Post by nickd on Jul 17, 2012 20:48:41 GMT 1
Universal Credit - an overview
What is changing?
Universal Credit is due to be introduced as a single, means-tested benefit and will replace many existing benefits. It's one of the key changes brought in by the Welfare Reform Act 2012 and its introduction will form the basis for restructuring the whole social security system. Universal Credit (UC) will be available to people under state pension credit age.
UC will be a single benefit to top-up your income if you're working age, whether you're in work or out of work, sick or disabled, or caring for children or disabled people. You’ll not lose all entitlement to UC when your earnings or hours of work increase as you do with benefit like Income Support. Instead, the higher your income is, the less your UC will be. This article explains which benefits it will replace, how it will work and the timetable for its implementation.
Which benefits will Universal Credit replace?
Universal Credit will eventually replace the following means-tested benefits and tax credits:
• Income Support
• income-based Jobseeker's Allowance
• income-related Employment and Support Allowance
• Child Tax Credit
• Working Tax Credit
• Housing Benefit
• Budgeting loans. Will be replaced by an advance payment on Universal Credit.
Work-related conditions for claiming Universal Credit
To get UC, most people will have to show they are taking some steps to prepare themselves for work. If you’re employed part time, you may have to show you're trying to increase your working hours. What you’ll need to do to show you’re trying to find work will depend on your circumstances. You will have to sign a claimant commitment to get UC. This is a record of the steps you will have to take.
You'll be able to get UC without having to prepare for work if you:
• have limited capability for work-related activity. This means the same as it does for people in the support group for Employment and Support Allowance
• provide regular and substantial care for a severely disabled person
• are the parent of a child aged under one
• are already earning the equivalent of a full-time job (35 hours per week) at the national minimum wage
• are a recent victim of domestic violence.
How will Universal Credit be calculated?
To work out how much Universal Credit (UC) you'll be entitled to, the Department for Work and Pensions (DWP) first calculates the maximum UC payment that someone in your circumstances could get. If you have no income or capital you'll get the maximum UC payment. If you have income or capital, the more income and capital you have the less UC you will get. If you have capital over £16,000 you won't be entitled to UC.
The maximum amount of UC can be made up of:
• a standard allowance for a single person (or couple)
• an amount if you're responsible for a child or young person
• an amount for housing costs, whether this is rent or a mortgage or home loan
• amounts for other particular needs or circumstances, for example, caring responsibilities or disability
• an amount for child care costs (if you're working).
Your UC payment is your UC maximum payment minus:
• 65 per cent of your earnings, although the DWP will ignore some types of earnings and applies an earnings disregard
• types of income other than earnings, for example, occupational pensions.
This means that if your income is less than the maximum UC payment you'd be entitled to, you will get UC to top up your income. If your income is more than your maximum payment, you won't get UC.
You may also get an extra amount of UC if you're transferred to UC from one of the benefits that UC replaces.
Will you get less money if you're transferred to Universal Credit?
If you're getting one of the benefits that UC replaces, you'll be transferred from your current benefit to UC at some point. If your UC is less than your current benefit, you'll be entitled to some extra UC to make up the difference, as long as your circumstances have not changed substantially. This is known as transitional protection. It is not yet clear how much extra UC you'll get under these rules or whether there will be any shortfall. The government have not yet announced which changes mean they will transfer you from your old benefit to UC without transitional protection.
How often will Universal Credit be paid?
The DWP is likely to pay Universal Credit monthly to most claimants.
Who will Universal Credit affect, and when?
From April 2013 UC will apply to new claims in the Pathfinder area of Tameside, Oldham, Wigan and Warrington. UC will be introduced gradually in other areas from October 2013. It is expected that all new benefit claims will be for UC by mid-2014.
The Department for Work and Pensions will phase out new claims for the benefits and tax credits that UC replaces between October 2013 and April 2014. New claims for Housing Benefit and Tax Credits will be the last to end in April 2014. By this date, any working age person who makes a new claim for a benefit to top-up their income will have to claim UC rather than the benefits it replaces. If you are already getting benefit but your circumstances change after UC is introduced, for example, you move into work or have a child, you will move onto UC from the date of change. The Department for Work and Pensions will transfer all other existing claimants to UC between April 2014 and 2017.
This means if you're getting any of the following benefits or tax credits, you'll transfer to UC and your benefit will end:
• income-based Jobseeker's Allowance
• income-related Employment and Support Allowance
• Income Support
• Housing Benefit
• Child Tax Credit and Working Tax Credit.
