Glossary · UK
What is Universal Credit (UC)?
A means-tested benefit that replaced six legacy benefits for working-age claimants. Payments are based on earnings, savings and household circumstances.
Full Definition
Universal Credit (UC) is a single monthly means-tested benefit administered by the DWP that replaced six legacy benefits: Housing Benefit, Income Support, income-based Jobseeker's Allowance (JSA), income-related Employment and Support Allowance (ESA), Working Tax Credit and Child Tax Credit. UC is assessed monthly using Real Time Information from HMRC, meaning the payment adjusts each month as earnings change. The award is built from a standard allowance (ranging from £311.68 to £617.60 per month depending on age and whether a couple) plus additional elements for children, housing, disability and childcare. Earned income reduces UC via a taper rate of 55% — for every £1 earned after any applicable work allowance, UC falls by 55p. Work allowances of £404 or £673 per month (higher amount for housing element recipients) protect the first portion of earnings. Savings between £6,000 and £16,000 are treated as generating a notional income of £4.35 per month for each £250 above £6,000; savings above £16,000 exclude the claimant entirely. The two-child limit means the child element is not paid for a third or subsequent child born after 6 April 2017. Up to 85% of eligible childcare costs can be claimed through the UC childcare element. UC has been fully rolled out and new claims to legacy benefits are no longer possible for most people.