Everything You Need to Know About Universal Credit

The introduction of Universal Credit completely transformed the benefits system in the United Kingdom. One payment replaced six previously existing benefits, simplifying the process of applying for and obtaining financial support for people on low incomes and those struggling to cover their living costs.

Updated: 2025-07-22

Although the change began back in 2013, it has not yet covered all claimants - according to current projections, the process will be completed by the end of March 2026. That deadline is approaching fast, which makes this a great time to familiarise yourself with the new rules and get answers to the basic questions about Universal Credit (UK): what is it, how much can you get, and who is entitled to it?

What is Universal Credit?

It is a benefit whose purpose is to provide the financial support needed to cover living costs. It is aimed at people who are:

• out of work,

• unable to work, for example for health reasons,

• working (including self-employed or part-time) but earning a low income.

UC replaces six earlier benefits:

• Child Tax Credit

• Housing Benefit

• Income Support

• income-based Jobseeker’s Allowance (JSA)

• income-related Employment and Support Allowance (ESA)

• Working Tax Credit

Moving to Universal Credit - when and on what terms?

Important information for people already receiving one or more of the benefits being replaced by UC is when and how to move from the old system to the new payment. This is necessary in two cases:

• if there is a change in your circumstances that must be reported (e.g. a change of employment, change of address, etc.),

• if you receive a letter (Migration Notice) about the obligation to move to UC.

Unless one of the situations listed above occurs, there is no obligation to move to UC on your own initiative.

Universal Credit - who is it for?

An application can be made by people who meet the following conditions:

• they live in the UK,

• they are adults (in certain situations it is possible for people aged 16 or 17 to receive UC, for example if they are responsible for raising a child, live independently, care for someone,

• who receives a benefit due to ill health or disability),

• they have not reached State Pension age,

• they have less than £16,000 in savings.

If you live with a partner in the same household, you must make a joint claim. Importantly, this is the case even if your partner does not qualify for the benefit. The decision on the award and the calculation of the UC rate will take into account your combined earnings and savings.

Universal Credit for the unemployed: Do you have to find a job?

To receive UC, you must accept a claimant commitment, that is, an agreement setting out the claimant’s obligations, the fulfilment of which is a condition of payment. This commitment may specify, among other things, a minimum weekly number of hours to be spent working, looking for work, or on activities intended to increase your chances of employment, e.g. vocational training.

Whether and to what extent this requirement applies to you depends on your personal circumstances, including your health or your responsibilities caring for a young child. For example, people who have been assessed as unfit for work are not required to be economically active.

Universal Credit: What income?

There is no upper limit on the number of hours worked beyond which you lose your right to UC. What matters instead is the level of your earnings (and your partner’s earnings) - it is on this basis that your UC rate is determined. Every £1 earned reduces the amount of benefit paid by 55p.

How is Universal Credit calculated?

UC is paid monthly, and the amount awarded depends on your situation in a given month. What matters most is the income you have received, but also whether you qualify for extra amounts, for example for a child or due to limited capability for work.

In this context, the so-called monthly work allowance is also very important: the amount you can earn in certain cases (e.g. disability or supporting a child) without it affecting the level of your UC. It is £411 for people receiving help with housing costs, and £684 where no such help is received.

Does Universal Credit count towards your pension?

People receiving UC automatically get Class 3 National Insurance credits, which count towards the State Pension.

Universal Credit: How long can you receive it?

You can receive help under UC:

• for as long as you meet the conditions entitling you to payment;

• until you reach State Pension age (for couples, until both people reach State Pension age).

Universal Credit increase - rates for 2025

Standard allowance

if you claim as a single person:

• £316.98 if you are under 25,

• £400.14 if you are 25 or over.

if you claim with a partner:

• £497.55 when you and your partner are both under 25,

• £628.10 when you or your partner are 25 or over.

The extra amounts have also been increased, e.g.:

• for the first child (born on or after 6 April 2017) and for each subsequent child - £292.81,

• for people with limited capability for work, it has risen to £423.27.

How do you claim Universal Credit?

You can claim UC online, by phone or at your local Jobcentre Plus office. Remember that to submit a claim you will need documents confirming your identity and circumstances, including earnings, childcare costs and housing costs.

Universal Credit advance - what is it and how do you get one?

If you find yourself in a situation where you need urgent help to pay a bill or other urgent costs, you can apply for an early payment. Such an advance cannot exceed the estimated amount of your first UC payment. You must repay the money received as an advance within 24 months of receiving it. Repayment takes place through deductions from your benefit payments until the full amount has been repaid.

Does Universal Credit have to be paid back?

No. UC is non-repayable financial help. However, repayment of money paid out may be necessary if:

• you were awarded too much benefit, for example because you reported lower earnings than you actually had,

• you were paid a UC advance.

In such situations, you will need to repay the overpayment and the advance.

Summary

The information above does not exhaust the subject, but it does answer the most frequently asked questions. We encourage you to contact a specialist to learn the details and check what you can expect in your situation.

Sources:

• https://commonslibrary.parliament.uk/research-briefings/cbp-9984/

• https://www.gov.uk/universal-credit

• https://www.gov.uk/government/publications/universal-credit-and-your-claimant-commitment-quick-guide/universal-credit-and-your-claimant-commitment

• https://www.gov.uk/national-insurance-credits/eligibility

• https://www.gov.uk/government/publications/benefit-and-pension-rates-2025-to-2026/benefit-and-pension-rates-2025-to-2026#universal-credit-uc-monthly-rates