Universal Credit: a checklist before claiming

What is Universal Credit?

Universal Credit (UC) is a means-tested benefit for people both in and out of work. It is replacing six social security benefits and tax credits for working-age people and families:

• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Income Support
• Housing Benefit
• Child Tax Credit
• Working Tax Credit

The Department for Work and Pensions (DWP) calls these ‘legacy benefits’.

Except for some Housing Benefit claims, it’s no longer possible to make a new claim for a legacy benefit – UC is the only option for means-tested support. This also applies to people already getting a legacy benefit whose circumstances change in a way that would previously have meant they had to claim a different legacy benefit.

Legacy benefit claimants whose circumstances don’t change can remain on their existing benefits for the time being, or choose to claim UC. If they don’t claim UC, they will remain on legacy benefits until the DWP notifies them that they need to make a claim for UC. This final stage of the introduction of UC is known as ‘managed migration’, but the DWP also calls it ‘Move to UC’.

Starting from May 2022, the DWP began sending notices to small groups of legacy benefit claimants in certain areas, as part of a ‘discovery’ phase to test approaches to managed migration. The discovery phase expanded to further areas in 2022 and 2023. Full-scale Move to UC will start in 2023/24. Tax credit claimants will be contacted first, and the DWP aims to move all legacy benefit claimants (except those only getting income-related ESA, or only ESA and Housing Benefit) to UC by the end of 2024/25. Managed migration of the remaining ESA claimants has been delayed until 2028/29.

The DWP points out that most people on legacy benefits could be better off financially under UC and wants to help people make an “informed choice” about whether to claim UC voluntarily, ahead of Move to UC. The DWP suggests people use an independent benefits calculator to check what they could get, but also says they should get independent advice before they apply.

This article outlines issues people thinking of claiming UC now might want to consider before making a claim, and links to further resources.

No return to legacy benefits

When someone claims UC, any existing legacy benefits they’re getting will stop, and they won’t be able to claim legacy benefits again. This will happen even if, having met the basic conditions, the outcome of the claim is that they are not entitled to UC.

Better off on Universal Credit?

Someone on legacy benefits could be entitled to more, or less, if they claim UC. People moving onto UC at the managed migration stage who are entitled to an amount less than their existing benefits will receive ‘transitional protection’ – a top-up so that they don’t lose out in cash terms at the point they move to UC. For people claiming UC in the meantime, however, there isn’t any such protection, unless they were getting the Severe Disability Premium.

There are online benefits calculators people can use to check what they might be able to get, but these can’t always take into account a person’s detailed circumstances. For other ways people can find out what they might get see our Commons Library constituency casework page What benefits might people claim?

Capital rules

Tax credits aren’t usually affected by any capital (such as savings) a family holds, but UC can be. Savings of more than £6,000 may reduce the amount of UC received, and no UC is paid if total savings exceed £16,000. The Commons Library constituency casework page How savings can affect benefits gives further information.

Work-related conditions

Most people claiming UC will have to meet work-related requirements as a condition of receiving benefits – this is called ‘conditionality’. This could include a requirement to look for work, or for more or better paid work, although which (if any) requirements apply will depend on the person’s situation. A claimant’s responsibilities are set out in their Claimant Commitment, which they agree with their Work Coach.

Under UC, more people will be subject to conditionality than in the legacy benefits system. Some people may become subject to work-related conditions for the first time on claiming UC. This includes people previously only getting tax credits, who were not subject to any work-related requirements.

The Citizens Advice website has a section people can use to find out which work-related activity group they’re in.

Self-employed people

Under UC, some self-employed claimants can be treated as if they earn the National Minimum Wage for the number of hours per week they are expected to work, even if they earn less than this. This is called the Minimum Income Floor (MIF), and where it applies claimants’ UC payments will be lower than if calculated on the basis of their actual earnings. There is no MIF in tax credits.

Most self-employed people moving onto UC will have a 12-month grace period during which the MIF cannot apply. But if after 12 months their earnings are less than the MIF, the MIF will apply.

When to apply

When someone needs to claim UC, it is usually best to claim as soon as possible, as it takes at least five weeks before the first payment is made. However, where someone is claiming because their job has ended, it may make sense to wait until they receive their final wages before claiming. If they don’t, the final payment of wages might reduce their first UC payment. The rules here can be complicated and someone in this situation may want to get specialist advice.

Getting advice

This article sets out only some of the issues people thinking about claiming UC – and caseworkers helping them – should be aware of. Many other factors could be relevant, depending on a person’s situation.

People can also find independent advice organisations where they are using the Advicelocal website.

Further information

GOV.UK, Understanding Universal Credit: Could Universal Credit be for you?

Money Helper, Should I switch to Universal Credit from legacy benefits such as tax credits or housing benefit?

Citizens Advice, Moving to Universal Credit from other benefits

Turn2us, Universal Credit (UC) – Switching from other benefits to Universal Credit

Child Poverty Action Group, Tax credits: moving on to Universal Credit, April 2024

Simon Osborne, Should I stay or should I go? Moving to UC, CPAG Welfare Rights Bulletin, February 2022

Low Incomes Tax Reform Group, Universal Credit

Newcastle City Council, The move to Universal Credit

Newcastle City Council, Universal Credit natural migration toolkit for advisers (PDF)

Disclaimer

The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.