What do you claim?

Let’s say you have recently become unemployed and currently have no benefits at all. Until Universal Credit reached your area you would have contact the Jobcentre Plus and asked to claim Jobseeker's Allowance, as well as Housing Benefit and Council Tax Support.

You might think that all you need to claim is Universal Credit. After all, that would seem to be the point of the thing. However, you would be wrong. Remember that contribution based Jobseeker's Allowance has not been abolished, so unless you’re absolutely sure that you do not have enough National Insurance contributions to qualify you for contribution based Jobseeker's Allowance, you need to claim this as well as Universal Credit.

However, from now on I will assume that you don’t actually get any contribution based Jobseeker's Allowance, either because your NI record is not good enough or you have already been getting it for the maximum 6 months.

What do you get?

The odd thing is that, despite all the excitement about Universal Credit, the amount you get if you aren’t working but are looking for work, is about the same as you would get on Jobseeker's Allowance (contribution based or income based): you’ll get £73.14 per week for your living expenses (£57.94 if you’re under 25), and whatever you would have been getting as Housing Benefit or other help with housing costs. The only real differences, in terms of what you actually receive, are:

• The amounts are given as monthly, not weekly figures, so the living expenses are written as £317.82 per month (£251.77 if your under 25), which multiplied by 12 for a year, divided by 365 for a day, and multiplied by 7 for a week give the figures above.
• You get your help with housing costs paid together with your living expenses by the Jobcentre Plus, rather than separately by your local authority.

If you have other income (apart from earnings) or savings these get treated in just the same way as they would for income based Jobseeker's Allowance.

What do you have to do?

You have to accept a ‘claimant commitment’ and keep to it. This is similar to, but not the same as, the jobseeker’s agreement you would have had under the old rules. (If you are also getting contribution based Jobseeker's Allowance don’t have to keep to the Jobseeker's Allowance jobseeking rules as well.)

What if you start work?

Here’s where it starts getting interesting.

With Jobseeker's Allowance (either income or contribution based) if you work 16 or more hours a week you stop being entitled. Also, if you work less than that, anything you earn over £5 per week is deducted from your income based Jobseeker's Allowance.

Universal Credit is very different. It doesn’t matter how many hours you work: 5, 10, 18, 35, it doesn’t matter. What you earn does matter, as it does affect the amount of Universal Credit you get paid, but in a more generous way than with income based Jobseeker's Allowance.

However, if you do earn anything, your Universal Credit is reduced by a 63p in every pound (in other words you lose 63% of any earnings). (This figure, brought in in April 2017, is a slight improvement on the previous figure of 65%.)

Sadly, this is a change from the Universal Credit rules as originally designed. Until April 2016 you, as a single job-seeking claimant with no children, your benefit was reduced by 63% for every pound over £111 per month (£25.25 per week). That £111 was called the work allowance.

The work allowance still exists for claimants in some circumstances, but for most people it is much less than what it was originally. Click here for a table of all the different work allowances.

Aisha has been getting Universal Credit because she is looking for work. She lives with relatives who own the house, so she has no housing costs. She finds a part time job (for 15 hours per week) which pays £411 per month (about £94.59 per week). For every pound of that £411, her Universal Credit is reduced by 63p, which works out as £258.93 in total (£411 x 63%). So instead of getting £317.82 Universal Credit per month (£73.14 per week) she gets £58.89 Universal Credit per month (£13.55 per week). It’s worth comparing this situation with the old rules. As she is working less than 16 hours a week, she would in theory have been entitled to Jobseeker's Allowance, but her earnings are too high to allow her to have been paid an income based Jobseeker's Allowance. Her overall income is therefore equal to her earnings, i.e. £411. As it is she is now receiving a total monthly income of £469.89 (her earnings of £411 plus her Universal Credit of £58.89), or £108.14 per week.

What about rent? how would this fit in?

Aisha's friend, Amina, is in just the same position as Aisha, except that she rents her home, from a private landlord: her eligible rent is £80 per week, i.e. about £347.62 per month. Her Maximum Universal Credit now includes help with her rent as well, and so she therefore gets £665.44 per month (£317.82+£347.62) (£153.14 per week (don't forget that she has to pay £80 of that to her landlord). When she starts working (doing the same job as Aisha) her total Universal Credit is £406.51 per month (£58.89+£347.62) (£93.55 per week), compared with Aisha's £58.89 per month (£13.55 per week).

What’s the catch?

Well. The problem is that if you get any Universal Credit at all, you still have to keep to your claimant commitment, although it might be amended to take into account the fact that you are working. This means that if you get a part-time job you may still be required to show that your looking for more work.

This is still a very new benefit so it’s unclear how this will pan out in practice.

How are your earnings assessed?

If you’ve had any experience with working and claiming income based Jobseeker's Allowance in the past, you’ll know what a hassle this can be, having to inform them every time your wages go up and down, and often having to end claims and then reclaim again.

Universal Credit doesn’t work like this. Although you still have responsibility to keep them informed of any changes, including changes in earnings, the idea is that because employers are now obliged to report what they pay employees to Her Majesty’s Revenue & Customs on an ongoing basis, and HMRC will in turn pass this information onto the Jobcentre Plus. So hopefully you should see your Universal Credit go down when your earning go up without you doing anything.

Also, because of the way Universal Credit works, you won’t have to keep ending and restarting your benefit claims just because your hours go up and down, for example.

Although changes in earnings should be taken into account by the Jobcentre Plus automatically, remember that the responsibility is yours. If your earnings do not appear to be affecting your Universal Credit, or if, say, your employer is not passing the information to Her Majesty’s Revenue & Customs, it’s down to you to keep the Jobcentre Plus informed.

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