Free Lone Parent Helpline 0808 801 0323 helpline@opfs.org.uk Universal Credit January 2018 This factsheet contains information on universal credit which was introduced in October 2013 to replace six of the main income related benefits currently in use. Note: This factsheet is for single parents. The regulations for couples and single people may differ from those given here. Universal credit is part of a radical reform to simplify the welfare benefit system. It is administered by the Department for Work and Pensions and replaces income support, income-based jobseeker s allowance, income-related employment and support allowance, child tax credit, working tax credit and housing benefit which are now known as legacy benefits. Who can claim Universal credit can be claimed by people, both in and out of work, usually between the ages of 18 and 65 (the upper age limit will increase in line with the qualifying age for state pension). Some 16 and 17 year olds can claim, depending on their circumstances, including single parents and pregnant women within 11 weeks of the expected date of delivery. Live and Digital services There are two universal credit services; the live service where a claim is made online but there is no on-line account yet and the newer full service, where a claim is made and managed online. Only people who meet the gateway conditions can claim universal credit under the live service. The gateway conditions vary across local authorities. Generally these include not having children, not being pregnant, not being considered to be in work, not being homeless and not being in receipt of any other benefit (including disability benefits). Couples and families (including single parents) can only claim through the full service. Universal Credit January 2018 1
Timetable for introduction The universal credit live service is now active throughout Scotland for new benefit claims. At present the only local authorities where you can claim universal credit as a family, i.e. where the full service is active, are: Angus Clackmannanshire Dundee City East Ayrshire East Dunbartonshire East Lothian Fife Highland Inverclyde Midlothian Council (Dalkeith and Penicuik) North Ayrshire South Lanarkshire Stirling The full service is expected to be available throughout Scotland in the following order: February: South Ayrshire March: Falkirk April: North Lanarkshire May: West Lothian, Dumfries and Galloway June: Aberdeenshire, Scottish Borders, Moray, Perth and Kinross September: Shetland Isles, Orkney Isles, Eilean Siar (Western Isles), Glasgow City (Govan, Laurieston and Newlands), Argyll and Bute, East Renfrewshire and Renfrewshire October: City of Edinburgh, Aberdeen City, Glasgow (Partick and Springburn), West Dunbartonshire December: Glasgow (Castlemilk, Drumchapel and Shettleston) People already in receipt of legacy benefits will be transferred to universal credit from 2019. How to claim Once you are on universal credit you will usually remain on it even if you move to another local authority or become part of another client group. Claims can only be made by filling in a form online and will only be accepted by phone, or in person, if you are unable to use a computer. All further contact regarding the claim, such as reporting a change of circumstances, must be done by phone or online. Jobcentre Plus offices have installed computers for the public and are offering support to use them for those who need it. Apply for universal credit online: XX www.gov.uk/apply-universal-credit If you are having difficulty filling out your online application you can contact the Universal Credit Helpline (see Useful contacts) Universal Credit January 2018 2
Reporting a change of circumstance If you have a change of circumstance that could affect your entitlement to universal credit you need to report it. HMRC informs the Department for Work and Pensions of monthly earnings so only those who are self-employed need to report this. If you are in a live service area changes need to be made by calling the universal credit helpline on 0800 328 9344. Claimants in a full service area need to give changes on-line via their universal credit account. In order to avoid an overpayment, a fine or losing out on money, it is important to report changes as soon as possible. Contact the Lone Parent Helpline for more information. How payments are made The first payment of universal credit is made up to 7 days after a one month assessment period. There may also be an additional 7 days waiting period * depending on circumstances. It is usually paid monthly, in arrears, into your bank account but you can request that it be paid twice monthly after you have received your first payment. You can also request that any amount you receive for housing costs be paid directly to your landlord by calling the Universal Credit Helpline (see Useful contacts). Universal credit can be backdated one month. If you don t have a bank account you can collect your payment from some Paypoints using a Simple Payment Card. Advance Payments You can ask for an advance payment of universal credit if you cannot afford to wait five weeks until the first payment. You can call the Universal Credit Helpline (see Useful contacts) and ask for, up to, the full first month s payment upfront. This will need to be repaid over a 12 month period from your future payments. Capital limits If you have savings or capital over 16,000, you will not get universal credit. If you have savings or capital between 6,000 and 16,000, your universal credit award will be reduced by 4.35 (per month) for every 250 your capital exceeds 6,000. * From February 2018 you will not have to wait as long for your first payment of universal credit. The first seven waiting days will no longer apply so you will only wait five weeks, instead of six, from when you claim until you get paid. Universal Credit January 2018 3
How universal credit is calculated The amount of universal credit you receive depends on your circumstances. A maximum amount will be calculated by adding together the individual elements you are entitled to (see Table 1: Universal credit elements, below). This will then be reduced depending on any income you have. If you have no income, you will be paid the maximum amount. Two Child Limit The child element of universal credit is now only paid for two children. If you have more than two children you cannot make a new claim for universal credit until after 31 October 2018 even if you live in a full service area. You will have to claim tax credits instead. If you already receive universal credit and have more than two children you will get universal credit for all of them but only until 31 October 2018. If you have two, or more, children and have another child, born after April 6 2017, you will not get universal credit for the new baby. After 31 October 2018 your universal credit will be reduced so you will get it for only two children no matter when they were born. Exceptions apply where a third or subsequent child has been adopted, there is a kinship care arrangement or the child was conceived as a result of rape. If your third or subsequent child has a disability you will receive a disabled child element but not the child element. Help with childcare costs is paid for all children. See https://www.gov.uk/guidance/universal-credit-and-families-with-more-than-2-childreninformation-for-claimants for more details. Income Any income you have will be taken into account for universal credit. Earned income, including wages from employer, statutory sick, maternity, paternity and adoption pay, will be subject to the work allowance and taper (see below) in the universal credit calculation. Unearned income, including carer s, bereavement and widowed mothers/parents allowances, is subtracted pound for pound from a universal credit award. Some income, such as disability living allowance, personal independence payments and maintenance paid for children, is disregarded completely. Universal Credit January 2018 4
Table 1: Universal credit elements Standard allowance per month Single claimant under 25 251.77 Single claimant 25 or over 317.82 Limited capability for work and work related activity 318.76 Child element per month Child or qualifying young person 231.67 Disabled child or qualifying young person lower rate 126.11 Disabled child or qualifying young person higher rate 372.30 Childcare costs element Maximum amount for one child Maximum amount for two or more children Carer s element per month (85% of 760 limit) 646.35 (85% of 1,300 limit) 1,108.04 per month Carer s element 151.89 Housing cost element An amount equivalent to eligible rent or mortgage interest payments. Only claimants who are not working will receive help with mortgage interest payments. There is a waiting period of 39 weeks before it is added. Note: Prior to April 2017 there was an additional amount for people with limited capability for work. This has been abolished. Anyone already in receipt of this amount will have transitional protection and continue to get it. Universal Credit January 2018 5
Case study: Jenny Jenny is a single parent of two children aged four and nine. Her four year old gets disability living allowance high rate care. She is not working but gets carer s allowance which is treated as unearned income so reduces her maximum universal credit award pound for pound. She is entitled to help with the full amount of her rent of 477 per month. Calculate maximum universal credit: Standard Allowance 317.82 Child Element + 231.67 Child Element + 231.67 Disabled Child Element high rate + 372.30 Carer s Element + 151.89 Housing Element + 477.00 Maximum universal credit 1782.35 Adjust for unearned income: Jenny has unearned income (carer s allowance) which reduces her maximum award pound for pound: Maximum universal credit 1782.35 Unearned income 271.70 universal credit award 1510.65 Jenny will receive a universal credit award of 1510.65 per month. She will also receive child benefit, carer s allowance, disability living allowance for her daughter and help with council tax. Universal Credit January 2018 6
The work allowance and taper If you are working part of your income will be ignored when calculating your universal credit entitlement. This disregarded amount is called the work allowance. There are two work allowances that apply to single parents: Lower work allowance 192 Higher work allowance 397 Lower work allowances are for claimants with housing costs added to their maximum universal credit calculation. Higher work allowances are for claimants with no housing costs added to their maximum universal credit calculation. Maximum universal credit will then be reduced by 63p for every pound (63% taper) of income above the work allowance. Universal Credit January 2018 7
Case study: Marc Marc is a single parent of two children aged six and eight. He works 20 hours per week earning 823.77 (net) per month and pays 433 per month for registered childcare. He has a mortgage but has no eligible housing costs as he is working. Calculate maximum universal credit: Standard Allowance 317.82 Child Element + 231.67 Child Element + 231.67 Childcare Element (85% of 433) + 368.05 Maximum universal credit 1149.21 Calculate eligible income: Marc has an earned income of 823.77, which will reduce his maximum award. Only income over the work allowance will be taken into account. He will get the higher work allowance as he has no eligible housing costs. Earnings 823.77 Higher Work Allowance 397.00 Eligible income 426.77 Apply 63% taper to eligible income: The 63% taper is applied to this amount and the result taken from the maximum universal credit to give the final universal credit award. Eligible income 426.77 Apply 63% taper 63% Tapered eligible income 268.86 Deduct tapered eligible income from maximum universal credit: Maximum universal credit 1149.21 Tapered eligible income 268.86 universal credit award 880.35 Marc will receive a universal credit award of 880.35 per month. He will also have his earnings, child benefit and can apply for help with council tax. As Marc is working he will not receive any help to pay his mortgage. Universal Credit January 2018 8
Transitional protection If you move from legacy benefits to universal credit, you will not suffer a drop in income if the amount of universal credit is less than you were receiving before the transfer. However, the payment you receive will not be up-rated each year, but will stay the same until it is equal to universal credit, which will be increased annually. If you are moved from legacy benefits to universal credit because of a change of circumstances, you will not get this transitional protection. If you report a change of circumstances while receiving universal credit, you will lose any transitional protection you had. Self-employed claimants If you are self-employed, you will have to report your earnings (i.e. profit after deductions and expenses) to the Department for Work and Pensions every month. This information will then be used to calculate entitlement to universal credit. A maximum universal credit award will be made for each month, during the first year of self-employment, where no profit is made. After this start-up period an income will be assumed based on minimum wage at the number of hours you are expected to work Self-employed people have the option to carry forward losses to the next month for up to 11 months, allowing for earnings to be evened out through high and low periods. However the minimum wage level will still remain. The number of hours you are expected to work is based on your individual circumstances. Claimant commitment and conditionality Some claimants of universal credit will have a responsibility to take certain steps to find employment or to increase their earnings. In order to receive universal credit you must sign a claimant commitment stating what these steps are and that you will complete them. These work related requirements include: In order to receive universal credit you must sign a claimant commitment stating what these steps are and that you will complete them. These work related requirements include: Work-focused interviews: interviews to discuss what you are doing to find work or increase your earnings and what support you might need. Work preparation: actions, such as courses or classes, you must undertake to improve your chance of employment. Work search: steps to find job vacancies. Work availability: being willing and available to start work immediately. You will be placed into one of four conditionality groups depending on your circumstances. The group you are in will dictate the requirements you need to fulfil in order to receive universal credit. The groups are: No work related activity requirements: claimants in this group include those who are working and have an income above the earnings threshold (for single parents this is 16 x the national living wage), have limited capability for work related activity (i.e. those who were in the support group of employment and support allowance), are in receipt of the carer s element of universal credit or caring for a severely disabled person for at least 35 hours per Universal Credit January 2018 9
week, are pregnant and within 11 weeks of the expected date of delivery or are responsible for a child under one year old (single parent or the main carer in a couple). Therefore single parents with a baby under one year old are not expected to undertake any work-related activity in order to receive universal credit. Work focused interviews only: single parents (or the main carer in a couple) with a youngest child of one year are included in this group unless they also have other caring responsibilities. Work preparation: this group includes single parents with a child aged two and claimants with limited capability for work (i.e. those who were in the work group of employment and support allowance). All work related activity (full conditionality): everyone who does not fit into one of the above groups will be included here. Single parents with a child three and over will be in this group. Most claimants in this group will be expected to spend 35 hours per week looking for work or taking part in activities that improve their chances of getting a 35 hour per week job. Single parents with a child under 13 years can restrict the hours they are available for work, and the hours spent looking for work, to their child s school hours. In all groups there are certain circumstances where requirements may be waived for a limited period. Circumstances include where you have suffered illness, abuse, bereavement or you have sudden, unexpected, childcare responsibilities. Sanctions A sanction is a penalty imposed if you don t fulfil the conditions of your claimant commitment. The level of sanction applied depends on the conditionality group the claimant belongs to, the activity they failed to complete and the number of times the claimant failed. There are four sanction levels; high, medium, low and lowest. If you are subject to high, medium or low level sanctions, you will lose an amount equal to the standard allowance of your universal credit for the duration of the sanction. If you have a child under three years, you will lose an amount equal to 40% of the standard allowance from your universal credit. However if you are a single parent in the work focused interview only conditionality group, you will only lose 20% of your standard allowance if sanctioned. Universal Credit January 2018 10
Table 2: Universal credit sanction durations Sanction High Level e.g. Failure to take up an offer of paid work. Medium Level e.g. Failure to undertake all reasonable action to obtain work. Low Level e.g. Failure to undertake particular, specified work preparation action. Lowest Level i.e. Failure to participate in a work-focused interview. Applicable to Claimants subject to all work-related requirements. Claimants subject to all work-related requirements. Claimants subject to all work-related requirements. Claimants subject to work preparation and work-focused interview requirements. Claimants subject to work-focused interview requirements only. Duration 1st failure Duration 2nd failure Duration 3rd+ failure 91 days 182 days 1,095 days 28 days 91 days 91 days Open ended until re-engagement plus: 7 days 14 days 28 days Open ended until re-engagement. Hardship payments If you, as a result of a sanction, are unable to meet the costs for food, heat, housing and hygiene, you may be entitled to a hardship payment of 60% of the standard allowance of universal credit. Any hardship payments received must be repaid from universal credit once the sanction has been lifted, unless you move into work and earn more than your earnings threshold. In this case the recovery of hardship payments will be suspended and written-off if the employment continues for at least six months. Free school meals and passported benefits If you receive universal credit, you are entitled to free NHS dental treatment, vouchers towards glasses or contact lenses and help towards the cost of travel to hospital for treatment. You are also entitled to free school meals for your children if your earnings are below 610 per month. Universal Credit January 2018 11
The benefit cap The benefit cap is a restriction on the total amount of benefit a non-working household can receive. The limit has been set at 385 per week ( 1,667 per month) for a couple or single parent household and 258 per week ( 1,117 per month) for single claimants. Benefits included in the cap are bereavement allowance, child benefit, child tax credit, contributionbased employment and support allowance, jobseeker s allowance, maternity allowance, universal credit, widowed parent s allowance and widow s benefit. All relevant benefits will be added up and any amount over the limit will be deducted from universal credit. Households where monthly earnings from employment total at least 520 (16 hours p/w at National Living Wage), where someone receives carer s allowance, the carer s element in universal credit or has an underlying entitlement to them, is in receipt of war widow or widowers pension, disability living allowance, personal independence payments, attendance allowance, industrial injuries benefits, guardian s allowance the support component of employment and support allowance or the limited capability for work and work related activity element of universal credit are exempt from the cap. If you are subjected to the cap, you will have a grace period of nine months (before it is applied) if you have earned over 520 per month in each of the previous 12 months. Useful contacts Universal Credit Live Service Helpline: 0800 328 9344 (Open: Monday - Friday 8am - 6pm) Universal Credit Full Service Helpline: 0800 328 5644 (Open: Monday - Friday 8am - 6pm) www.gov.uk/universal credit Supporting and inspiring single parent families across Scotland For further information about OPFS or our services, please contact: One Parent Families Scotland, 13 Gayfield Square, Edinburgh EH1 3NX Tel: 0131 556 3899 Email: info@opfs.org.uk Helpline: 0808 801 0323 Helpline Email: helpline@opfs.org.uk Visit our website at More help from OPFS You may also be interested in these related information packs available from OPFS: Separation and Divorce Money for Single Parents Going Back to Work Call the helpline on 0808 801 0323, or download them from. One Parent Families Scotland is a charitable company limited by guarantee. Registered at Edinburgh, No. 094860. Registered Scottish Charity No. SC006403.