Date last updated: 19 October 2017

What is universal credit?

Universal credit is a new benefit system that is replacing many of the current benefits and tax credits. It is for individuals and families of working age whether they are in work or not working.

Why is universal credit being introduced?

Universal credit is being introduced to simplify the benefits system. At the moment there are separate benefits for different purposes, such as child tax credits which help meet the costs of raising a child, and housing benefit to help with the costs of rent. Universal credit is a single payment intended to meet the different types of costs.

What’s changing?

Compared with the current benefit system, universal credit is different in a number of ways.

The main changes for most people are:

  • It is a single benefit payment
  • It is paid monthly into a bank account
  • You claim it online
  • You have your own online account
  • There are changes to who can get help with childcare costs
  • If you’re working and paying tax through the PAYE system your benefit is calculated on income figures your employer sends to HMRC
  • You don’t have to tell the Department for Work and Pensions (DWP) about every change in income
  • Money for your rent is paid directly to you and not to your landlord in most cases
  • Some expenses for example childcare will need to be updated regularly on your account (monthly).

Universal credit is paid in one monthly instalment into a bank account. If you don’t already have a bank account then you will need to open one. The Money Advice Service has information on how to open a bank account, and what you’ll need. The Money Advice Service can also help you with budgeting and managing your money monthly.

What to do now

There are things you can do now – if you’re not already doing them – to help get prepared for universal credit. See the Gingerbread guide to getting ready for universal credit.

Remember to check back

We will be updating this information on universal credit as and when the details become available. Do check back from time to time for updates. We will also alert you to new information in our membership newsletter.

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