Universal Credit UK: Your payment could be limited in one circumstance – here’s why

Universal Credit was designed to replace six older “legacy” benefits, in an effort to streamline the benefits system in the UK. The payment, then, often provides vital support to individuals who are eligible to claim. It is designed to offer financial support to individuals who are on a low income or out of work, and resident in the UK.

To be eligible, in most circumstances one must be over the age of 18, however, people are required to be under state pension age to receive Universal Credit.

In addition, a person or couple must have less than £16,000 in savings to unlock their entitlement from the Department for Work and Pensions (DWP).

Universal Credit is paid on a monthly basis to provide individuals with regular support.

And the payment will prove particularly valuable for many during the COVID-19 crisis.

READ MORE: Universal Credit UK: Claimants could receive up to £150 extra weekly

Government guidelines, however, detail how payments may end up being limited.

This is through the benefit cap, which is a limit on the total amount of benefit a person is able to receive.

To ensure a person does not receive more than the benefit cap limit, the amount a household gets in certain benefits could be reduced.

The rule applies to most people aged 16 or older, but under state pension age, so it is worth paying attention to.

The government explains people will get the grace period if all of the following are true:

  • a person claims Universal Credit because they stopped working or earnings went down
  • a person is now earning less than £604 a month
  • in each of the 12 months before a person’s earnings went down or they stopped working, they earned the same as or more than the earnings threshold (which is £604 from April 1, 2020)

People must report their last 12 months’ earnings when they apply for Universal Credit to get the grace period.

Universal Credit claimants who need help with the benefits cap are encouraged to contact the DWP through the journal in their online account.

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