What is Universal Credit?
People living in England, Scotland or Wales, inside one of the trial areas may already be receiving this payment. Those in Northern Ireland will be able to apply when it’s officially rolled out in September of this year.
How much you can claim depends on your individual circumstances, such as age, whether you have children and your relationship status. You may even be able to receive extra support on top of your standard Universal Credit allowance if you meet the eligibility criteria.
What benefits are being cut?
So what tax credits and benefits are included in Universal Credit?
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income support
- Housing benefit
- Child Tax Credit
- Working Tax Credit
How do I apply?
To apply for Universal Credit you’ll need to complete the form online - you’ll also be able to join your partner’s claim if you wish. You’ll need to have a complete overview of your financial circumstances so that your claim is as accurate as possible. So, before you start the application make sure you’ve got:
- National Insurance number
- Details of bank account the Universal Credit will be paid into
- Rent agreement
- Details of any savings
- Details of any income not from work
- Your current benefits
- Details of your children and their Child Benefit numbers
The process can take up to 40 minutes to complete and if you’re accepted, the first payment can take up to 7 weeks to be paid into your account.
Does the Universal Credit system work?
An analysis by Citizens Advice highlighted that over half of those who had made a Universal Credit claim were looking for financial help while they waited to receive the money. Meanwhile, almost a third of applicants needed to make 10 or more calls to the helpline whilst completing the online application according to The Guardian . With such a huge number of calls, waiting times often increased to at least half an hour.
MPs joined together to express their concernsover the current Universal Credit system, pleading that the plans should be delayed. However, this hasn’t had much of an impact and there is likely to be a sudden surge in applicants later this year when it’s rolled out further. This could leave many with a cashflow crisis if the government can’t solve its teething problems.
I’m waiting for my Universal Credit payment - what should I do?
If you’re sitting through the 7 week wait for the Credit payment, you might be worried about falling into debt. But you can apply for a government-backed loan that can be repaid through your Universal Credit payments. The ‘Budgeting Advance’ has been put in place to help people pay for emergencies. However, it means that you’ll receive a lower monthly payment when you finally get the Universal Credit, until you’ve paid off the cost of the advance. Some people are also applying for payday loans, but this is not recommended as a borrowing option if you’re on benefits or unemployed. If you’re thinking of applying for a Budgeting Advance, you must have...
- been getting Universal Credit, Employment and Support Allowance, Income Support, Jobseeker’s Allowance or State Pension Credit for 6 months or more, unless you need the money to help you start a new job or keep an existing job
- earned less than £2,600 (£3,600 together for couples) in the past 6 months
- paid off any previous Budgeting Advances
How to prepare for Universal Credit
Paying off a loan when you’re already struggling to cope isn’t a great idea, so try to find better alternatives before taking out a loan (read our guide on Borrowing with Bad Credit for some tips). If you know you’re going to be applying for Universal Credit then you could start trying to set aside some funds in advance to cover yourself over the wait period. If you’re in a job, consider requesting overtime, or work more hours to push up your income.
However, if your only option is taking out a loan, then do make sure that you are finding the best option for you and aren’t applying for more than you can pay back. Taking on debt will affect your credit score, even if it’s only a small amount such as a payday loan.