Universal Credit (UC) is a monthly benefit payment for working-age people on a low income or out of work. It replaced six legacy benefits — Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit, and Working Tax Credit. The migration of remaining legacy benefit claimants to UC is ongoing, with a target of completion by March 2025 (though this has faced delays).
Who can claim Universal Credit
You may be eligible if you're aged 18 or over (some 16-17 year olds qualify in specific circumstances), under State Pension age, on a low income or out of work, have savings below £16,000, and live in the UK.
Savings between £6,000 and £16,000 reduce your UC payment — for every £250 of savings above £6,000, your UC is reduced by £4.35 per month. Savings above £16,000 disqualify you entirely, with some exceptions.
You can claim UC whether you're single or in a couple, with or without children, working or unemployed. It's designed to adapt to your circumstances, topping up low earnings or providing a basic income when you're not working.
How Universal Credit is calculated
UC is made up of a standard allowance plus additional elements based on your circumstances:
Standard allowance (monthly): Single under 25: £311.68. Single 25 or over: £393.45. Couple both under 25: £489.23. Couple one or both 25 or over: £617.56.
Child element: £333.33 per month for the first child (born before April 2017, otherwise £287.92), £287.92 for each subsequent child. The two-child limit applies to children born after April 2017, with exceptions.
Housing costs element: Covers rent (up to the Local Housing Allowance rate for private tenants) or mortgage interest (through the Support for Mortgage Interest loan scheme).
Other elements: Childcare costs (up to 85% of eligible costs), limited capability for work element, carer element, and disabled child additions.
The work allowance and taper rate
If you're working, UC doesn't simply stop. You keep a work allowance — an amount you can earn before your UC starts to reduce. If you have housing costs in your claim: £404 per month. If you don't: £673 per month. For every £1 you earn above the work allowance, your UC reduces by 55p (the taper rate).
This means working always pays more than not working — but the effective marginal tax rate can be high when you combine the 55% taper with income tax and National Insurance deductions.
How to claim
Claims are made online through the UC journal at gov.uk/universal-credit. You create an account, provide personal details, and verify your identity. You'll then have a phone call with a work coach to discuss your circumstances and agree a claimant commitment — what steps you'll take to find work or increase your earnings.
There's a five-week wait from your claim date to your first payment. This waiting period causes significant hardship for many claimants. You can request an advance payment — a loan of up to 100% of your estimated first payment, repaid from future UC payments over up to 24 months. Citizens Advice recommends taking an advance if you need it, but being aware that repayments will reduce your future payments.
Assessment periods
UC is calculated monthly, based on assessment periods. Your first assessment period starts on the day you submit your claim and runs for one calendar month. Whatever you earn in each assessment period affects your payment for that period. If you're paid weekly or fortnightly by your employer, some assessment periods may capture more paydays than others — this can cause your UC to fluctuate unpredictably.
This is a known problem with the system. If your wages for two months fall in one assessment period, your UC for that period drops significantly (or disappears), even though your actual monthly earnings haven't changed. HMRC's real-time information (RTI) system reports earnings as they're received, and UC responds accordingly.
Conditionality and sanctions
Depending on your circumstances, you'll be placed in a conditionality group that determines what's expected of you. If you're fit for work and not in a job, you're expected to search for work, attend job centre appointments, and apply for roles. Failing to meet these requirements without good reason can result in sanctions — a reduction in your UC payment for a fixed period.
Sanctions can be severe — losing your entire standard allowance for up to 182 days for the most serious breaches. If you're sanctioned and believe it's unjust, you can request a mandatory reconsideration and then appeal to a tribunal. Citizens Advice and other organisations can help with this process.
Reporting changes
You must report changes in circumstances through your UC journal — changes in income, living arrangements, address, health, or household members. Failing to report changes can result in overpayments that you'll have to repay, or underpayments that you'll miss out on. Report changes as soon as they happen.