal Credit?
• Who is eligible for Universal Credit?
• What are the recent changes to Universal Credit?
• How much money do you get if you are on Universal Credit?

What is Universal Credit?

Universal Credit is a single benefit payment for people of working age. It was introduced in stages from April 2013 to replace various other benefits including:

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

Who is eligible for Universal Credit?

Universal Credit is available both to working and non-working people. The main criteria for receiving Universal Credit is your level of income. Aside from this, to be eligible for Universal Credit you need to:

• live in the UK;
• be aged 18 or over (though there are some special circumstances if you’re 16 to 17);
• be under State Pension age;
• have less than £16,000 or less in savings.

If you have a live-in partner, you need to make a joint application for Universal Credit, ensuring that their financial circumstances are also taken into account.

Your entitlement to Universal Credit will also vary depending on your employment situation. For example:

• If you are working but have a low income, you may be eligible for Universal Credit until your earnings reach a certain level. Your Universal Credit payment will reduce as your earnings go up, and increase again if you either stop working or your earnings go down. 

• If you are temporarily not working, you might be able to get Universal Credit and also either New Style Jobseeker’s Allowance (JSA) or New Style Employment and Support Allowance (ESA).

• If you are permanently unable to work and apply for Universal Credit, you will need to undertake a Work Capability Assessment (WCA) to provide medical evidence of this. You will need to fill in a medical questionnaire, and may also require a medical examination.

There are currently an estimated 6.4 million people on Universal Credit in the UK, almost 40% of whom have jobs. But how do the recent changes affect this? Let’s take a look.

What are the recent changes to Universal Credit?

The most significant recent change to Universal Credit is that anyone working and also claiming Universal Credit has to earn enough money to meet the Administrative Earnings Threshold (AET). The current value of the AET is £892 per month for an individual claimant, and £1,437 for a couple.

To achieve an income of £892 per month generally means that someone will need to work a minimum of 18 hours at the National Living Wage, which is currently £11.44 per hour for those aged 21 or over. However, they could work fewer hours if they earn more per hour.

If someone does not take steps to earn at least at the above level, they risk having their benefits reduced. Under the changes, an estimated 180,000 people could find themselves in the situation of either having to work more or risk losing their benefits. However, the government has increased the level of support to help people in this situation earn more money. Known as “The Intensive Work Search group”, it will involve more regular meetings with a work coach to find ways to build their careers and boost their earnings.

Certain groups of people will be exempt from the above process, for example people who can’t work because of a long-term illness or disability. But some charities – for example Turn2Us – are concerned that vulnerable people could still be adversely affected by the changes. 

How much money do you get if you are on Universal Credit?

It can be complicated to work out exactly how much money you would get on Universal Credit because there are a variety of different factors involved.

The first set of circumstances that affects your amount of Universal Credit is whether you are claiming as a single person or as a couple. And the second is your age. The standard allowances for these different circumstances are:

You may be entitled to extra money if you have children or if you need help with mortgage or rent payments. And you may also be able to claim a reduction in Council Tax while on Universal Credit.

Your Universal Credit will be paid once a month into your bank account, and it usually takes around 5 weeks to get your first Universal Credit payment. If you need financial help before this you can apply for an advance on your first payment or you could consider a small personal loan. And if you are worried about your eligibility for a loan, remember that Loans 2 Go offer loans for bad credit which may be able to help.

We hope that this article has helped you to understand more about Universal Credit and about the changes which have recently taken place.

 For more helpful financial and lifestyle tips, visit us here again soon at Loans 2 Go.