Part 1 of 4 blogs on the UC sums: Who can I claim for? How do the UC sums work? How often are they repeated? How do savings and capital affect things?
Welcome to Part 1 of 4 blogs looking at that rather crucial question of how much will UC pay me? And how can I make sense and check monthly UC statements?.
This is a companion series to a series looking at the wider issues of What is UC, and how it works as a benefit. Please see under Links and Further Reading section at the end of this blog. While there will be sums , they will be mainly gentle ones, with plenty of examples as we go
In this first part we focus on why it’s more complicated than other important benefits for people affected by cancer, who you claim for, the basic steps in the sums and how they are re-done each month. We’ll look briefly at how savings and capital can affect things. Often these matters are straightforward. Where they do get complicated, they do so for all the means tested benefits, so we will cover that in a separate blog.
Why are the sums complicated?
The trouble with that rather good question “How much Universal Credit (UC) will I get?”, is that the answer is tha : "It all rather depends" . That is not because UC is more complicated than the benefits it replaces; in some ways it gets criticised for trying to oversimplify and wish away the complexities of real people’s lives. The main reason for added complications in all means tested benefits are:
- that they cover quite a range of support and
- they involve an extra financial assessment.
Other benefits important to people affected by cancer are non-means tested: Carer’s Allowance, New-style ESA and Personal Independence Payment (PIP). There may be complications about meeting the criteria – or scoring enough points – but once that’s done, you will be paid at one of just a few flat rates. These claims are for you as an individual and are paid regardless of other circumstances and of most other income and savings.
By contrast, UC has a much broader range of flat rates that might apply to cover a much wider range of circumstances. Some of those will be fixed amounts form a set scale - a bit like in the non-means tested benefits. However, others may be quite specific to your claim – e.g. how much rent do you pay? What childcare costs do you have?
And on the other side of the balance sheet, UC also needs to look at what income you already have – and not just you, but also any partner. For UC is not just about adding up the different amounts you might be entitled to and then paying you that total. Rather, it’s about topping up any other income you already have, so that you end up with a total income - including some UC that brings you up to an your "Maximum UC" level.
Who counts in my claim?
Individual claims versus the “benefits unit
Non-means tested benefits are claimed individually You are paid your New-style ESA or Personal Independence Payment (PIP) at one of a few flat rates, regardless of whether you have a partner or children.
There used to be extra amounts for a partner who wasn’t working or for children, but these have gradually been removed, which is why increasingly people who may have only needed to claim a non-means tested benefit in the past, now need to claim a top up from Universal Credit
Means tested benefits have always been claimed as part of a “benefits unit”, which includes you, any partner and/or any dependent children.
Couples and partners
You count as a couple if you are living together, as if you were spouses or civil partner. It does not matter whether you have a legal tie or no, nor your genders. The decision as to whether you are a couple depends on a range of factors that may make you a bit more coupley or not.
Sometimes, it is very clear to you, friends and neighbours and the DWP that you are a couple and you may be happy to claim as such. Other times, it's much more of a "grey area": a flat-share arrangement ticks many of the boxes of living as a couple, even when in relationship terms you may be very clear that you are not. Living together decisions can then be very wrong. If in doubt, do get advice.
The reason why DWP may be too ready at times to say that you are a couple - is there is a financial incentive for some to say they are not a couple when they are; and for the DWP perhaps, to say that you are a couple when you are not. There was a missed opportunity for UC to take a much simpler approach and get rid of the discrimination against couples in the old system and not copy and paste over all the complications and intrusiveness of the couple rules from the "legacy benefits that it takes over from
The practical effect of the couple rules is that couples then are assessed together: you do get a higher joint allowance (rather than two single ones) but just not quite enough. But on the other side of the balance sheet, it will be joint savings and income that will be considered
Seperate claims and claimant commitments
UC did go part of the way to treating partners in a couple individually though. For the first time each partner in a couple must make their own claim and then the two are linked for doing the sums. The reason for separate claims is about each partner accepting their own Claimant Commitment that sets out the “work requirements” that must be met a s a condition of receiving benefit without a sanction. These could be very different for each partner.
Jo and Jemal are a couple and their UC sums will be worked out together and will include a couple Standard Allowance. But they have very different Claimant commitments at first:
- Jo is starting on a course of chemotherapy for breast cancer. She has no work requirements because she is “treated as” being too unwell to look for work or to have to do any work-related activity.
- Jemal was working in a well-paid job for many years, but has recently been made redundant. He may be recognised as Jo’s carer in time and so he would then also have no work requirements. But for now, while they wait for Jo’s PIP claim to be assessed he come in the “All Work Requirements” group, but there is scope for this to be eased off a little.
Your benefits unit will also include dependent children i.e. ones that you are fully financially responsible for. That includes
- children under 16 (until the 31st August after they turn 16) and
- any "qualifying young people" who may be staying on at school or college in non-advanced education (e.g. up to A levels.) possibly up until they reach 20.
They don't have to be your offspring directly. You might be a step parent or another relative taking responsibility for that young person. That could for example be an older sibling. If a dependant has a child of their own, you might claim for their child as well as the toung person.
There may be a choice from 18 on as to whether a qualifying young person can claim on their own or stay with their parent or acting parents. Get advice.
If a a 17 or 18 year old moves into advanced education (e.g.starts off at University) then they no longer feature in your UC claim. Generally they would depend on grants and loans., although some may be able to claim UC themselves.
Others living in your home
Your house may be home to others who do not count as part of your benefit unit:
- a grown-up child who might be: at Uni, in paid work, working or looking for work etc
- your parents or other extended family members
- a housemate or lodger etc.
These are all counted as separate “non-dependants” and so do not count in your UC claim.
If they needed UC help and were were entitled to it, they would make their own UC claims. That might be as as individuals or as part of a benefit unit (e.g. with a partner). Their finances would be totally separate from yours, apart from, perhaps being treated as making some contribution to the rent.
Basic principles and the four steps of UC sums
The basic idea of the UC assessment follows that of all previous means tested benefits that provide a “safety net” to keep someone above a certain basic poverty line. There are then four steps in the sums for UC just as there were in the benefits that came before it:
Step 1. Are your savings and capital below the £16,000 limit?
Sometimes it can get quite complicated as to how your savings and capital are assessed. Often though it’s a straightforward matter of cash in the bank or the attic.
If you have over £16,000, the sums go no further. If you have less, then you can still claim but your savings may or may not influence the rest of the UC sums.
Step 2. What much does your benefit family need – your Maximum UC?
This looks at what level of income “the law says you need to live on”. Under UC, this is made up of a standard allowance and child elements covering the people in your claim and other elements on top for: being unwell, being a carer and childcare and or housing costs.
The elements are not separate benefits and you don’t have to claim them separately. They are just extra amounts within the UC sums> So the more elements you are entitled to and the higher your standard allowance, the higher your Maximum UC will be.
Step 3 . What resources do you already have to meet those needs – your assessed income?
UC then look at how much income you already have to meet your needs. Some important amounts that you may have coming in (such as PIP or Child Benefit) are ignored in these sums. Earnings are treated differently and are not counted in full. That is how UC also supports people in work not just to not fall below the safety net, but also to rise above it and be “better off in work”
4 How much top -up do you need?
If you had no income or saving of your own, then your UC would simply be your Maximum UC from Step 2. But if you have some other income that is counted, then UC takes away any total from Step 3 Essentially it’s a case of UC take one from t’other to get to how much top up you would need from UC to bring you up to the level of your Maximum UC.
Jo has a Maximum UC of £800 a month to cover her living costs and rent. Her other income is assessed as £500, so UC pays her £300 to top her up to that £800 Maximum UC level
If only the sums were quite so simple in practise…
How often are the sums done? Your Monthly Assessment Period
UC sums are always done monthly and afresh at the end of each monthly assessment period. That means:
- your Maximum UC is worked out according to your circumstances on the last day of your assessment period, regardless of when any change happened. You might win or lose as a result
- Your income is based on the amounts you have received during that assessment period. If this varies from month to month, then your UC will fluctuate too. You may even come off UC one month and then need to do a rapid reclaim for next month.
The computer does the sums on the last day of each monthly assessment period and you will get that amount of UC paid 7 days later.
Jo claims UC on the 4th of the month. Her assessment period lasts until the 3rd of the next month. She gets her UC payment for that assessment period on the 10th
Changes in circumstances
UC wants to keep things very simple rather than redo sums when circumstances change or have rules to use common sense in allocating income to the monthly assessment periods that it covers. This can produce some odd effects and unexpected variations.
Mr Rusty and Ermintrude claimed on the 17th of the month and their assessment period ends on the 16th. Ermintrude is about to give birth to a slightly delayed Baby Dylan on the 16th. If Dylan is born before midnight on the 16th, the couple will get an amount for him going back to the 17th of the previous month. If not, then he will only count in the next assessment period.
Fast forward 18 years and Dylan is still on Mr Rusty and Ermintrude’s claim as he is doing non-advanced music studies at Carousel College. He wants to move in with friends to form a Magic Roundabout Collective. He plans to leave on the 16th. If he can hold off to the 17th, then his parents can still have an amount for him for the assessment period, but if not, they will lose
There are also some odd effects on earnings, but we will come back to that when we look at Step 3 in more detail.
Step I Savings and capital
UC has a savings and capital limit of £16,000 for the benefit unit. That limit is the same whether you are single or claiming as a couple.
There are common rules for all means tested benefits (with a few variations) as to what exactly counts as capital, how assets are valued, and whether some amounts can be ignored for a period. There are also restriction on how you spend savings if they think you might be doing so just to get your savings below the capital limits. These will all be covered in a separate blog.
Often though, it can be straightforward: Your own home, garden, car, furniture and personal possessions are always ignored. So, it may come down to cash savings in the bank or under the bed.
The impact of any savings or other capital is as follows:
- If you have more than £16,000 you cannot claim UC and the sums end here
- If you have under £6,000. then that amount has no effect on the rest of the UC sums
- If you have an amount in between £6,000 and £16,000 you can still claim, but you will be treated as having a “tariff income” of £4.35 a month for every from anything over the £6,000 in Step 3
Jo and Jemal have £8.500 in savings. The first £6,000 are ignored, leaving £2,500 that counts for tariff income in Step 3: 2,500 divided by 350 = 10. The tariff income will be £4.35 x 10= £43.50 a month
The capital limits and tariff income will be familiar to people coming over to UC from “legacy benefits" with similar rules. However, it could be a nasty surprise for someone coming over from tax credits (which have no savings rules) or Pension Credit (which has no upper limit and more generous rules on tariff income
Amounts for any means tested benefit is complicated by the fact that they involve a financial assessment. By contrast – the amounts that you may get in non-means tested benefit are more straightforward: you will get one of only a few rates regardless of most other income and savings.
You also claim along with any partner and for any children you may have. Others who may live in your home would make any UC claims separately, if they were entitled
The steps in the sums – and the arithmetic involved – can be simple:
- Step1 check capital is below the limit.
- Step2 2. Add up the allowances and elements that apply to get a Maximum UC
- Step 3 Add up any other income that is counted
- Step 4 Take one from the other… And Bob’s your uncle, Flo’s your Auntie but neither count in your claim
The sums are redone each month and for simplicity this is taken based on the circumstances that apply on – and the other income that you receive by – the last day of your monthly assessment period. That can produce some odd effects for that month’s payments
Step 1 is often straightforward. For many people their “capital” may just amount to savings in the bank. Do these amount to over £16,000 in which case you can’t claim, and the sums stop there. If you have under £16,000 it may have no further effect on the sums or it may lead to some tariff income being counted in Step 3
The devil then starts picking up in the detail of which allowances and elements apply and sometimes at which rate and why? And to a lesser extent how UC looks at your other Income. So that’s why we will take a break here…
Next time we will focus on the main issues in Step 2 Working out your Maximum UC. We will look at issues that apply to people affected by cancer, such as elements for being unwell or being a carer.
But other amounts can be important too. Regardless of cancer, you still have basic living costs, children to feed, rent to pay and so on.
In a third part we will look at Steps 3: adding up your income and Step 4 Taking one from t’other to get the amount of UC due. We will also look briefly at how some top ups or deductions might affect the actual amount that is paid.
Finally, we will step back to look at some pitfalls to avoid and to explain a bit more about how key elements such as the LCWRA element and carer’s element. We will also look at gaps and why there are no equivalents to disability and pensioner premiums in UC.
Links and further reading
Other blogs on UC sums:
- UC sums 2: Your Maximum UC
- UC sums 3: Assessing your income and UC due
- UC sums 4: Missing elements and pitfalls to avoid