UNIVERSAL CREDIT AND PENSION CREDIT
What is Universal Credit?
A Universal Credit is a social security benefit which was introduced in the year 2013, with the intention to replace six benefits, namely: Income Based Jobseeker’s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Income Based Employment & Support Allowance and Income Support. All the six benefits were means tested benefits i.e. means which was a way to determine whether an individual or family is eligible to sustain on their own or they would need government assistance.
Universal Credit was announced by Work and Pensions Secretary Iain Duncan Smith at the Conservative Party Annual Conference in 2010 with the intention to bring fairness and simplicity to the British Social Security System; however it was implemented in the year 2013 in stages i.e. it affects people at different times depending on where they are (location wise) and their present circumstances. The main idea behind designing this unique benefit system was to help and support people their basic living expenses and housing costs, especially those who either have low income or less income. Universal credit system is different from other benefits system because firstly, it is on a monthly payment system and secondly it is administered by one department, which is Department of Work and Pensions, unlike other benefits which are paid by a range of different departments.
Universal Credit, replaced six means tested benefits and based on your circumstances, you can claim for the same. It is a monthly payment system and your share of the universal credit will depend on your situation like your present income, how many children you have etc. In principle, there are mainly four types of conditionality for the claimants, such as if you are looking for a full-time work or if you are not able to find a full time work, if you are single or married and your age and you can claim Universal Credit if you live in England, Scotland or Wales. It is yet to be introduced in Northern Ireland and is expected to be implemented there in September 2017.
Universal Credit is payable to people who are out of work, including those who are looking for work and those who are out of work and are unable to work because of illness, disability or any other reasonable reasons. As mentioned before, Universal Benefit is rolled out in stages and your share of the same depends on the claimant group you belong to. There are basically four such groups, such as:
- Work Availability: Those who are in this group are deemed ready for worn and look actively for an appropriate opportunity. They are available for work. However, there are no limits on the number of hours you can work if you are eligible for Universal Credit.
- Work Preparation: Those who are in this group, though are not working fulltime but they are expected to prepare themselves for going into work. This group includes people with a disability and thus has a limited capability for work.
- Work-Focused Interviews: People in this group are not expected to work but are required to attend occasional work related interviews so that they are in touch with the labor market.
- No Conditionality: Those who in group, are not required to work because they are not considered to be able to work at all.
Who can claim Universal Credit Benefit?
You can claim Universal Credit, if:
- You are a single person and stay in England, Wales and Scotland.
- You are above 18 years of age.
- Your total savings is not above £16,000. In case you are working and able to earn enough to cover your housing and basic expenses or if you have earnings more than £6,000, you will still be eligible for Universal Credit but it will be lesser in value.
- You are under State Pension Age.
- You are married and stay in a certain postcode area.
- In this case, your claim for the Universal Credit should be a joint claim and your partner’s income and savings will be considered ( even if your partner is not eligible for the Universal Credit) before deciding on your share.
- In case, you have children, two or lesser than 2, you can claim for the Universal Credit depending on your postal code terms and conditions. However, couple who have 3 or more children, have to apply for Child Tax Credit before they can claim their share of Universal Credit Benefit.
- One of you must have UK National Insurance Number.
- In case both of you are entitled for Universal Credit, you will get one monthly joint payment which will be paid into a single bank account.
Who cannot claim Universal Credit Benefits?
You cannot claim Universal Credit in case you are already getting:
- Income Support
- Income-based Jobseeker’s Allowance.
- Income-related Employment and Support Allowance.
- Income-related Incapacity Benefit.
Universal Credit replaces the following:
- Income-based Jobseeker’s Allowance.
- Housing Benefit.
- Working Tax Credit.
- Child Tax Credit.
- Income Support.
- Income-related Employment and Support Allowance.
So, in case you are already getting these above benefits, your Job Centre will update you when to move to Universal Credit and as soon as you shift to it, the other benefits will stop, and at times, other benefits might stop even before Universal Credit benefits start to kick in. However, in case you do not have enough funds at your end, you can consult your local Job Centre for an advance payment and repay it once you get Universal Credit Benefit.
When Will I Be Paid Universal Credit?
In case you are claiming for the Universal Credit for the first time, it will take up to at least 7 days before you get your benefit. These 7 days are also called as waiting days and the seventh day will be the day on which your benefit will be paid to you on every month and is known as assessment date and since universal benefit is a monthly payment arrear, so it would take one calendar month from the assessment date for the benefit to reach your account. This period is also called as assessment period. After you have made your claim, it could take up to six weeks before your benefit is credited to your account. So, you must start your claim for the Universal Credit as soon as you become eligible for the same.
However, if you have applied for the universal credit benefit within the past six months, these 7 days waiting period is not applicable for you. This period is also not applicable in case:
- You are terminally ill and need funds at your end for your daily expenses.
- You are moving on to Universal Credit from another benefit.
- You are breaking up or splitting up from someone who is entitled for Universal Credit.
- You are vulnerable i.e. you have been a victim of domestic violence or are leaving a homecare or prison.
What/How Much You Will Get as Universal Credit?
How much you will get as Universal Credit depends on various factors like your present circumstances, your present income, number of children you have etc. However, there is a standard allowance allocated under specific circumstances header for universal benefit. Apart from standard allowance, you may get extra amounts depending on your eligibility.
|Your Circumstances||Monthly Standard Allowance|
|If you are single and under 25||£251.77|
|If you are single and 25 or above||£317.82|
|If you are a couple and both are under 25||£395.20|
|If you are a couple and either of you are 25 or over||£498.89|
|How Much You Will Get||Extra Monthly Amount|
|For your first child||£277.08, if born before 06th Apr 2017
£231.67, if born on or after 06th Apr 2017
|For your second child||£231.67 per child|
|In case you need help with childcare costs||85% of your costs i.e. up to £646.35 for one child and £1,108.04 for 2 or more children|
|If you have a disabled or severely disabled child||£357.78 to £649.38|
|In you are disabled and cannot work because of that||£318.76|
|If you care for a disabled person||£151.89|
Apart from standard allowance and extra amounts, you could also get universal credit to help you with your housing costs which can cover: rent, mortgage interest, some service charges, interest on a loan secured against your home. However, the eligibility for the same will depend on your present circumstances and your age.
In case you are working, your Universal Credit Benefit will reduce gradually in case you start to earn more i.e. for every £1 that you earn, your Universal Credit will be reduced by 63p and this is called as Work Allowance, which in turn will affect any money you might be getting for your housing costs.
|Your Circumstances||Monthly Work Allowance|
|If you are getting help with housing costs||£192|
|If you are not getting help with housing costs||£397|
However, in case of any change in your circumstances, whether for good or bad, should be reported to DWP at the earliest. Otherwise, chances of your benefit getting reduced or stopped are quite higher. Change in the circumstances could be anything like:
- Finding or finishing a job
- Having or caring for a child
- If your child/children were born before 6th April2017, there will be no change in the support you are getting, however if any of your child is born post 6th April 2017, you will not get any support i.e. you won’t be able to make any new claim for Universal Benefit, unless you have been getting universal credit from last 6 months and are making a reclaim or you are making a new claim as a single person because you are no longer a couple.
- A change to your address
- A change to your banking details
- Any change in your rent
- Your health conditions
How to Claim Universal Credit?
You can claim your Universal Credit online and contact the Universal Credit Helpline in case you have any questions or there is any change in your circumstances or in case you want to claim in Welsh language. After you have applied online at your local Job Centre office, you might be called for a face to face interview and the time and venue of the meeting will be informed to you. In case you are not medically fit to apply online, you can apply through alternative formats like Braille, large print or audio.
Universal Credit Helpline:
Telephone: 0345 600 0723
Textphone: 0345 600 0743
Welsh Language: 0345 600 3018
Monday to Friday, 8 am to 6 pm
What is Pension Credit?
Pension Credit was introduced in the United Kingdom in the year 2003 by then Chancellor of the Exchequer Gordon Brown with the intention to help those who are retired and are not very well to do. It was intended to supplement the UK State Pension and has two elements: Guarantee Credit and Savings Credit and you don’t pay tax on Pension Credit. However, if you are registered for Self-Assessment, you have to update the same to the Pension Service because it affects how much pension credit you will get.
Guarantee Credit: Guarantee Credit, as its name suggests, is a guaranteed, income-based credit which is paid to the applicant if his income, along with this partner’s income is below a certain level. The minimum age to claim for guarantee credit is 62 at present; however it is expected to be 65 by April 2020.
For those who are single, guarantee credit is £148.35 per week whereas for a couple is £226.50 per week.
Savings Credit: Saving Credit is an inverse means-tested benefit which means an individual will get more amounts in their savings credit if their private pension income is high. So, it is basically an additional benefit to those who are not necessarily well off but have done their part by savings or a personal pension and also they may not qualify for the full guarantee credit.
The savings credit is up to £13.20 a week for a single person whereas it is £14.90 for married couples and civil partners. In case, you have reached your pension age on or after 6th April 2016, you might not be eligible for this particular credit.
How to Calculate Pension Credit?
To calculate your pension credit, you would need following details for self and your partner, in case you have one:
- Earnings, Benefits and Pensions
- Savings and Investments
You can go to the government website to calculate your pension credit: https://pensioncreditcalculator.dwp.gov.uk/pension-credit-calculator.php
However, you cannot use the calculator, in case you or your partner:
- Are deferring your State Pension,
- Own more than one property
- Are self-employed.
When you apply for the Pension Credit your income is worked out and it will include the following:
- State Pension
- Other pensions, if any
- Social Security Benefits, if any
- Savings, Investments over £100,000
However, while calculating your pension credit following factors will not be included:
- Attendance Allowance
- Christmas Bonus
- Disability Living Allowance
- Personal Independence Payment
- Housing Benefit
- Council Tax Reduction
What is the Eligibility for the Pension Credit?
For the Guarantee Credit component of the Pension Credit, one must be a resident of Great Britain and must have reached the pension qualifying age and for the Savings Credit component, you or your partner must be of 65 years or more.
When and How to Apply for the Pension Credit?
The best way to apply for the Pension Credit is by telephone. In case you are not medically fit to make the phone call, a friend or a family member could do this for you. But it is recommended for you to be there when they are making the phone call because they would need following information during the phone call, such as:
- Your National Insurance Number
- Information about your income, savings and investments
- Your bank account details.
The earliest you can start to claim your Pension Credit is 4 months before you reach Pension Credit Qualifying age and once you reach that age, you can claim anytime , however your claims can only be backdated 3 months and in case you disagree with the money you have received as Pension Credit, you can ask for mandatory reconsideration and in case you are not satisfied after that, you can further appeal to the Social Security and Child Support Tribunal
Pension Credit Claim Line:
Telephone: 0800 99 1234
Textphone: 0800 169 0133
Monday to Friday, 8 am to 6 pm
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