Managing your finances for the first time can be daunting and the benefits system can seem complex and confusing. Young Futures keyworker Amy Sharp has put together a guide to Universal Credit in hope that it will help you to understand your entitlements and maximise your income. This easy guide is also verified by Jason at Specialist Advice Services, and is a must read to help you make sense of it all!

An Overview

  • Universal Credit is a benefit to help with your living costs if you are on a low income, out of work or you cannot work due to health issues. You can apply for Universal Credit online. If your application is successful you will get your first payment around 5 weeks after applying. If you need help sooner you can ask for an advance, but this amount will then be deducted from future payments.
  • Universal Credit is usually paid monthly, however if you are struggling financially you may be able to get fortnightly payments instead, this is called an ‘alternative payment arrangement’ and is made at the discretion of your Universal Credit advisor.
  • There are different elements to Universal Credit, it is made up of a ‘standard allowance’ and additional amounts depending on your individual circumstances, so there is no set amount that applies to everyone.

Additional amounts are awarded according to these categories:

  1. Children (caring for children, childcare costs)
  2. Disability/health conditions (limited capability to work, caring for someone receiving disability benefits)
  3. Housing costs (rent payments once you have an independent tenancy)

For full details on each element and current rates, go to

Starting work and how this affects Universal Credit

  • If you start work or change jobs you will need to report this to Universal Credit through your online account as it may affect your benefit award, go to ‘Report a change’ and select ‘Work and earnings’ to update your employment details.
  • Once you are in paid employment HMRC automatically inform Universal Credit of how much you earn each month (after tax), your benefit will be reduced accordingly. Again, this depends on your individual circumstances. If you are single and only receiving standard allowance, then 63p of every £1 you earn will be deducted from your Universal Credit payment.

For example – A single person under 25 (living with Young Futures) gets £342.72 Universal Credit per month on a standard rate. If they started work and earned £500 within their assessment period, then their UC payment would be reduced by £315.

  • If you have a child or have limited capability for work, then the rules are slightly different and a ‘work allowance’ is applied - meaning you can earn a certain amount before it will affect your Universal Credit award.
The monthly work allowances are set at:

£512 when you do not receive housing costs (whilst living with Young Futures)

£292 when you do receive housing costs (when you have an independent tenancy)

For example – A lone parent under 25 (living with Young Futures) with one child gets £578.55 Universal Credit per month (standard rate + child element). If they started work and earned £800 within their assessment period, then their Universal Credit payment would be reduced by £181.44. *They would also qualify for help with childcare costs*

Childcare costs when you work

  • If you are employed and pay a registered childminder or nursery to look after your child you can claim up to 85% of these costs back through Universal Credit (up to £646.35 for one child and £1,108.04 for 2 or more children). The childcare element can be paid from the date the claimant accepts a job offer, up to a month before the job starts. It can also be paid for a month after a job ends.
  • You can declare these costs through ‘Report childcare costs’ in your online account, you will need to provide proof each month (receipt or bank statement) to ensure it is included in your next payment.
  • If you are a lone parent and cannot afford to start work due to advance childcare costs then you can ask a Universal Credit advisor to refer you to your local job centre and apply to the ‘Flexible Support Fund’. This is a grant awarded at the discretion of the jobcentre, there is no set amount of money you can be given, and the award would depend on your individual circumstances.

Health conditions or disability which affects your ability to work

  • If you have a health condition or disability that prevents you from working, you may be entitled to an additional amount of Universal Credit.
  • You can apply online through ‘Report a change’ and select ‘Health’.
  • Once you have done this you will be sent a ‘Capability for work questionnaire’ which you must complete and send back by the date provided.
  • Following this you will be told if you need to have a ‘Work Capability Assessment.’ Currently all assessments are being done over the phone due to coronavirus.

Claiming housing costs once you move into an independent tenancy

  • When you move on from Young Futures into your own property your key worker will support you in ensuring your universal credit is updated to include housing costs. This will replace any housing benefit you previously claimed through the council.
  • You will need to ‘Report a change’ through your online account and provide the details of your new tenancy in the section ‘Where you live and what it costs’. It is important that this is done as soon as your new tenancy begins to avoid any delays in rent payments.
  • Once this has been completed your total monthly benefit award will include money for your rent. This can usually be paid directly to your landlord if you request, otherwise it will be paid to you and it will be your responsibility to pay your rent each month.
  • The amount awarded for housing costs is dependent on your circumstances and if you are entitled to a studio, one bed or two bed property. The housing rates vary depending on the area you live in and is referred to as ‘Local Housing Allowance’. You can check the current rates in your borough here -

Challenging a decision if you think Universal Credit have made a mistake

  • If you think that a decision made by Universal Credit is wrong, then you can ask for a ‘mandatory reconsideration’ (for the decision to be looked at again) within one month.
  • If after this, you still think the outcome is wrong then you have one month from the date of the mandatory reconsideration notice to submit an appeal to an independent benefits tribunal.
  • For support with benefits appeals you can contact your local citizens advice office -

Useful links

 If you want to check your entitlement before applying you can use one of the following benefit calculators