How to manage Universal Credit payments
12th Jul 2020
Managing Universal Credit payments can seem like a daunting process if you’ve not applied before given all the different phases and information you need to report. And even if you have applied before, that doesn’t make going through the whole procedure again any easier. But fortunately, by breaking down the various steps, you’ll be able to navigate the task and find a way to make your finances work.
How does Universal Credit work?
Universal Credit works by taking a look at your situation and figuring out how much financial support you’re able to receive. In the past, a lot of these factors would be separate, whereas now all benefits come under the remit of Universal Credit. A few of the things that will affect how much Universal Credit you can get include:
- Living situation
- Number of children and dependents
- Employment status
To work out how much Universal Credit you could get, use entitledto’s Benefits Calculator.
Once you’ve applied for Universal Credit, you’ll receive a regularly scheduled payment. The payment is subject to change each month depending on whether any of your circumstances change (e.g. you start a new job).
Depending on where you live in the UK, you will get paid on slightly different schedules. In England and Wales, you’ll get paid on the same date every month. In Scotland, you have the option to split your payments so you can get paid twice a month, and in Northern Ireland, this is the default option (although you can arrange to be paid once a month if you’d prefer).
For guidance on how the application process works, take a look at our guide to applying for Universal Credit.
How to budget monthly
The best way to get the most from your money is to set up a monthly budget. By working out how much you’re due to get from your Universal Credit payments and how much you’ll need to cover bills before paying for food and other spends, you can put yourself in a better financial position.
To budget monthly, you should first work out your total income by adding up your Universal Credit and any other sources of income (e.g. salary). Next, add up all of your bills such as rent and utilities, then subtract this amount from your total income. Finally, work out how much you spend on other costs throughout the month (e.g. travel and food shops) and add this to the budget.
For more help setting up a monthly budget, check out our guide to budgeting monthly bills.
How do I manage my bills?
The best way to manage your bills is to work out how much they’re costing you each month and add this information to your budget. From there, you should work out what your other expenses are (e.g. travel, foods shops) and add this information to the budget as well.
You should then subtract these figures from your monthly income, which can be made up of your Universal Credit payments and any salary payments you receive. If you feel like your bills are eating up too much of your budget, take a look at our tips to saving money on your bills to see if there’s any way you could cut back.
If you’d like to take the hassle out of managing your bills, a thinkmoney Current Account could be the perfect way for you to remove this stress from your routine. Whenever you get paid, the money to cover your bills is automatically set to one side, meaning you never have to worry about overspending and can rest assured that all the money in your account is yours to spend.
What should I do if I can’t wait for my next Universal Credit payment?
In some cases, you might need your Universal Credit payment much sooner than it’s scheduled. This is the case for a lot of people getting their first payment, as it takes five weeks to come through. The good news is that you can get an advance on your payments, although it’s worth understanding what this advance means.
An advance on your Universal Credit is essentially a 0% interest loan, which means that you’ll have to pay it back in full, but it won’t cost you anything extra. To get an advance payment, you should:
- Speak to your work coach at your first Universal Credit interview
- Apply online through your account
- Call the Universal Credit helpline
You should also note that you can’t get an advance until your first interview. Additionally, you don’t need to ask for the full amount - if you only need half of the payment, make sure to ask for this when applying. Should you then need more, you can ask for a second advance payment, although the two advances can’t add up to more than the original total.
Advance payments usually take about three days to be paid, and they’ll always be paid into the same account as your other Universal Credit payments. Once you’ve received the advance, you have 12 months to pay it back in full. The Department for Work and Pensions (DWP) will take the repayments back automatically, although these deductions will never be more than 30% of your payment.
The DWP can also take what’s called a “last resort deduction” where they take part of your Universal Credit payment to pay for your rent or utilities. This will only happen if you’re about to be evicted or are at risk of having a utility shut off. If you’re concerned about paying back an advance or about last resort deductions, speak with your work coach.
If you get rejected for your advance, you can appeal the decision by asking the DWP to look at the case again. Should this happen, it might help your case to show them how your circumstances have changed. If this doesn’t work, you can apply for a Budgeting Loan from the government.
What should I do if I’m struggling to pay my rent?
Having difficulty paying the rent is a problem a lot of people have, and if this is the case for you, one option is to set up Alternative Payment Arrangements (APA). These payments work in three ways:
- Your rent can be paid directly to your landlord
- You can agree to get paid more than once a month
- You can split the payment between yourself and your partner
APA can be sorted out at any point when you’re receiving Universal Credit, so if you think that this would make paying your rent easier, speak to your work coach. However, not all APA applications are accepted, and all decisions are final so there’s no chance to appeal them. For this reason, it’s best to speak with your work coach about whether you’d benefit from an APA.
In some instances, a Universal Credit payment won’t be enough to cover your rent, and in this case, you should speak to your local council about getting a discretionary housing payment. This payment will make up any difference in your rent, but because they’re given out by local councils, you’ll need to speak to them directly to see if you’re eligible.
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