What is Universal Credit?

Universal Credit was introduced as part of the 2012 Welfare reform. If you currently claim any benefits it is important for you to know about the changes.

Under Occupancy otherwise known as bedroom tax

Bedroom tax is applied to your ‘net rent’ (the rent when things like water charges are removed, as these aren’t covered by housing benefit). The housing benefit office calls this your ‘eligible rent‘ the amount of net rent is cut by 14% if you have one spare bedroom and 25% if you have two or more spare bedrooms. For example, if your net rent is £100 a week, you need to pay the following extra rent yourself: £14 more if you have one spare room £25 more if you have two spare rooms. If you want to check how many bedrooms you are entitled to under Housing Benefit law you can look here

Four-year benefit freezes

Four-year freeze to working age benefits whilst still protecting pensioners, and benefits related to the extra costs of disability.

Benefit Cap

Since November 2016 the Benefit Cap for families was reduced to £23,000 in London (£15,410 single claimants) and £20,000 elsewhere (£13,400 single claimants). Exemptions apply for people receiving guardians’ allowance, carers allowance and the carer’s element of Universal Credit.

No support for housing costs for under 21 year olds

18-21 year olds making new Universal Credit claims in full digital service areas will not be entitled to help with housing costs unless they fall into one of the exempt groups. These include: those with dependent children, people exempt from the Shared Accommodation rate of Local Housing Allowance, people unable to live with their parents and young people who have been working (more than 16 hours per week) for the previous six months, existing claimants will have some protection from the change.

Employment and Support Allowance (ESA)

People claiming disability benefit (ESA) will get £29.05 less every week if they’re deemed fit for ‘work-related activity’ (WRAG). They will get £73.10, the same as Jobseekers’ Allowance, instead of £102.15.
Child tax credit cut for third child born after April 2017
support provided through Child Tax Credit will be limited for some new births – if you already have two or more children any subsequent children born on or after 6 April 2017 will not be eligible for further support. You can still receive a child element for more than two children if the children were born before 6 April 2017

Bereavement Support

Three different benefits are being replaced with one new Bereavement Support Payment. It’s worth £3,500, plus £350 a month for 18 months, for claimants with dependent children (£2,500 plus £100 a month for other claimants).

Further Changes

Following the recent Budget, there have been a number of changes made to the proposed Welfare Reforms. Make sure you know how these will affect you, and what you need to do.

Universal Credit – Budgeting Advance terms extended

Currently, new claimants are able to ask for a Budgeting Advance of up to half of their personal element payment. This is a loan that is paid at the discretion of the DWP to cover any immediate bills or household costs that they would otherwise not be able to afford while they wait for their first Universal Credit payment. The loan is paid back, being taken directly from your Universal Credit payments, over 6 months for new claimants or up to 12 months for those transferring from another benefit to Universal Credit.

From January 2018, new claimants will be able to request a Budgeting Advance of up to 100% of your personal element payment. The repayments can be deferred for an agreed period of time and the repayment time has been extended to 12 months for new claimants.

This change will affect all new Universal Credit claimants. It has alleviated some of the pressure that new claimants may have felt while waiting for their first payment, with more money now available for essentials like food and bills, with an extended repayment period available.

Universal Credit – New claimant waiting period reduced

Currently it takes six to seven weeks for a new claimant to receive their first Universal Credit payment. This includes a seven-day waiting period after a claim is made for it to be processed.

From February 2018, the time between a new claim being made and the first payment being paid to the claimant will be reduced, with the seven-day waiting period being scrapped. The Department of Work and Pensions is committed to all new Universal Credit claimants receiving their first payment between four and five weeks after making their claim.

This is a further change being introduced to reduce the pressure on new claimants, as they will have less time without a source of income from Universal Credit. This will affect all new claimants of Universal Credit.

Universal Credit – 2 week Housing Benefit rollover period for new claimants

Currently, there is typically a two-week shortfall in the housing benefit element of Universal Credit, when a claimant switches to Universal Credit from other benefits. There is a six-week waiting period, with only four weeks of housing benefit being paid for this period. Claimants are expected to pay any shortfall, or subsequent arrears accrued, from other income or from the personal element of their benefit payment.

From April 2018 new Universal Credit claimants will continue to be paid housing benefit, by the Local Authority, for two weeks after the claimant begins their claim for Universal Credit. This rollover period should cover the gap in payment time, meaning that no arrears are accrued in this time.

This change has been done to resolve the issue of a shortfall in housing benefit that would have occurred. This will mean that claimants will not have to pay any rent shortfall from other income or from the personal element of their benefit payment.

Here to Help

If you need support applying for Universal Credit or on any of the points covered here, please get in touch.

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