Is claiming UC the best option?
When someone loses their job, or sees a drop in their income, the automatic response seems to be ‘claim Universal Credit’.
However this may not always be the best option.
If you are already getting any of the benefits Universal Credit replaces – in particular Tax Credits and/or Housing Benefit – then you may be better sticking with these ie staying on the ‘legacy benefit’ system. This is especially true if your income is only dropping for a few weeks.
This is because:
- Your Tax Credit award can continue: for 4 weeks if you’ve lost your job, or for as long as the Job Retention Scheme / Self-Employed Income Support Scheme is in place (even if you are not part of these schemes) if the drop in your wages/hours is only going to be a temporary thing.
- Any Housing Benefit you are getting can be reassessed to take account of your lower income.
- If you make a claim for Universal Credit any Tax Credits and/or Housing Benefit you are currently receiving will stop (although you may be entitled to a two week run-on of Housing Benefit).
- You will then have to wait around 5 weeks before your first payment of Universal Credit.
- If you make a claim for Universal Credit then you can receive an Advance Payment, but this is a loan that needs to be repaid.
- For some people Universal Credit pays less than the Tax Credits and/or Housing Benefit they have been getting and so you could find that in the long run you end up worse off.
- More deductions for debts can be taken from a Universal Credit payment than from a Tax Credit or Housing Benefit payment – these will reduce how much you receive every month. Although some repayments have currently been suspended, these will start back again in the future.
- If you do find yourself worse off there’s no going back!
However if you are going to struggle financially then claiming Universal Credit may be the only option you realistically have.
Janet’s hours have been reduced at work, her wages have dropped and she’s wondering how she is going to manage to pay her rent. She’s been told to claim Universal Credit – but she’s not sure she is entitled as she is still in work.
Universal Credit is not just for those out of work – so Janet can claim. Whether this is her best option depends on whether or not she is currently getting any of the benefits Universal Credit replaces – in particular Tax Credits and/or Housing Benefit.
If she is not currently getting any of the means-tested benefits, then she may have nothing to lose by making a claim for Universal Credit. Whether she is entitled – and how much she will receive – will depend of her income, savings and personal circumstances.
If she is already getting Tax Credits and /or Housing Benefit, then she may be better off staying on these in the long run. She should seek advice from a Benefits Adviser.
Making a new claim for Universal Credit
You should make a claim for Universal Credit in the normal way.
See How do I claim? for more information
But you will not be required to attend the Job Centre:
- New claim interviews will be conducted over the phone.
- If you cannot verify your ID online, then leave a message on your journal and the DWP will call you and verify your ID over the phone instead.
- If you need an Advance Payment you can apply for this online – but you will normally have to verify your ID before a payment can be made.
Your Job Centre will know you have applied online: they will call you if they need to confirm any information with you in order to progress your claim.
Rashid made a claim for Universal Credit when he was finished at work.
He claimed online and received a phone call from the DWP the following day, who took him through his claim and he provided them with evidence of his rent, a photo of his passport and his final pay slip.
He did not need to attend the Job Centre – everything was sorted out over the phone.
IMPORTANT: Some claimants finishing work may be better delaying making the claim where they are due some final earnings/holiday pay etc. shortly after finishing work – see What if I finish work for more information.
The Claimant Commitment
Due to the Coronavirus outbreak, all work search requirements have been suspended, as has the requirement to be immediately available for work. This is the case up to the end of June 2020 (and could be extended).
But you will still need to agree a Claimant Commitment.
See What is the Claimant Commitment for more information.
And you may still be required to undertake some work related activities – so keep checking your journal and complete any tasks given or explain on your journal why you are not able to complete them.
See What do I have to do? for more information.
Colin and Sandra made a claim for Universal Credit when Sandra lost her job.
Although Sandra is fit for work and has no caring responsibilities she is not currently expected to look for work. She has agreed with her Work Coach to prepare a CV and make a list of the businesses she can send this to as soon as the Coronavirus outbreak is over. This has been included in her Claimant Commitment and if she fails to do this she could be sanctioned (which would mean Colin and Sandra’s Universal Credit payment being reduced for a period of time).
At some point in the future her Claimant Commitment will be changed – it will probably state that she has to spend 35 hours a week looking for work and what is expected of her to do this. She will be given 7 days to accept this new Commitment online, otherwise Colin and Sandra’s claim for Universal Credit will be closed.
I need help paying my rent
A Universal Credit award can include an amount towards your rent – called a Housing Costs Element.
See Help with your rent for more information.
If you are awarded some Universal Credit and it includes a Housing Costs Element then you may also be able to get additional support towards your rent through the Discretionary Housing Payment scheme.
See Discretionary Housing Payments for more information.
Melanie made a claim for Universal Credit when her hours dropped at work. When her Universal Credit is assessed it includes a Housing Costs Element which means that it is taking account of the rent she needs to pay.
She is still struggling though as she lives on her own in a two bedroom flat and so her Housing Costs Element is reduced by an Underoccupancy / Bedroom Tax reduction. Her Income Officer has advised her that she could make a claim for a Discretionary Housing Payment from her local Council – she will need to explain why she is struggling to pay her rent.
What if I’m not entitled?
If you’re not entitled to Universal Credit then there may be other benefits that you could be entitled to – it all depends on your circumstances.
Universal Credit is a means tested benefit, so there are rules about your savings and income. And Universal Credit takes account of any partner’s savings as income too.
If you’re not entitled because your savings / income is too high then you may still be entitled to other benefits – such as Statutory Sick Pay, New-Style Employment and Support Allowance, New-Style Jobseekers Allowance, Carers Allowance.
So do speak to a Benefits Adviser.
Steve and Belinda live with their two children in a two bedroom rented house. Up until March they were both working but Belinda has just been finished at work. Due to Steve’s earning they are not entitled to any Universal Credit. But Belinda had been working for 5 years (since her youngest started school) and so she has been awarded New-Style Jobseekers Allowance – this will give them an extra £74.35 a week for a maximum of 6 months.
IMPORTANT: The DWP phone systems mean calls from them should display as 0800 232 635 but may display as other 0800 numbers, or an unknown number. If you get a call from an unknown number following a message in your UC account, answer the call as it’s likely to be DWP.
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.