Universal Credit UK: Important information about benefit repayment

Universal Credit has been claimed by millions of people within the past few months as a direct consequence of job losses and furloughing brought about by the coronavirus crisis. The Department for Work and Pensions (DWP) often struggled to meet the intense demand from new claimants, although officials have said the system has now improved and will quickly help those who need it most. The payment is provided to eligible claimants every four weeks to assist them in meeting a variety of costs which arise in everyday life.

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By applying through the government website, new claimants will usually receive their first payment within five weeks of submission of a claim.

However, it is important to note the circumstances in which the benefit may need to be repaid.

For those who are in desperate financial straits, the DWP provides the opportunity to apply for a Universal Credit advance.

This enables people to receive up to 100 percent of their first payment amount quickly to assist with emergency costs.

But the government website states this advance will need to be paid back “a bit at a time from your future Universal Credit payments”.

Those who apply for an advance online will be shown the repayment amounts for different repayment periods.

This will allow them to select the option which is best suited to their personal circumstances.

For those who are applying via phone, the Universal Credit helpline adviser assesses whether a claimant can afford to repay the advance.

They can then provide information on how much of an advance a person can receive, their repayment amounts, and when the first repayment is due.

Those who are repaying an advance have 12 months in which to settle up the amount with the DWP.

The first deduction is made on the day of receipt of the first payment.

Britons who are really struggling or who are hit with unexpected circumstances can ask for repayments to be delayed for up to three months.

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However, it is worth noting this is only permitted in exceptional circumstances

Standard Universal Credit payments do not usually have to be paid back.

But there are three separate circumstances in which the DWP would expect money to be repaid.

These are:

  • If a person did not report a change to their circumstances straight away
  • If a person provided the DWP with the wrong information
  • If a person was overpaid by mistake

If either of the first two circumstances apply, then Britons should be aware.

This is because people who provide wrong information or don’t report a change in circumstances could be taken to court, or required to pay a penalty fee.

Universal Credit can be claimed by those on low income or out of work, as long as they are above 18 and under State Pension age.

It is also a requirement that they have less than £16,000 in savings, and live in the UK. 

The benefit has replaced six legacy benefits which may be more familiar.

These are: 

  • Housing Benefit
  • Child Tax Credit
  • Working Tax Credit
  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance

Those who are still receiving any one of these benefits do not have to take action with the DWP informing Britons if they need to switch to Universal Credit.

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Barclays is cutting interest rates on these products from this month – are you affected?

Barclays is to reduce its current interest rates within the next two weeks for certain popular products, and it alerted customers to the decision via text and email correspondence. From June 16, 2020, the rates will change on accounts including Instant Cash ISAs. The rates for Instant Cash ISAs were effective from October 9, 2019 to June 15, 2020.

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For those with a balance between £1 and £29,999, the tax-free percentage per year stood at 0.40.

Those with a £30,000 to £99,999 balance had a rate of 0.45 percent per year.

And those with a balance of over £100,000 had a tax-free per year percentage of 0.55.

Effective from June 16, 2020, future interest rates will stand at 0.10 percent.

This is for Instant Cash ISAs with a balance above £1.

The Blue Rewards Saver rate may also shift on this date, as documentation from the bank states current rates expire on June 15, 2020. 

Barclays messaged its customers alerting them of the change, stating in a text: “Hi, just to remind you that your savings rate will reduce on 16 June.

“For more information, search ‘interest rates’ on our website. Your Barclays team.”

The change will take place automatically, with customers not having to take any action on their savings accounts.

It is important to note, however, that other changes in interest rates are scheduled to take place in just over a month’s time.

These changes will affect the Everyday Saver accounts, which have had the same rates since September 2018.

For those with a balance of over £1, gross percentage interest rates per year currently stand at 0.25 percent.

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Those with over £50,000 in savings here receive 0.30 percent in gross per year.

However, from July 28, 2020, interest rates will witness a staggering drop to 0.01 percent for all customers saving through this type of account. 

Rates for Children’s Instant Saver accounts also expire in July, so parents and guardians managing these accounts should remain aware. 

In recent weeks, many high street providers have made the decision to lower their interest rates.

It is thought the decision could be as a result of the Bank of England base rate cut.

The central bank decided to lower its interest rate to 0.1 percent, the lowest in its 325-year-history.

The Bank of England stereotypically makes the move to lower interest rates in order to encourage more spending and less saving.

However, with the economic effects of coronavirus as widespread, this may not be achievable for some. 

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Currency war: Chinese government ramps up trials for digital currency to rival the dollar

This digital currency is being referred to as the “digital Yuan”, but it’s also known as the Digital Currency Electronic Payment (DCEP) system. The new system will be different from using an online bank or debit card in that it does not necessarily require any link to paper money to work, and would be operated from one central bank rather than multiple.

One launched, users would download an electronic wallet which would be linked to a bank card.

Then, the money would be taken from this linked bank account and converted into digital cash. But there is also an option not to link any bank account at all, South China Morning Post reports.

The whole thing would be operated by China’s central bank – the People’s Bank of China (PBOC).

The trials for the currency are currently being run in four different cities across China, but Bloomberg reports that a wider – but possibly complete – rollout penned for the Beijing Winter Olympics in 2022.

Xu Yuan, a senior researcher with Peking University’s Digital Finance Research Centre, told SCMP that China’s digital currency may be one “the two defining historic events of 2020” along with the coronavirus pandemic.

Generally, the new system would make it easier for the PBOC to trace cashflow and credit data, Xu added.

However, it isn’t clear how or if this would differ from any tracking carried out on traditional online banks.

Former Bank of China President Li Lihui said in a live streaming talk on People’s News on May 5 that the digital Yuan “can become the dominant form of currency,” but that this would depend on whether it allowed for greater efficiency, lower transaction costs, economic scale and general acceptance, Cointelegraph reports.

But for all the talk of revolutionising payment systems, China’s digital currency is not to be confused with cryptocurrencies – of which Bitcoin is probably the most famous type.

Both currencies will be digital and operate via digital wallets, but the most important difference is how the systems are regulated.

China’s DCEP system will be operated and tracked by a central bank, cryptocurrencies like Bitcoin work in the complete opposite way.

Cryptocurrencies are completely decentralised – meaning that the whole system is run publicly by a network of computers.

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Proponents of cryptocurrencies say that these payment systems allow for greater anonymity and offer a way to pay outside of central banks or governments.

But on the other hand, cryptocurrencies are used increasingly for criminal purposes such as illegal drug purchases, the NY Times reports.

In fact, China has been cracking down on its use of Bitcoin in recent years.

Developers of cryptocurrencies often hold fundraising events known as initial coin offerings, which have been banned in China, according to CNBC.

China has been exploring the possibility of a digital currency since 2014, SCMP reports.

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Debt free: Couple explains how they paid off over £50,000 in just two years

Debt free status is often a substantial goal, and Britons are often forced to dedicate a number of years to achieving their target. Sadly, many difficult financial circumstances have been exacerbated by the recent crisis, which has created significant economic strain. Debt often arises in various areas of life, and it can be easy for this to snowball without realisation.

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However, several people have forced themselves to set aside the time to confront their finances.

One couple who experienced rising debt revealed how they were able to eliminate this within two years.

Their debt had reached over £50,000 as a result of student loans and other repayment programmes.

They took to the website Reddit to share their tips and tricks on how to get on top of debt.

The female saver wrote: “We had some extremely difficult years financially early in our marriage, so we sort of got used to eating beans and rice and going with very little extra spending.

“We’ve lived lean, because we had to. There wasn’t any money to spend. But over time, we got a few promotions and things got easier.

“We decided to buy a car to save my husband the bus commute, and I wasn’t inwardly panicking every time I bought groceries.

“Then my husband got a bonus at work. It wasn’t ‘change your life’ money – about £4k – but it was enough to wake us up. 

“We realised we had lived pay check to pay check for so long, just getting by, that we didn’t know what to do with money, or how to have a plan and be proactive with it.”

First, the couple decided to put away £1,000 to start an emergency fund for any rainy day expenses.

They then deployed a technique known as the snowball method – which suggests starting with the smallest debt can be the easiest for those who struggle to make a repayment plan.

It was these techniques which brought the pair closer to achieving their goals and eliminating their debt.

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They added: “The first year we paid off nearly £24,000 in debt, way ahead of our goal.

“This last year, we got excited, tightened up more, and moved our timeline up. And we did it!”

The couple now plan to put away three to six months of expenses in savings in an attempt to live more efficiently. 

The Money Advice Service has provided insight into the various ways Britons can attempt to pay off their debts.

A Debt Management Plan allows people to pay debts back at an affordable rate through one payment a month.

This is suitable for those who have non-priority debts such as credit cards, overdrafts and personal loans.

The service advises Britons to consult a free debt adviser to tackle their financial circumstances.

These individuals can assist people in managing their money, as well as provide assistance with paying off debts. 

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Universal Credit UK: Who is eligible, payment dates and how much claimants receive

Universal Credit is issued by the Department of Work and Pensions (DWP) to claimants each month in a lump sum to provide them with help. The sum recently rose as a result of two measures put into place by the government. Due to the new tax year, claimants saw a payment boost of 1.7 percent, as the benefit freeze finally drew to a close.

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Then, in addition to this increase, the government placed a £1,000 per year boost on the benefit to assist those struggling during the pandemic.

Although this figure will revert after a year, subsequent tax year rises are thought to be beneficial to claimants in the future.

What is important to note about the benefit is that different people are entitled to different amounts.

The figure any claimant receives is likely to vary from person to person, and it is therefore important to check the various segments of the benefit one could be entitled to claim.

However, the government has provided information regarding the standard allowance system on its website.

Single people over the age of 25 could receive £409.89 in benefit, with those in a couple over 25 entitled to £595.04 per month to share between them.

The figure does, however, increase if a claimant has children, a disability, a health need or requires more financial help.

In order to be eligible to make a claim on Universal Credit, Britons must be over the age of 18, but under State Pension age.

However, they must also be resident in the UK, and have less than £16,000 in savings.

Universal Credit is traditionally issued every four weeks to provide regular assistance to claimants.

But those who are new to the service can expect a wait of up to five weeks to receive their first claim.

This is because the DWP says a claim must be processed, taking five weeks to go through the system and arrive at a claimant’s bank account of choice.

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The system has been put under strain recently as a result of the coronavirus crisis, with many forced to wait slightly longer than the standard time.

The department, though, has reassured claimants it is working hard to ensure as high a number as possible receive their payment within the allotted time. 

Universal Credit is slowly replacing six legacy benefits Britons may be more used to receiving.

These are: 

  • Child Tax Credit
  • Housing Benefit
  • Income-Related Employment and Support Allowance
  • Income-Based Jobseeker’s Allowance
  • Income Support 
  • Working Tax Credit

The DWP are gradually phasing these benefits out, however, those who claim them will not have to take any action unless instructed to.

To apply for Universal Credit, potential claimants should head to the online platform to submit their request.

Information such as proof of identity, details of income and savings and bank account details must be provided to the DWP to issue the claim.

The online portal provides regular updates to how a claim is progressing to assist claimants. 

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Pension: Expert offers advice on how to easily track multiple pensions

Pension saving can be undertaken in a number of ways to provide multiple income streams for when a person chooses to finish their working life. The State Pension is provided by the government and is often considered as an income safety net to help with the cost of retirement. However, many Britons accumulate a number of workplace or private pensions throughout their lifetime.

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These streams of income are provided, in part, by an employer who contributes to employees’ pension pots as a form of reward for service. 

The law now dictates every workplace should offer a pension scheme by law, however, it is easy to rack up a number of schemes throughout one’s working lifetime. 

But how can savers keep track of multiple pensions to be able to claim the full amount to which they are entitled upon retirement? 

Express.co.uk spoke to Peter Wood, Partner at Prudential Financial Planning, who provided more insight into the matter, and developments in the pipeline which could help many Britons. 

He said: “At this time, tracking a range of pension will involve multiple statements. Or, if you have a financial adviser, they can track for you. 

“The government has been working with the industry to develop a Pensions Dashboard. This will allow clients to see all of their pensions, including their state pension, online, and will therefore make tracking pensions a lot easier.

“Having one central pension can make life easier, however financial advice should always be taken before switching.”

Mr Wood stated this advice would allow pension savers to understand if any potentially valuable benefits could be lost on transfer.

He added this option also assists in individual circumstances such as charges, fund choice and flexibility. 

However, some may decide multiple pension arrangements are still the best option for them.

In this case, Mr Wood stated there is a potential benefit to be had from keeping this arrangement. 

Mr Wood said it is possible for those who have more than one pension to obtain a 25 percent tax-free drawdown on each pension arrangement. 

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An income drawdown allows savers to take income from their pension fund while the pot remains invested.

This allows withdrawals, whilst helping the pension to continue to benefit from investment growth.

And Mr Wood pointed out a key tip which could help savers.

He stated the tax free drawdowns can be obtained from different pensions at different times.

This may help those who run into difficult circumstances at various times of life, or just need an extra boost in cash.

For those who may have lost track of pensions throughout their lifetime, the government has provided a helpful tool.

The Pension Tracing Service allows pension savers to find contact details for personal or workplace pension schemes.

While the service does not provide information on the value of the pension, or whether someone has a pension, it can assist with contact information.

Developments Mr Wood mentioned are likely to help pension savers to keep track in a more efficient way. 

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Debt free: Saver explains how they paid off £16,000 in debt in two years

Debt can arise in various areas of life, and sadly finances have frequently been made more challenging as a result of the lockdown measures and the recent crisis. However, as much as debt can be tricky to confront, many people are using this time to reassess their finances and attempt to pay off bills.

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Sometimes this can appear an insurmountable mountain to climb, but there is potentially a detailed method Britons can use to clear their debts.

One person in a similar situation revealed how they were able to become debt free in just over two years.

The saver had £16,000 worth of debt spread over nine credit cards, and was unsure how to clear this amount.

But by following a simple method, they were able to achieve their goals, and they took to the Reddit website to explain how.

They wrote: “Pay off that credit card debt, and do it now – today I paid off the last of it!

“I wanted to point out how important for me the ‘feeling’ of success was during this two year process.

“It was absolutely due to the snowball method, and with every balance payoff, I got a ‘high’ driving me to keep going as I took that extra money to tackle the next balance.”

The Snowball Method the user spoke of is often described as the fastest way to pay off debts.

It focuses on paying off the smallest balances first, before moving on to larger ones.

It is therefore known as snowballing, as it encourages savers to build momentum over time when paying off debts.

Snowballing is also designed to give debt payers a psychological boost each time they clear a debt. 

The method, popularised by finance expert Dave Ramsey, repeats in a cycle until all debt is repaid.

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And the Reddit user encouraged others by explaining their repayments further.

They added: “I kept my focus on finances and frugalness. During this process I also documented everything, including success along the way.

“If you’re newer to taking control of your finances, want to pay off debt, and think you’ll require a physiological boost to keep going, I definitely recommend it.”

Another Reddit user also stated the snowball method allowed them to pay off significant debts.

They said: “The Snowball Method is really good at making you feel like you’re getting somewhere.

“It is really good at helping you feel like you are making a dent, even if it is slower, and less of a dent, it is far more tangible, and therefore more likely to keep them going towards paying off their debt.”

The Money Advice Service has offered tips on how Britons can look to pay off credit card debt.

During the coronavirus crisis, some customers may be able to get a three month payment freeze on credit card payments.

However, for those looking to tackle their balance, the service advises moving to a zero percent balance transfer card.

This allows savers to pay off debt with no interest being charged, meaning all payments go towards reducing the size of original debt. 

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Universal Credit: Challenge to ‘absurd’ rules could affect benefit amid coronavirus crisis

Universal Credit was recently given a boost by the Chancellor Rishi Sunak, in a measure intended to help those adversely affected in terms of finances by the lockdown measures. However, one woman has argued the changes have left her worse off, and is now taking her case to court. The single mother of four children, who chose not to be named, launched her case against the government, after arguing she was left £123 out of pocket in comparison to before the crisis.

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The woman, living in the north-west of England, said she had been left with £100 a month to live on after her rent and bills were paid.

Under the coronavirus crisis boost, the woman saw her Universal Credit payment fall from £1,397.92 to £1,275.

The reason behind the drop is because the increase rose her household income past the benefit cap threshold. 

The benefit cap is a limit on the total amount of benefit Britons can receive, and applies to the majority of people in the country.

Legal representatives for the woman, Leigh Day, have argued the benefit rules are “perverse” and far too “stringently applied” during this unprecedented time. 

She also highlighted advance payment deductions, which she argued were as a result of someone stealing her identity to claim the benefit in her name last year. 

The woman has written to work and pensions secretary, Therese Coffey, to discuss her circumstances and put forward her case for judicial review. 

Speaking to the Guardian, she said: “I have only one meal a day, and it’s been like this for ages. 

“I live off toast. I’d rather my kids eat than me. I can’t even remember when I last bought clothes for myself. I’ve been stressed. It’s been horrendous.

“The changes to benefits in the pandemic have left me worse off when in fact they were supposed to help me during this difficult time, how can that be right?”

Solicitors have also asked Ms Coffey to explain the decision behind the retention of the benefit cap and advance payment deductions, despite the coronavirus crisis.

It is thought the case could pressure ministers to review the benefit cap, a policy which has often been unpopular. 

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The benefit cap was intended to encourage those who are unemployed to find work, however, it has been viewed as unfair on marginalised communities such as single parents and carers for children.

It is also thought to be superfluous in a time where Britons are finding it all but impossible to gain new employment. 

Carolin Ott, a solicitor for the woman, said: “Our client argues this is unlawful as it is irrational and discriminatory. 

“The benefit cap is a measure intended to encourage benefit claimants into work, but it is absurd for it to deprive individuals of much needed support during a time when it is entirely unrealistic for them to enter into employment.”

The Department for Work and Pensions (DWP) has said the department is working hard to ensure people are supported during the crisis.

A DWP spokesperson told Express.co.uk: “Universal Credit adapts to your personal circumstances and the vast majority of claimants are better off on it. 

“We estimate that 2.5 million households receiving universal credit will benefit straight away from the increase in the standard allowance.

“We have also taken steps to help ease the burden of debt repayments including reducing the maximum deduction from 40 percent to 30 percent of a claimant’s standard allowance.”

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State pension: How can I get a state pension if I’ve never paid into one?

The new state pension was introduced on April 6, 2016, and created some big changes from the old system. The earliest you can claim your pension is the national pension age, which is currently 65, but will change to 66 in October 2020.

What if I’ve never paid into my state pension?

If you have never worked and do not have a reason for not working, such as being disabled or having a condition that means you can’t work, you do not get any state pension.

The full new state pension is £175.20 per week – but you don’t automatically get this amount.

What you will receive is based on your National Insurance history, and how many qualifying years you have on your record.

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Any man born after April 6, 1951 and any woman born after April 6, 1953 is automatically eligible for the new state pension if they have accrued at least ten ‘qualifying years’ of national insurance contributions.

The exception to this rule is if you are married or in a civil partnership, in which you can qualify for state pension based on your partner’s national insurance record.

Saving into a workplace pension or another type of private pension does not affect how much State Pension most people receive from the Government.

The Department of Work and Pensions only takes into account your NI contributions and does not make an assessment of how much you need from other income sources unless you have low income.

You can get a pension forecast from the Government which will tell you, based on your current record, how much you are set to receive once you reach state pension age.

What are qualifying years?

Qualifying years are years you have spent paying National Insurance as part of your salary in work or receiving National Insurance credits.

You need 35 full qualifying years to get the full state pension.

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They do not need to be consecutive, and National Insurance credits also count towards your qualifying years.

National Insurance credits are given when you take time off work due to something like caring for a child or having a long term illness, or if you are in receipt of certain benefits.

Each qualifying year you add to your national insurance record works out at an extra £4.70 a week once you are able to claim.

If you have gaps in your NIC history and are not in receipt of the full state pension, you can usually pay voluntary Class 3 contributions for the past six years.

Prior to the new state pension, the old state pension was made up of two parts – the basic state pension and the additional state pension.

The new state pension combines those into a single amount, which is higher than the basic state pension.

The full level of the new state pension is £175.20 in 2020/21, although you could get more or less than this.

You won’t get any less than what you would have received under the old system.

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Coronavirus crisis could cost more than 9/11, insurance giant Lloyd’s warns

The insurance giant is set to pay out between $3bn and $4.3bn (£2.5bn to £3.5bn) to cover its customers around the world. And Lloyd’s warned the losses could be even higher if the lockdown runs into another quarter.

The London-based insurance market added the pandemic was likely to become more expensive than the September 11 attacks or all the hurricanes of 2017 combined.

It said: “Lloyd’s believes that once the scale and complexity of the social and economic impact of COVID-19 is fully understood, the overall cost to the global insurance non-life industry is likely to be far in excess of those historical events.”

The 2017 hurricanes and September 11 were geographically contained events but coronavirus has affected the world, Lloyd’s said.

Chief executive John Neal warmed insurers are facing one of their biggest challenges in history.

He said: “The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by COVID-19.

“The Lloyd’s market alone is currently expected to pay claims amounting to some $4.3bn, making it one of the market’s largest payouts ever.

“What makes COVID-19 unique is the not just the devastating continuing human and social impact, but also the economic shock.

“Taking all those factors together will challenge the industry as never before.”

Around 15 percent of the payout is expected to go to UK customers.

European customers will get around 7 percent, while those in the US and worldwide category will be paid 58 percent.

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The rest of the world will get 10 percent of the payouts.

Lloyd’s paid out $4.8bn (£3.9bn) when the Caribbean was hit be devastating hurricanes in 2017.

And after 9/11 it paid out $4.7bn (£3.8bn).

Lloyd’s said that its estimates for the coronavirus outbreak assume that some form of the lockdown and social distancing continue through 2020.

It also took into account forecasts of major declined in global Gross Domestic Product (GDP).

There have been more than 4.39 million confirmed cases of coronavirus worldwide and 296,900 people have died.

In the UK 233,151 have tested positive and the death toll is 33,614, according to the Government’s latest figures.

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