Universal credit: How long will the £20 increase last?

·3 min read
Picture of people entering a job centre
Picture of people entering a job centre

The £20-per-week boost to universal credit will be extended until the end of September, Chancellor Rishi Sunak announced in the Budget.

What is universal credit and who gets it?

Who will benefit from the universal credit changes?

Universal credit is claimed by more than 5.5 million households across the UK.

The payment was increased by £20 a week in April 2020, to help struggling families during the pandemic.

It had been due to end on 31 March and the government was under pressure to announce an extension.

The Joseph Rowntree Foundation - a charity which researches poverty - said millions of households would have faced an income loss equivalent to £1,040 a year.

The government will also give working tax credit claimants an equivalent increase for the next six months. This will be done through a one-off payment of £500.

What is universal credit?

Universal credit is a benefit for working-age people, which was introduced to replace six benefits and merge them into one payment. The replaced benefits are:

  • income support

  • income-based jobseeker's allowance (except for some people with severe disabilities)

  • income-related employment and support allowance

  • housing benefit

  • child tax credit

  • working tax credit

Mother holding young boy's hand
Universal credit can help with childcare costs

Most people who would have made a new claim for these individual benefits must now make one for universal credit. It was designed to make claiming benefits simpler.

A single universal credit payment is paid directly into claimants' bank accounts. This happens monthly in England and Wales, but there is the option of payment every two weeks in Scotland and Northern Ireland.

It can be claimed whether you are in or out of work.

Universal credit may not be appropriate or available for everyone. Claiming it can affect other benefits, and it is vital to get some advice - available for free - before applying.

Photo of a woman looking at a receipt
Photo of a woman looking at a receipt

What are the concerns?

It is complicated to work out exactly how much universal credit you might receive. Some people, such as those with £16,000 or more in savings, will not be eligible.

Others may find what they receive depends on their circumstances, including any income their family has, as well as housing and childcare costs.

One issue is that it usually takes five weeks from the date of claiming to receiving a first payment, although claimants may be able to get an advance loan.

An application for universal credit may put a stop to any tax credits you receive, even if it proves to be unsuccessful.

You may be able to claim a reduction in council tax when on universal credit, and get help with childcare costs. There is also support to pay the rent, which works in different ways across the UK. In time, there may also be assistance in paying the mortgage, although there are some strict criteria involved.

What other benefits are still available?

The main benefit for anyone losing their job after a period in work is new-style jobseeker's allowance (JSA).

This is worth £58.90 a week, if you are under 25, or £74.35 a week if you are 25 or over.

You can get this for up to six months and it will be paid into your bank, building society, or credit union account every two weeks. Unlike universal credit, your partner's or spouse's income will not affect your claim.

You may be able to claim new-style JSA as well as universal credit.

Where can I go for help?

There is a host of free guidance and advice available, including:

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