Myths & FAQ’s of Universal Credit

Say the words ‘Universal Credit’ and it is highly likely that you will get a negative response and confusion.

There is a lot of jargon around Universal Credit.  We have pulled together a jargon cheat sheet to help you navigate through your Universal Credit journey.

We have pulled together a list of Myths to try and help people understand Universal Credit a bit more and relieve some of the stress and anxiety often felt by people.

"My rent won’t be paid directly to my landlord anymore"

Housing costs can still be paid directly to landlords, as an 'Alternative Payment Arrangement'.

The Department for Work and Pensions (DWP) has a list of factors that they consider when looking at whether they think this would be in your's or the landlord's best interest.  More information on Alternative Payment Arrangements is available on the Citizens Advice website.

"Universal Credit will replace all of my benefits"
Universal Credit only replaces the following benefits:
  • Income Support
  • Income-related Employment Support Allowance
  • Income-based Job Seekers Allowance
  • Housing Benefit
  • Child Tax Credit
  • Working Tax Credit
There are around 38 different benefits that exist.  The most notable benefits which Universal Credit does not replace are:
  • Council Tax Support
  • Child Benefit
  • Carer's Allowance
  • Personal Independence Payment
  • Disability Living Allowance
  • Contributory Employment Support Allowance
  • Contribution-based Jobseekers Allowance
  • Attendance Allowance
"I can't claim Housing Benefit and Universal Credit at the same time"

You can get help paying for your housing if you’re eligible for Universal Credit.  This is called your housing payment and will replace any Housing Benefit claim you either currently have, or have had in the past.

There are a couple of scenarios where you might claim both Universal Credit and Housing Benefit

You cannot get Universal Credit to pay for temporary, emergency, supported or sheltered housing.  Apply for Housing Benefit through your council instead.

When will I get paid?

The date you submit your claim is the date of the month your Universal Credit payment will be paid. This is called your assessment date.

Universal Credit is paid monthly in arrears, so you’ll have to wait one calendar month from the date you submitted your application before your first UC payment is made. This is called your assessment period.

You then have to wait up to seven days for the payment to reach your bank account.

This means it can take up to five weeks before you get your first payment.

What is the work allowance?

The work allowance is the amount of money you’re allowed to earn before your Universal Credit payment is affected.

You will be entitled to a work allowance if you’re:

  • - responsible for dependent children, and/or
  • - you can’t work as much because of illness or disability.

If you’re entitled to the work allowance, you can earn up to the threshold for your circumstances.

Your Universal Credit payment will then go down by 63p for every £1 you earn above this amount. This is called the earnings taper.

If you don’t qualify for the work allowance, your Universal Credit payment will go down by 63p for every £1 on all your earnings.

Employer-paid benefits, such as Statutory Maternity, Paternity, Adoption and Sick Pay are treated at earnings and will be affected by the taper.

"I can't claim Universal Credit if I have savings"

If you or your partner have £6,000 (£10,000 if you are over state pension age) or less in savings this will not affect your claim for these benefits.

If you or your partner have £16,000 or more in savings, you will not be entitled to Universal Credit.

If you or your partner have any savings or capital of between £6,000 and £16,000, the first £6,000 is ignored.

The rest is treated as if it gives you a monthly income of £4.35 for each £250, or part of £250.

"Universal Credit can only be paid monthly"

Univeral Credit is usually paid monthly in arrears but in special circumstances, an Alternative Payment Arrangement (APA) can be set up.

Citizens Advice have produced information on this area.

“I can’t go back on my old benefits once I have claimed universal credit”

The short answer:  Generally true .... but not always so.

You cannot usually make a new claim for legacy benefits to replace your universal credit (except for some families with more than 2 children who have come off universal credit for six months, or if you or your partner have reached the qualifying age for pension credit).

“The DWP can sanction me if I don’t do something on my claimant commitment”

The short answer:  This is true ... but only if you didn't have a good reason for failing to do it.

If you don't do something that you have agreed to on your claimant commitment then you can be sanctioned for failing to meet your work-related requirements. However, this should only happen if you did not have a good reason for failing to carry out the activity. If you fail to do something, the DWP should give you a reasonable time - usually five days - to explain what the problem was. A sanction should only be imposed if the decision maker decides that you did not have a good reason.

You should be notified of any decision to sanction you and you can challenge it by mandatory reconsideration and then appeal.

“They can’t take away my rent money if I’m sanctioned”

The short answer:  It's kind of true … but it may feel like they’re taking your rent money.

Your entitlement to universal credit in respect of your housing costs is not protected, so in some circumstances, it may be used to cover a sanction.

How much is a sanction?

A sanction is usually equivalent to the standard allowance for a person or a couple of your age (it is less if you are 16 or 17, or are only expected to take part in a work-focused interview and have no other work-related requirements).

Why can housing costs be used to pay for sanctions?

If you receive less than the standard allowance in addition to your housing costs - for example because you have other income that reduces your entitlement, or the DWP are making deductions from your benefit such as for advance payments or utility arrears payments - some of your entitlement to housing costs will be withheld to cover the sanction amount that cannot be covered by what is left of your standard allowance.