Who can claim Universal Credit during the coronavirus pandemic?

The COVID-19 outbreak has meant that many self-employed businesses are facing plummeting or even no income. While the Government has set up several support packages including the Job Retention and Self-Employed Income Support schemes, there are still thousands who cannot apply for these.

However, many of these may be eligible for Universal Credit, which is a means-tested benefit to help you meet basic living costs.

If you work for an employer, are self-employed, been recently furloughed or redundant, or had a reduction in wages, you may still be able to apply for Universal Credit.

In response to the coronavirus pandemic, the Government has made some changes to Universal Credit including increasing the monthly standard rate from £317.82 to £409.89 for single people aged 25 or over and removing the ‘minimum income floor’ to help self-employed people whose income has dropped, as well as revising the allowance for private renters who need help with housing costs.

Who is eligible for Universal Credit?

If you meet any of the criteria below you may be able to claim universal credit if:

• You live in the UK
• You are aged 18 years or over (there are some exceptions if you are 16 or 17)
• You are out of work or on a low income
• You or your partner are below state pension age
• You have savings less than £16,000 - if you have a partner, their savings will count too (if you are self-employed some savings may not count if they are for business purposes, e.g. tax)
• You currently receive any of the benefits that universal credit is going to replace e.g. working tax credits, child tax credit, income support, housing benefit - and your circumstances have changed

Beware If you are presently receiving means-tested benefits such as working tax credits but are thinking of applying for Universal Credit, you need to check before you do so. You should be aware that your existing payments will stop. Universal Credit replaces these benefits and therefore you will not be able to go back onto those benefits in the future, although you could remain entitled to some Universal Credit.

How much Universal credit can you receive?

Everyone receives a standard allowance based on age and whether you are single or in a couple:

Your situation	Monthly standard allowance
Single and under 25 years	£342.72
Single and 25 years or over	£409.89
In a couple and you are both under 25	£488.59 per couple
In a couple and either of you are 25 years or over	£594.04 per couple

Universal Credit also offers some people extra help, such as:

• Housing costs - for rent, although mortgage holders can apply for a 'support for mortgage interest' loan.
• If you have an illness or disability that means you cannot work
• If you care for children
•  If you have other caring responsibilities

It is important to note that there is no fixed amount you can earn before you can receive Universal Credit. It will depend on your personal situation. Therefore, unless two people who claim have the same circumstances, they will get different entitlements and be able to earn different amounts of money before their entitlement is eliminated.

Will the amount of Universal Credit you receive be revised if your circumstances change?

While there are no strict thresholds, there are some clear criteria:

• If your income increases, your payment will reduce
• Your payment will keep reducing until you are earning enough to no longer claim Universal Credit
• If your earnings drop after this, you can claim Universal Credit again.
• It is your household income, not your own income that is considered. If your partner lives with you and is a high-income earner it is highly unlikely likely you will be eligible to claim Universal Credit.

What is counted as income?

• Salary: In a nutshell this is any money you earn from paid work. For every £1 you earn in a month, your Universal Credit entitlement will go down by 63p. However, some people will receive a special work allowance.
• Savings: If you or your partner have combined savings of more than £6,000, you will receive less Universal Credit. If your household has savings of £16,000 and over, you will not be eligible for any Universal Credit.
• Pension: If you are receiving money from a private pension and are under the state pension age, for every £1 you receive it will reduce your entitlement by £1.
• Other benefits: Several benefits are taken into account when calculating your entitlement and is considered “unearned income” and, like a pension, counts £1 for £1.

Are you self-employed and have set aside savings to pay tax?

Putting aside a third of your profits to pay tax is usually a wise move, however if you wish to claim Universal Credit, and you have that money in a personal account, you may think you will not be eligible. However, the Department for Work & Pensions (DWP) has confirmed that while it would expect business savings to be in a business account, it has stated “if someone has money in their personal account to be used for business purposes, it won’t be counted towards their capital.”

However, the DWP has stipulated that you may need to prove any savings in a personal account is for business purposes. Therefore, you make it clear in your application that your savings are business savings, and include a note stating this in your online Universal Credit journal. It should then be discounted from the calculations.

How to apply for Universal Credit

Not surprisingly, DWP’s phone lines are exceptionally busy at this time, so it is advisable to make your application online here.

However, if you need to call the Universal Credit helpline, it is 0800 328 5644.

When will you get your Universal Credit payment?

Universal Credit is assessed and paid in arrears, on a monthly basis and in a single payment. Your personal circumstances will be assessed to work out the amount of Universal Credit you will receive.

Your first assessment period will begin on the date that you make your claim and should take one calendar month.

You should receive your first payment seven days after the end of your first assessment period. Universal Credit is then paid on the same date each month. Your normal pay day will be fixed at seven days after the end of your assessment period.

If your pay day falls on a weekend or bank holiday you should receive your payment earlier – usually on the last working day before that weekend or bank holiday. If that would mean there is not enough time between the end of your assessment period and the day you are paid, the DWP will ensure you receive your payment on time.

The amount you receive will not change to take account of different numbers of days in a month.

If your payment date is on the 29th, 30th or 31st of a month and the current month has fewer days, you should be paid on the last day of the month.

Can you receive financial help now?

If you have made your Universal Credit claim but cannot manage until you receive your first payment, you may be able to get a Universal Credit advance. The amount you can borrow will be up to your first estimated Universal Credit monthly payment.

You will need to pay back your advance in instalments from your future Universal Credit payments, usually over a 12-month period.

If you wish to apply for an advance payment, you will need to:

• Tell the DWP why you need the advance
• Provide your bank details so the money can be paid if an advance is agreed
• Have had your identity checked
• Prove you will be able to pay the advance back
• Agree that you will your advance back

You can only apply for an advance online if you are within your first Universal Credit assessment period and will usually be told if you can get an advance on the same day that you apply for it.

For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information

 

Date published 21 Apr 2020 | Last updated 22 Sep 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.