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COVID-19: A guide to Universal Credit

What is Universal Credit?

Universal credit was brought in to replace benefits such as Child Tax Credit, Housing benefit, Income support, to name but a few. The payment is designed to help with your living costs and is paid monthly, or twice a month for some people living in Scotland.


Who is eligible?

If you are a contractor that has been advised that you aren’t eligible for government initiatives such as the Coronavirus Job Retention Scheme (CJRS) and the COVID-19 Self-employment Income Support Scheme you may be entitled to claim Universal Credit, providing you also satisfy the below criteria.

  • you’re on a low income or out of work
  • you’re 18 or over (there are some exceptions if you’re 16 to 17)
  • you’re under State Pension age (or your partner is)
  • you live in the UK
  • you and your partner have £16,000 or less in savings between you

On that final point, it has been confirmed that if you are a PSC or self-employed contractor and have money set aside to pay your tax liabilities, this money won’t count as savings. Written confirmation from a spokesperson at the Department for Work & Pensions has stated: "Most commonly, we'd expect people to have business assets in a business account, including savings for tax liability, which would not be counted towards their capital limit. However, if someone has money in their personal account to be used for business purposes, it won't be counted towards their capital, but they may be asked to prove that the money is for business purposes."

You will need to make a note of this in your online universal credit application and also when a representative calls you. Further information on the above criteria can be found here.


How much can you claim?

This figure varies depending on each individual’s circumstance. It is made up of a standard allowance plus any extra amounts that apply to you. For example if you have children, a disability or health condition that prevents you from working or you need help paying your rent.

The standard allowance again varies depending on your circumstance, further details can be found here along with details of any extra amounts you may be able to claim.

As of April 6th 2020 and in light of the current COVID-19 crisis, the Government are increasing the standard allowance by an additional £20 per week, on top of the usual annual increase.

There is a benefits calculator available on HMRCs website which can help you identify what you may be able to claim.


How does it work?

It is paid once a month into either your bank, building society or credit union account and it usually takes around 5 weeks for the first payment to come through. However if you can’t wait 5 weeks, then you may be able to apply for an advance payment.


How do you claim?

You can apply for universal credit online and in order to do so you will need the following information:

  • your bank, building society or credit union account details (call the Universal Credit helpline if you do not have one)
  • an email address
  • information about your housing, for example how much rent you pay
  • details of your income, for example payslips
  • details of savings and any investments, like shares or a property that you rent out
  • details of how much you pay for childcare if you’re applying for help with childcare costs
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