Everything You Need To Know About the Universal Credit

Over the last few months you have probably read about the introduction of the Universal Credit. This is the biggest change to the welfare system since the 1940s and will combine working tax credit, child tax credit, housing benefit, income-related employment and support allowance (ESA), income-based jobseeker’s allowance (JSA) and income support.

But, what do the changes mean? And how do they affect you? Keep reading our simple guide to find out.

Who will universal credit affect?

Universal credit will affect you if you receive one of the six benefits above. This will affect millions of people, as the chart below shows:

Why is the tax credit and benefits system changing?

The government believe that the benefits system currently provides few incentives for people to return to work. So, their aim is to create a greater incentive to take a job and reduce the number of homes where no adults work.

The changes are also designed to make the system easier to understand and simpler to administer – aving money in the process.

How is universal credit different to the existing system?

One of the main changes that the new universal credit will bring is that you will be required to apply online and manage your claim through a web based account.

It will also merge various out of work and in-work benefits and is designed to provide an incentive to claimants to take a job.

Another change is that universal credit payments will be made on a monthly basis, into your bank account. And, support with housing costs will be paid to you with your monthly payment, not directly to your landlord.

When will universal credit come into effect?

Universal credit is scheduled to start with new claims from unemployed people in October 2013. If you are in work, the process will begin in April 2014. The remainder of current claims will be moved to universal credit from 2014, with the process being complete by 2017.

Does it replace all benefits?

No. A large number of benefits remain, including:

• Carer’s allowance

• Contributory Employment and Support Allowance

• Bereavement benefits

• Industrial injuries disablement benefit and war pensions

• Child benefit and guardian’s allowance

• Social fund maternity, funeral, winter fuel and cold weather payments

• Other benefits such as free school meals or free prescriptions to which claimants on certain other benefits and/or tax credits are automatically entitled

Is the Universal Credit going to affect you? Please share your thoughts/concerns in the comments below.

Leave a comment