Universal credit, working tax credit and housing benefit


  1. Universal credit
  2. Increase in benefits from 6 April 2020
  3. Interaction with time to pay arrangements
  4. Interaction with SEISS

Universal credit

Universal credit is a tax-free state benefit that is available for individuals and the self-employed on low incomes. Measures taken by the Government to enable faster access to universal credit during the coronavirus outbreak include dispensing with the usual requirement for a minimum income floor. For more details, see the Universal credit guidance note.

Those who are not currently claiming tax credits, who believe they now qualify for support, should make a claim for universal credit. Those still within the tax credits regime should note that universal credit is a replacement for tax credits, not a benefit that is claimed in addition to tax credits; if existing tax credits claimants apply for universal credit, their tax credit award will end and they will not be able to get back into the tax credits system.

Claimants are reporting that the online application process requires the submission of their payment card details, including the three-digit security number. This is causing anxiety, and some claimants abandon the process due to security concerns. They may revert to their advisers to confirm the legitimacy of this request. The online application cannot be completed without these details being submitted.

Once the online application is completed, the claimant must have a telephone interview, and delays are being experienced at this stage. However, after the interview, payment of the ‘advance’ is usually made within two to three days of the application being approved.

Increase in benefits from 6 April 2020

The standard allowance for universal credit and the basic element of working tax credit are to be increased by £20 per week from 6 April 2020. See the Computing the working tax credit guidance note.

From April 2020, local housing allowance rates are increased to the 30th percentile of market rents. This applies to all private renters who are new, or existing universal credit housing element claimants, and to existing housing benefit claimants.

Interaction with time to pay arrangements

It should be noted that an application for universal credit usually means that HMRC is released from any existing time to pay arrangement in relation to tax credit overpayments, and that the debt is transferred to the Department of Work and Pensions. The tax debt will be repaid through a reduction in the universal credit award.

Any other time to pay arrangements will continue to stand, although of course the individual may need to renegotiate existing arrangements with HMRC if their circumstances have changed due to the economic impact of the pandemic. See the Time to pay arrangements for tax due under self assessment guidance note.

Interaction with SEISS

Regulations (SI 2020/522) have been amended to ensure that payments from the SEISS are taken into account as earnings for the purpose of universal credit. This ensures that self-employed claimants do not receive duplicate payments for living costs from both SEISS and the universal credit benefit.

Payments from the CJRS are not taken into account as earnings for a self-employed claimant because the payments are obviously intended for the furloughed staff of the self-employed person’s business.

Where a self-employed claimant receives coronavirus support via a loan or grant to help with business recovery, those support payments will be disregarded for a period of 12 months, for the purposes of universal credit.