by Annetta Bentley, Universal Credit Adviser, December 2019
This blog is aimed towards professionals working with the general public, who may need to advise people on their application for Universal Credit. There are some vital things to consider to ensure that people end up with the most beneficial outcome for them.
*Please note that this list is not exhaustive: a claimant’s personal circumstances should be explored and considered in full before they are advised on their options.*
Universal Credit is not the right benefit for everyone.
Before advising anyone to claim Universal Credit, there are a number of factors that need to be considered first; once someone has claimed, there’s usually no going back!
Will they be better-off on Universal Credit?
If someone is already receiving one or more legacy benefits, it’s really important to check whether they will be better or worse off before advising them to claim. You can do this by completing a better-off calculation (Citizens Advice can help with these).
However, even if someone is going to be better-off on Universal Credit, it’s also important to explain to them how it works and what will be required of them if they decide to claim. Universal Credit works very differently to legacy benefits and often requires a lot more engagement from the claimant. For example:
· Claimants are likely to be required to make and manage an online claim which needs to be accessed every few days
· There may now be Work Related Requirements placed on claimants, when there were none before
· Universal Credit means monthly payments and a five week wait for the first payment
· Claimants will be subject to a new Right to Reside/Habitual Residence Test
· Self-employed claimants should be particularly cautious before migrating to Universal Credit, and should ideally be directed to seek advice before claiming
· Universal Credit is a much more unstable benefit than legacy benefits. If the claimant doesn’t do something (e.g. complete a “to-do” on time), their claim can be closed
· Universal Credit is still in its infancy and there are lots of problems with its administration and decision-making.
Many people choose to remain on legacy benefits for the time being when this is explained to them, especially if they find they will only be slightly better off on Universal Credit. Remember: people are never forced to claim Universal Credit (except by their financial circumstances of course). Even if one of their legacy benefits stop because of a change in their circumstances, they do not have to claim Universal Credit; it is their choice whether to claim or not.
For example, Income Support would stop for someone whose youngest child turns 5, but this would not stop their Child Tax Credit, Child Benefit, Housing Benefit or Council Tax Reduction; all of these can continue.
Another often-forgotten option for claimants are the new-style benefits (the new name for the contribution-based benefits) which are awarded based on the claimant’s National Insurance contributions. These may be a good option for people who do not meet the financial criteria for means-tested benefits, perhaps because of capital or a working partner. They may also be a good option for people who don’t want to navigate the Universal Credit system when they are only going to be unemployed in the short-term.
Please remember that claimants can claim new-style benefits whether or not they claim Universal Credit.
We usually advise any Universal Credit claimants who might be eligible for new-style benefits to claim, even though it will be completely deducted from their Universal Credit. This is because new-style benefits provide a separate income stream to a claimant’s unstable Universal Credit and, if claimants delay their claim to a later year, they may find they are no longer eligible. Claiming new-style benefits may also provide some protection from future changes in a claimant’s financial circumstances that could end means-tested benefits: their new-style benefits may be able to continue despite the change.
Do they receive a Severe Disability Premium (SDP)?
Currently, claimants who are in receipt of an SDP cannot claim Universal Credit. This includes claimants who have an SDP in their Housing Benefit claim; many claimants are not aware of this.
Where someone in receipt of an SDP claims Universal Credit in error, they can be moved back onto legacy benefits. If the local council receives a stop notice from Universal Credit for a claimant with an SDP in their Housing Benefit claim, their Housing Benefit should not be stopped. Read gov.uk’s guidance on this here.
These claimants can be referred to their local Citizens Advice for help with moving back onto legacy benefits.
It’s also important to check whether claimants who receive a qualifying disability benefit are eligible for an SDP even if they don’t currently receive it (i.e. they live alone and no-one gets Carer’s Allowance for looking after them). They are likely to be better-off by having this added to their claim and remaining on legacy benefits, rather than applying for Universal Credit.
As a bonus, it may be possible to assist the claimant in requesting that the SDP is backdated indefinitely for any period that they were eligible, as this can add up to a significant sum.
It’s worth discussing the SDP with claimants who have applied for PIP (Personal Independence Payment), and who would be eligible for the SDP if their PIP (daily living component) were awarded. Some clients prefer to wait and see, rather than apply for UC. As the PIP application process is a long and uncertain one, this option is not open to many claimants. As with any delay to the start of a Universal Credit claim, we should be advising clients that UC can only be backdated by a maximum of one month and only in a specific circumstances.
Have they just failed an Employment Support Allowance (ESA) Work Capability Assessment?
Contrary to the DWP letters send to claimants when they fail a Work Capability Assessment, these people do not necessarily have to claim Universal Credit.
They can instead choose to challenge this decision by lodging a Mandatory Reconsideration (MR). They won’t get any money while waiting for the outcome of their MR; this can take one-two months, so they need to be able to afford to do this. However, if their MR is unsuccessful, they can appeal. Once their appeal is lodged, they will receive ESA at the assessment rate while they are waiting for their appeal date.
Do they receive contribution-based ESA?
People who are receiving contribution-based ESA (not new-style ESA), who become eligible for income based benefits, do not have to claim Universal Credit. They can instead ask ESA to reassess them for an income-related top-up to their current ESA claim.
Are they in a mixed age couple?
Since 15th May 2019, mixed age couples (i.e. where one person is working age and one person is over state pension age) who need to make a new claim for means-tested benefits, usually have to claim Universal Credit. However this does not apply to couples who were already receiving Pension Credit or pension age Housing Benefit before 15th May 2019, and who have continued to do so. These couples can remain on legacy benefits, including making new claims where appropriate.
Have they just moved home?
A Universal Credit claim for help with housing costs would only be triggered for a claimant receiving Housing Benefit, if they move into permanent accommodation a new local authority area. If they have moved within area, they can stay on Housing Benefit.
This even applies to claimants who are receiving Housing Benefit because they are in temporary accommodation. These claimants can stay on Housing Benefit when they move to permanent accommodation in the same area, as long as they don’t already have a claim for Universal Credit alongside their Housing Benefit claim. The move by itself doesn’t trigger a new claim for Universal Credit.
Even if Universal Credit is the best option for the claimant, it may be a good idea for them to consider delaying the start of their claim.
This may be an appropriate option for people who are working and paid monthly, or for those whose job has recently ended and they are expecting a last payment from their employer that they haven’t received yet.
People on Universal Credit have a monthly assessment period. This starts the day they make their claim for Universal Credit. Once the claim is made, these dates can’t be changed.
Pay dates for working people can change due to weekends and bank holidays, so if someone is paid monthly and claims Universal Credit around the same time of the month that they are normally paid, they could end up receiving two lots of pay within one Universal Credit Assessment Period. This can mean that:
· People receive significantly less or no Universal Credit that month, making it very difficult to budget (especially as they have no idea that this is going to happen!)
· If someone receives no Universal Credit at all, their Universal Credit claim will stop and they will need to reclaim
· If claimants are eligible for a work allowance (i.e. they have children or a Limited Capability for Work), they will miss out on this in any month that they receive no pay within a Universal Credit Assessment Period.
If this happens, the decision to calculate their Universal Credit on the basis of the date their wages are received can be challenged – Citizens Advice can help with this. However, if someone hasn’t claimed Universal Credit yet, it may be better to suggest that they wait a couple of days until after their pay date, so that they can avoid these issues altogether.
Similarly, if someone is expecting a final payment from work*, it may be beneficial for them to wait until after this received before claiming Universal Credit, especially if the amount is going to mean they are not eligible for Universal Credit at all. This problem (Universal Credit being calculated based on the date pay is received, rather than looking at the period to which the pay relates) can also detrimentally affect the following claimants:
· People who are paid weekly, fortnightly or every four weeks
· People paid early for Christmas
· People who receive annual bonuses.
*Note that redundancy payments are treated as capital, but pay in lieu of notice and holiday pay is treated as income.
Anyone who is affected by this issue can challenge the decision. Citizens Advice can help with this.
We hope that this blog piece is helpful to people working with potential Universal Credit claimants.
