Income Dropped

Already getting Universal Credit?

If you are already getting Universal Credit, and your wages have dropped, then that drop in income is taken into account when your Universal Credit is next assessed.

You should let your Work Coach know what is going on. If your hours have also dropped you may have to agree to a new Claimant Commitment.

There is a deadline of seven days to agree to the new Claimant Commitment and if you miss this deadline your claim will be closed.

If you are going to struggle until you receive your next Universal Credit payment, you can request a Change in Circumstances Advance, which is a loan that would be repaid over 6 months out of future Universal Credit payments.
See Need extra financial help? for more information.

Example:
Sam has had his hours cut. He was already on Universal Credit. Since having his hours cut his Universal Credit award has been higher to take account of his drop in earnings (although it doesn’t fully cover the earnings he has lost).
He keeps his Work Coach informed of what is happening at work.

Benefit Cap

If you are already on Universal Credit or claiming it because your wages have dropped, and the earnings paid in a monthly Assessment Period have dropped below £617, and your total ‘welfare’ is higher than your Benefit Cap limit, then you may find that your Universal Credit award is reduced due to the Benefit Cap.

The Benefit Cap generally only affects families with three or more children, or those with high rents.

But if you have been working for 12 months or more then you may find that the Benefit Cap should not be applied straight away if you are entitled to the ‘grace period’. This is where you have earned above a certain amount (£617 gross from April 2021; £604 gross before April 2021) in each of the 12 months prior to finishing work. In these cases the Benefit Cap should not be applied until after the ‘grace period’ – which is a period of 9 months.

If you have not earned enough or for long enough then the Benefit Cap may apply – although some claimants are exempt from the Benefit Cap anyway, due to receiving certain other benefits.

See Benefit Cap for more information.

NOTE: We have heard that if a claimant does not specifically ask for the grace period to be applied, it could be missed, as the Universal Credit computer system does not automatically apply it.

Already getting Tax Credits and/or Housing Benefit?

If you are currently getting Tax Credits and/or Housing Benefit, you might be able to stay on those benefits, but you might be better off if you claim Universal Credit. Note: once you’ve claimed Universal Credit you won’t be able to go back to Tax Credits/Housing Benefit – seek advice from a Benefits Adviser who will be able to conduct a better off calculation. 

Example:
Wendy has had her hours cut at work. She’s been getting Tax Credits. As she is still working over 16 hours a week then as a lone parent Working Tax Credit can continue in payment.
She has some rent to pay and is finding this a struggle on her reduced earnings. She has contacted a Benefits Adviser for help. The Benefits Adviser does a better off calculation for her and works out that whilst she can stay on Tax Credits she would be better off on Universal Credit as it takes account of the rent she has to pay. They discuss the pros and cons of moving onto Universal Credit.
As Wendy’s not expecting her employer to increase her hours any time soon she decides to claim Universal Credit and her Child and Working Tax Credit award stops.

Not currently getting any means-tested benefits?

As long as you meet the general eligibility criteria for Universal Credit then you can make a claim for it.
See – Who can get Universal Credit for more information.

Whether you are entitled or not, and how much you are entitled to, will depend on your personal circumstances and income.
See – How Much – the basics for more information.

Timing of the claim may be an issue if you are due some payments from work.

Example:
Imaan is single, age 24 and lives in a one bedroom social housing flat with a rent of £110 a week. She usually works full time in a Department Store but she has had her hours reduced. Her monthly wage has dropped from £1,255 to £1,071.
She didn’t think she could make a claim for Universal Credit – that it was just for people without jobs – but her Income Officer explained that it’s for working people too. She’s just received her first payment – £152.92

WARNING: There are many scams…..people trying to get you to tell them your bank account details. If you receive a call from someone saying they work for the DWP and asking for your bank account details, ask the caller to post a specific form of words into your Universal Credit journal so you can be sure it’s them.

The DWP regularly produce guidance or introduce new measures that may change the information on these pages. Please check back regularly for updates on the arrangements the DWP is making to support those who are affected by Coronavirus.