What is Universal Credit?

Universal Credit (UC) is a monthly payment from the government for people who are on a low income or out of work. It replaced six older benefits: Income-based Jobseeker's Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Income Support, and income-related Employment and Support Allowance.

UC is paid monthly and is administered by the Department for Work and Pensions (DWP). You apply online and manage your claim through a Journal system on the GOV.UK website.

How Universal Credit is calculated

UC is built up from several elements. The Standard Allowance is the base payment — currently around £311 per month for a single person under 25, £393 for a single person 25 or over, or £617 for a couple with at least one person 25 or over (figures subject to annual review).

On top of this, additional elements can be added for: a child or children; childcare costs; limited capability for work; caring responsibilities; housing costs (if you rent). Each element has its own rules and amounts.

How earnings affect Universal Credit

The Work Allowance allows you to earn a set amount before your UC starts to reduce. If you have children or a housing element, the Work Allowance is higher. If you do not, it may not apply.

Above the Work Allowance, for every £1 you earn, UC is reduced by 55p. This means you are always better off earning more — but it also means UC tapers down as income rises.

The five-week wait

When you first claim UC, there is typically a five-week wait before your first payment. You can request an advance payment during this period — it is a loan that is repaid through deductions from future payments.

If you are in hardship during this wait, Citizens Advice or your local council may be able to help with emergency support.

Transition from old benefits

If you are still on the older legacy benefits (such as Tax Credits or Housing Benefit), you will eventually be migrated to Universal Credit. The DWP sends Migration Notices with deadlines. Do not ignore a Migration Notice — seek advice before the deadline.

Citizens Advice and Turn2us can both help you understand how moving to UC will affect your income before you apply.