In the recent Budget, Chancellor Rishi Sunak announced that the temporary £20 a week uplift to Universal Credit will be continued until the end of September. This is welcome news, as the increase has been a lifeline for many people during the Covid-19 pandemic.
But are there other things you need to know about Universal Credit? Let’s take a look at some common questions about Universal Credit.
Who is eligible for Universal Credit?
Universal Credit is designed to support those who are on a low income or out of work. To be eligible you usually need to be aged between 18 and State Pension age, live in the UK, and have £16,000 or less in savings.
You can check whether you are eligible by using Fair Finance’s free online benefits calculator. Simply answer a few questions about your circumstances, your household and your finances, and the calculator will provide information about whether you are entitled to Universal Credit and/or any other benefits and grants.. These are:
How do I claim Universal Credit?
If you are eligible for Universal Credit you can either apply online on the Gov UK website or call the Universal Credit helpline on 0800 328 5644.
There are also dedicated Citizens Advice Bureau helplines available for those applying for Universal Credit for the first time. The numbers are:
- England - 0800 144 8444
- Scotland - 0800 023 2581
- Wales - 0800 024 1220
How much is Universal Credit?
The amount of Universal Credit payment you receive will vary depending on your age and circumstances. Your Universal Credit payment is made up of a standard allowance which ranges from £342.72 to £594.04 per month. You may also be eligible for additional allowances, for example if you have children, have a disability or health condition which prevents you from working, or need help paying your rent.
If you are working, the amount of your Universal Credit payment will depend on your earnings. It will reduce gradually as you earn more. The amount you receive is usually calculated on the basis of a “minimum income floor”, which assumes a certain level of income (based on the minimum wage) if you are working.
However, this minimum income floor has been suspended during the pandemic, because of disruption to earnings, particularly amongst the self-employed. In the Budget it was announced that the minimum income floor will continue to be suspended until August 2021, after which it will be gradually reintroduced.
What is Working Credit? How does that relate to Universal Credit?
Working Credit - or Working Tax Credit - is an older benefit available to those already receiving Child Tax Credits. You can no longer apply for Working Tax Credit, as it has now been replaced by Universal Credit. Many people who were on the Working Tax Credit system have now been switched to the Universal Credit system, and the rest will do so by 2024.
However, for those still receiving Working Tax Credit, a one-off payment worth £500 was announced in the Budget, to equal the £20 a week Universal Credit uplift. The payment applies to all who were receiving Working Tax Credit as of March 2nd. You do not need to apply for the payment: HMRC will contact you if you’re eligible, and payment should be paid by April 23rd.
Will Universal Credit or Working Credit affect my credit score?
No. Both Universal Credit and Working Credit boost your income, whereas your credit score is focused on your debts and repayments, such as mortgages, loans and credit cards.
However, receiving one of these benefits may affect any applications you make for credit. When you apply for a loan or credit card, the bank or financial company will examine all aspects of your finances, including your income. If you are receiving Universal Credit or Working Credit, you are likely to be on a low income, which means that you may not meet the affordability criteria of the lender.
In this case, it is not the fact that you are on Universal Credit or Working Credit that prevents you from being approved for a loan, it is the level of your income.
Fortunately, there are lenders such as Fair Finance who do offer loans for people on universal credit and those on benefits. The most important thing to us is not the level of your income, or your credit score or credit history, but whether your current financial circumstances mean that you can comfortably afford the loan repayments.
We hope that the above information helps you to understand more about Universal Credit and Working Credit.
Check back here soon for more financial and lifestyle information from Fair Finance.