Free Lone Parent Helpline 0808 801 0323 helpline@opfs.org.uk Universal Credit November 2016 This factsheet contains information on universal credit, 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 of Work and Pensions and replaces income support, incomebased 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 and the newer 'digital' or 'full' service. 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. Timetable for introduction The universal credit live service is now active throughout Scotland for new benefit claims. At present the only local authoriies where you can claim universal credit as a family, i.e. where the full service is active, are: z Highland z East Lothian z Perth z Inverclyde z East Dunbartonshire. The full service is expected to be available throughout Scotland by September 2018. People already in receipt of legacy benefits will be transferred to universal credit between July 2019 and March 2022. Universal Credit November 2016 1
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 also be done 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: ffwww.gov.uk/apply-universal-credit If you are having difficulty filling out your online application you can contact the helpline: ffuniversal Credit Helpline: 0345 600 0723 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 infroms the Department of 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 0345 600 0723. Claimants in a full service area need to give changes online 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 After a one week waiting period and then a five week assessment period, universal credit will be paid monthly, in arrears, into your bank account. If the first payment of universal credit is delayed, you may be able to get an advance which will be deducted from future payments. There is provision for backdating of universal credit of one month. Claimants assessed as vulnerable can be paid fortnightly. If you don't have a bank account, you can collect your payment from some Paypoints using a Simple Payment Card. 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, above). This will then be reduced depending on any income you have, the work allowance (see below for explanation) and the 65% taper. If you have no income, you will be paid the maximum amount. 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. Self-employed claimants If you are self-employed, you will have to report your earnings (i.e. profit after deductions and expenses) to 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 selfemployment, 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. The number of hours you are expected to work is based on your individual circumstances. Universal Credit November 2016 2
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 126.11 Limited capability for work and work related activity Child element 315.60 per month First child or qualifying young person 277.08 Second and each subsequent child or qualifying young person Disabled child or qualifying young person lower rate Disabled child or qualifying young person higher rate Childcare costs element Maximum amount for one child Maximum amount for two or more children Carer s element 231.67 126.11 367.92 per month (85% of 760 limit) 646.35 (85% of 1,300 limit) 1,108.04 per month Carer s element 150.39 Housing cost element An amount equivalent to eligible rent or mortgage interest payments. (Note: only claimants who are not working will have mortgage interest payments added to their maximum universal credit calculation.) There is now a waiting period of 39 weeks before you can get Support for Mortgage Interest. Capital limits and the benefit cap 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. 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, contribution-based 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 help given towards housing costs. Households where net monthly earnings from employment total 430 or more, 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 430 per month in each of the previous 12 months. Universal Credit November 2016 3
Case study: Jenny Jenny is a single parent of three children aged two, 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: Adjust for unearned income: Standard Allowance 317.82 First Child Element + 277.08 Child Element + 231.67 Child Element + 231.67 Disabled Child Element high rate + 367.92 Carer s Element + 150.39 Housing Element + 477.00 Jenny has unearned income (carer's allowance) which reduces her maximum award pound for pound: Maximum universal credit 2053.55 Unearned income 269.10 universal credit award 1784.45 Maximum universal credit 2,053.55 Jenny will receive a universal credit award of 1784.45 per month. She will also receive child benefit, carer's allowance, disability living allowance for her daughter and help with council tax. 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: z Lower work allowance.......... 192 z Higher work allowance.......... 397 Work allowance changes Since April 2016 there have been reductions to the work allowances in universal credit. If you have been affected by these changes: ffcall the dedicated helpline for claimants affected: 0345 600 3081 ffask your Work Coach at Jobcentre Plus about the Flexible Support Fund. 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 65p for every pound (65% taper) of income above the work allowance. Universal Credit November 2016 4
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: Apply 65% taper to eligible income: Standard Allowance 317.82 First Child Element + 277.08 Child Element + 231.67 Childcare Element (85% of 433) + 368.05 Maximum universal credit 1194.62 The 65% 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 65% taper 65% Tapered eligible income 277.40 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 Deduct tapered eligible income from maximum universal credit: Maximum universal credit 1194.62 Tapered eligible income 277.40 universal credit award 917.22 Marc will receive a universal credit award of 917.22 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. Free school meals and passported benefits If you receive universal credit, you are entitled to legal aid and free school meals for your children. The passporting of other benefits is still being considered. 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. Universal Credit November 2016 5
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. From April 2017 the conditionality within the groups will be changing with parents/carers with children aged 3 and 4 subject to all work-related requirements, those with children aged 2 subject to work-focussed interviews and work preparation requirements. Those with children aged 1 will still be subject to work-focussed interviews and there remains no conditionality if you have a child under the age of 1 year. 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: z Work-focused interviews: interviews to discuss what you are doing to find or increase your earnings and what support you might need. z Work preparation: actions, such as courses or classes, you must undertake to improve your chance of employment. z Work search: steps to find job vacancies. z 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 (see above), 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 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 or two years are included in this group unless they also have other caring responsibilities (see above). Work preparation: this group includes claimants with limited capability for work (i.e. those who were in the work group of employment and support allowance) but not limited capability for work related activity. Single parents with a child of three or four years are included in this group. 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 five years or 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 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 5 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 focus interveiw only conditionality group, you will only lose 20% of your standard allowance if sanctioned. See Table 2: Universal credit sanction durations, below. 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. Universal Credit November 2016 6
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. Table 2: Universal credit sanction durations Sanction Applicable to Duration 1st failure Duration 2nd failure Duration 3rd+ failure 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. z Claimants subject to all work-related requirements. z Claimants subject to all work-related requirements. z Claimants subject to all work-related requirements. z Claimants subject to work preparation and work-focused interview requirements. z Claimants subject to work-focused interview requirements only. 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. Useful contacts Universal Credit Helpline: 0345 600 0723 Open: Monday - Friday 8am - 6pm www.gov.uk/universal credit Universal Credit November 2016 7
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: z Separation and Divorce z Money for Single Parents z 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.