How will moving to Universal Credit affect me?

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.

You can no longer make a new claim for legacy benefits.

If you’re 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
  • nothing changes and the DWP asks you to start claiming Universal Credit.

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. For example, you might have a change in your:

  • employment status, such as starting a new job, or increasing or decreasing your hours
  • family circumstances, such as a 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.

You might also be asked to claim Universal Credit if your income has reduced due to the coronavirus outbreak. Or if you can’t work because you’re sick, self-isolating or shielding as a result of coronavirus, and you don’t qualify for Statutory Sick Pay.

When you claim Universal Credit, your existing benefits will stop.

However, if you get Housing Benefit, Income Support, or income-related Employment and Support Allowance they will be paid for an extra two weeks after you make your claim. This is to help you manage while waiting for your first Universal Credit payment.

It’s important to understand that you could get either more or less money than you do now when you move from legacy benefits to Universal Credit.

For this reason, it’s best to check in advance how your income will be affected. In some circumstances, delaying your claim for Universal Credit could make sense.

Find out more about changes that might mean you have to start a Universal Credit claim on the entitledto website

To find out if you would be better or worse off on Universal Credit, use the Benefit and Budgeting Calculator on the Benefit and Budgeting calculator website

If you’re getting legacy benefits and your circumstances don’t change

If you’re 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.

Unless there’s a change in your circumstances, you don’t need to do anything until the DWP contact you.

The DWP expect all households claiming legacy benefits and tax credits to have moved across to Universal Credit by September 2024.

Moving to Universal Credit from Child Tax Credit

If there’s a significant change in your circumstance, you’ll 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 or they move out.

You could get more or less money on Universal Credit than you’re currently getting in Child Tax Credit and other benefits. 

The way savings are counted are different than the rules for tax credits. If you have savings of more than £16,000 you won't qualify for Universal Credit. And if you have savings of over £6,000 the amount you get could be affected. It's important to get specialist benefits advice before you claim Universal Credit if you think this will affect you.

If you have one or two children, you can claim for children until they reach 19 – or 20 in some cases – if they’re in full-time approved education or training, but not at university.

If your children were born before 6 April 2017, you’ll be able to claim for them all.

If one or more of your children were born on or after 6 April 2017, you’ll 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 elements and additions listed below, 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. It will be paid at either a lower or higher rate, depending on the child’s needs.
  • 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 (for 2021-22) 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.

Your parental responsibility and receiving Universal Credit
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’ll be asked to attend interviews with a work coach to discuss plans for a future move into work.

Between 3 and 4

You’ll 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’ll be expected to look for work that fits in with your responsibilities – for example, during school hours.

Age 13 and above

You’ll normally be expected to look for full-time work.

Moving to Universal Credit from Working Tax Credit

If your circumstances change, you might be asked to switch to Universal Credit from Working Tax Credit. For example, 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, especially 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.

The way savings are counted are different than the rules for tax credits.

If you have savings of more than £16,000 you won't qualify for Universal Credit.

And if you have savings of over £6,000 the amount you get could be affected.

It's important to get specialist benefits advice before you claim Universal Credit if you think this will affect you.

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 are also no limits to the number of hours you have to work, as there are with Working Tax Credit.

If your working hours aren’t the same from month to month, it can mean you might 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. This is so you don’t get too much or too little Universal Credit.

Your employment status and ability to receive Universal Credit
Your circumstances
What you have to do in return for your Universal Credit payment

You’re working full-time

If you’re not earning at least the equivalent of 35 hours at the minimum hourly wage, you’ll be expected to look for better paid work. This depends on your ability to work, and any caring commitments you have.

You’re working part-time

You’ll normally be expected to look for more work until you’re earning at least the equivalent of 35 hours at the minimum hourly wage each week. This depends on your ability to work, and any caring commitments you have.

You’re self-employed*

You’ll probably have your payments calculated as if you were earning at least the equivalent of 35 hours at the minimum hourly wage each week. This depends on your ability to work and any caring commitments you have.

*The minimum income floor has been temporarily abolished during the coronavirus outbreak, until 31 July 2021.

The minimum income floor will gradually come back from August. However, if your income is still affected by coronavirus, then your work coach will have the option not to apply the minimum income floor. This is on an individual case-by-case basis so talk to your work coach in good time if you’re worried.

Download a leaflet on ‘Universal Credit and work’ at GOV.UK

Download a leaflet on ‘Universal Credit and self-employment’ at GOV.UK

Download a leaflet on ‘Universal Credit and tax credits’ at GOV.UK

Reporting your earnings if you’re employed

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. You can do this through your online account, or call the Universal Credit helpline:

Telephone: 0800 328 5644

Textphone: 0800 328 1344

Find more contact details at GOV.UK

If you have more than one employer, you’ll need to get a PAYE scheme number for each job.

When 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

You’ll have to report how much you’ve earned each month by the last day of your assessment period. You need to report this to your work coach through your online account or the Universal Credit helpline.

You’ll 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.

Find out more about claiming Universal Credit and reporting your earnings on the entitledto website

Reporting your earnings if you’re self-employed

Usually, Universal Credit payments for self-employed people have been worked out based on an assumed level of income called ‘the minimum income floor’. This is instead of your actual earnings.

However, as a temporary measure for everyone during the coronavirus outbreak, the amount of Universal Credit you’ll get will be based on the actual income you earn each week.

You report this through your online account and it’s included alongside everything else when working out your overall Universal Credit payment.

The minimum income floor might return at a future date.

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. You need to prepare for work when they turn three, with support from Jobcentre Plus.

Your Income Support will be paid for a further two weeks after you make your claim for Universal Credit before it will stop. You won't have to pay this money back.

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, especially if it’s in a new local authority area
  • stop being a carer
  • are a single parent and your youngest child turns five
  • start working enough hours to meet Working Tax Credit conditions.

Moving to Universal Credit from Employment and Support Allowance

Moving to Universal Credit from Housing Benefit

If your circumstances change

You might have to move from Housing Benefit to Universal Credit if you:

  • are claiming Child Tax Credit and start work
  • have your first child
  • move home, especially 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.

Your Housing Benefit will be paid for a further two weeks after you make your claim for Universal Credit before it will stop. This should mean you don't miss a rent payment while you're waiting for your first Universal Credit payment.

Rent payments 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’ll 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 until you get back on your feet.

This means your rent could be:

  • paid directly to your landlord
  • paid to you weekly or fortnightly.

In Northern Ireland

If you’re claiming Universal Credit in Northern Ireland, your housing costs will automatically be paid to your landlord. But you can choose to pay your landlord yourself.

In Scotland

You’ll 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

If you’re aged between 18 and 21, in return for getting 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’ll be expected to:

  • apply for an apprenticeship or traineeship
  • gain work-based skills, or
  • go on mandatory work placement.

Housing support for young people

If you’re aged between 18 and 21 and are out of work, you’ll be automatically entitled to housing support if you make a claim for Universal Credit.

If you’re on Pension Credit

If you’re in a couple and either you or your partner reach Pension Credit age, you’ll now have to claim Universal Credit if you have a change in circumstances. This might mean you will get less money.

Find out how much Universal Credit you might get by using the Benefit and Budgeting Calculator on the Policy in Practice website

Managing for money until your first Universal Credit payment

You’ll have to wait up to five weeks for your first Universal Credit payment from the date of your claim.

When you’ve made your claim for Universal Credit and you're getting one or more of these benefits:

  • Housing Benefit
  • Income Support
  • income-related Employment and Support Allowance 
  • income-based Jobseeker's Allowance.

They will continue to be paid for an extra two weeks before they stop. You won't have to pay this money back.

Tax credits will stop straightaway after you make your claim.

It’s important to think about how you’ll cope while waiting for your first Universal Credit payment, especially if your budgeting is based on the dates your old benefit payments come into your bank account.

If you think you’ll struggle to make ends meet, you can apply for an advance payment. But be aware that you’ll need to repay it within 12 months.

Was this information useful?
Thank you for your feedback.
We’re always trying to improve our website and services, and your feedback helps us understand how we’re doing.
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Talk to us live for…
Talk to us live for…
Talk to us live for pensions guidance using…
Talk to us live for money guidance using…
0800 011 3797* Hours
  • Mon – Fri:9.00am – 5.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for money guidance using the telephone
0800 138 7777* Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for pensions guidance using web chat
Hours
  • Mon – Fri:9.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed
Talk to us live for money guidance using webchat
Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat:8.00am – 3.00pm
  • Sun and bank holidays:Closed
Talk to us for pensions guidance using our web form

We aim to respond within 5 working days

Talk to us for money guidance using our web form

We aim to respond within 2 working days

Talk to us live for money guidance using WhatsApp
+44 77 0134 2744

Download app: WhatsApp

For help sorting out your debts, credit questions or pensions guidance. For everything else please contact us via Webchat or Telephone.