Universal Credit: Citizens Advice warn that payments may fluctuate – up to 63% reductions

Universal Credit has seen unprecedented demand over the last few weeks due to coronavirus. Thousands, if not millions of people have applied for state support due to losing income or employment from the effects of the disease.


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Incomes in particular could prove to be problematic for people at the moment, as Universal Credit payments can change if a person’s wages fluctuate.

This could be a problem for some workers whose hours aren’t set in stone, meaning that budgeting will become difficult.

Kate Smith, a Senior Benefits Expert at Citizens Advice commented on this: “Understanding how much Universal Credit you’ll be paid can be very confusing, as it can fluctuate from month to month, depending on how much you’re earning.

“If you’re unsure how Universal Credit works, visit the Citizens Advice website for more information on how your payment is calculated, and you can speak to an adviser online or on the phone if you need more help.”

This could be even more complicated for people who are furloughed.

Companies can now put through claims for the coronavirus job retention scheme, meaning that the affected employees should see income from this scheme in the coming days.

Thankfully, Citizens Advice also provide a specific example of how Universal Credit can fluctuate for someone who has been furloughed:

“Zoe”, 40, is a single parent with an eight-year-old daughter. She earns £1,200 after tax each month and gets paid on the last day of the month. The rent on their two-bedroom council flat is £450 a month.

On March 16 Zoe’s employer said she would not be able to continue working, and so she applied for Universal Credit that day.

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Her Universal Credit standard allowance is £409.89, and she will also be entitled to £281.25 child element, and £450 housing costs element which comes to a maximum entitlement of £1,141.14 a month.

She has a work allowance of £292 because she has a child, but this is the lower rate because her Universal Credit includes a housing cost element.

Zoe’s first Universal Credit assessment period was March 16 to April 15.

During this time, she was paid £650 on March 31for the work she did that month.

The first £292 of her earnings are ignored due to her work allowance, leaving £358 which is taken into account. Her Universal Credit is reduced by 63 percent of £358 which is £225.54.

This means Zoe will be paid Universal Credit of £915.60 (£1,141.14 – £225.54) around one week after the end of the assessment period, approximately April 22.


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As we move into the following month the assessments become a bit more complicated.

From here, arrears from the Job Retention Scheme are taken into account:

Zoe’s second assessment period runs from April 16 to May 15, and it is assessed based on her earnings of £1,520, which include arrears back to March 16 under the Job Retention Scheme.

Her work allowance means £292 of the earnings are ignored leaving £1,228. Zoe’s Universal Credit is reduced by 63 percent of £1,228 which is £773.64.

This leaves Zoe with £367.50 Universal Credit, which is paid around May 22.

The third and final assessment period in the Citizens Advice example is then examined.

Three months is a key time frame to examine at the moment as various payment “holidays” are in place which could last for up to three months, having a knock-on effect for income:

Zoe’s third assessment period runs from May 16 to June 15 and is based on her earnings of £1,010. Her work allowance of £292 is ignored leaving £718. Her Universal Credit is reduced by 63 percent of £718 which is £452.34.

This leaves Zoe with £688.80 Universal Credit which is paid around June 22.

All of this could be affected further if a claimant decides to accept an advance payment.

Fortunately, Citizens Advice also analysed how this could affect Universal Credit payments down the line:

If Zoe had taken a £600 advance payment to tide her over after applying for Universal Credit she could also have to repay £50 a month, because the Department for Work and Pensions usually tries to recover the advance over 12 months.

As a result her April Universal Credit payment would be reduced from £915.60 to £865.60, her May payment would be reduced from £367.50 to £317.50, and her June payment would be reduced from £688.80 to £638.80.

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