Universal Credit

Universal Credit is a new means tested benefit for people of working age who are looking for work or are in work and on a low income.

How will it be paid?

It is paid as a single monthly payment and replaces the following benefits which are gradually being phased out:

  • Income-based Jobseeker's Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Child Tax Credit
  • Working Tax Credit
  • Housing Benefit

So if you're using different benefit payments to cover your expenses you may need to consider how to budget a single payment to cover everything.

You'll also need to have a bank or building society account, or an account with an alternative provider like a credit union for your money to be paid into.

To help you prepare for the change the Money Advice Service have put together lots of useful information including advice on choosing a bank account and help with budgeting.

Childcare element of Universal Credit

The benefit also has a childcare element to help parents cover childcare costs. This will enable eligible parents to claim up to 85% of their childcare costs up to a maximum of £646.35 (85% of £760.42) per month for one child and £1,108.04 (85% of £1,303.57) for two or more children. Any costs that you pay in excess of these amounts are not used in the calculation.

To be eligible you (and your partner if you live with them) will usually need to both be working or have accepted a job offer that is due to start before the end of your Assessment Period.

In addition the childcare you use must be registered with Ofsted but can include childminders, day nurseries, pre schools, breakfast clubs, after school clubs, out of school activity clubs and holiday playschemes.

If you choose to claim the Childcare element of Universal Credit you will not be able to use Tax-Free Childcare at the same time. However, it is possible to move between the schemes if your circumstances change at a later date.

You may also be able to claim Funded early education for two year olds (FEET) until your child becomes eligible for Funded early education and childcare 3 and 4 year olds. Once your eligibility has been confirmed by the FEET team you can continue to receive the funding even if your circumstances change and you no longer meet the qualifying criteria.

Further information

You can find further information about Universal Credit on the Gov.uk website or phone their helpline on 0345 600 0723.

Subscribe to our newsletters for latest news and events.