If you’re struggling with debt, Universal Credit (UC) can be a vital lifeline. Offering financial support and a pathway to regain control of your finances, UC was introduced as a way to simplify the UK’s state welfare system. Since its introduction in 2013, UC replaced what used to be a series of individual benefits with one single payment.
In this guide, we explore how Universal Credit can help to ease financial burdens, especially for those managing debt. We also break down how UC works, discuss the benefits it combines, and outline how it can provide additional resources for individuals struggling with debt.
What is Universal Credit?
Universal Credit is the UK government’s overarching benefits scheme that’s designed to help struggling individuals cope with the cost of living. As mentioned above, this system was reformatted in 2013 with the aim of simplifying the entire welfare process and providing combined financial aid to those in need. This simplification saw six older key benefits (outlined below) replaced and consolidated into a single monthly payment. This system was designed to make claiming benefits easier and to reduce administrative issues and payment delays for claimants and the government.
As a form of state benefit, UC supports individuals and families with low income, those out of work, or those unable to work due to health or disability. Payments adjust according to the claimant’s circumstances, making sure they are tailored support for each household. According to government statistics, as of January 2024, there were 6.4 million claiming Universal Credit. This is up from 3 million before the COVID-19 pandemic.
What benefits are included in Universal Credit?
As discussed above, Universal Credit is made up of what used to be six individual benefit payments. In theory at least, this streamlined approach helps to ensure that individuals who successfully apply for UC only have to make one application (rather than multiple) and receive support tailored to their own individual circumstances. The benefits included are:
- Income support: Assistance for those on a low income or unable to work due to specific circumstances.
- Jobseeker’s allowance: Support for individuals actively seeking employment.
- Employment and support allowance: Financial aid for those with limited capability to work due to health issues.
- Working tax credit: Help for individuals or families on low incomes who are in work.
- Child tax credit: Additional support for those with dependent children.
- Housing benefit: Assistance with housing costs, such as rent or mortgage interest payments.
Can Universal Credit help with debt?
Yes – while it is not specifically designed as a debt relief tool, UC can ease financial pressures for individuals struggling with debt by offering a consistent source of income to help manage essential living costs. By alleviating this pressure, individuals dealing with debt are better able to prioritise their debts and allocate their income more effectively.
Aside from providing additional funds that can be used to cover necessary expenses like rent, food, and utility bills – which frees up other income to focus on repaying debts – UC can also help in other ways. This includes:
The budgeting advance scheme: If you are struggling financially, this can help you from falling deeper into debt. It does this by providing interest-free loans to cover emergency costs or essential one-off expenses, meaning you can become less reliant on high-interest credit options.
Debt management support: Universal Credit can include deductions for outstanding debts like rent arrears or energy bills, helping you manage repayments in a structured way.
Free financial guidance: If you are struggling with debt, through Universal Credit you can access debt advice services to help you plan repayments and take back financial control.
How much is Universal Credit? : What are you entitled to?
There is no one set amount for UC. This is to say, if you successfully apply for UC, the amount you receive will be tailored to your individual circumstances. Factors such as your age, employment status, relationship/martial status, and any additional needs you or your household might have all need to be considered. However, to give you a rough idea of what you might expect, below is a breakdown of the standard monthly allowances for eligible applicants:
- Under 25 single individual – £311.68 per month
- Over 25 single individuals – £393.45 per month
- Living with a partner and both under 25 – £489.23 per month (shared between you)
- Living with a partner and one of you is 25 or over – £617.60 per month (shared between you).
As discussed above, your actual entitlement may be higher or lower depending on your circumstances. For example, if:
- You have caring responsibilities for someone who is ill or disabled.
- You or your partner’s monthly income or earnings change.
- You are facing additional costs associated with raising a child with disabilities.
How to apply for Universal Credit?
Applying for UC is relatively straightforward and is most commonly done online. To do this, you’ll need to create an account on the government’s Universal Credit platform. You’ll also need the following information handy before you start:
- your bank account details
- your email address
- your phone number
- documentation that can prove your identity (a driving licence, passport, payslip or P60)
- your National Insurance number (if you have one)
- your payslips (if you are currently employed)
- documentation on any savings and any investments you may hold.
It’s important to remember that once your account is set up, your claim must be admitted within 28 days. If this deadline is missed, you’ll need to start the process again. Your claim officially starts from the date you submit it through your account. It’s also key to note that if you live with a partner, you’ll have to submit a joint application, even if only one of you meets the eligibility criteria. This is because UC considers your household’s total income and savings when calculating your entitlement. As part of the process, your partner’s financial information will also need to be included.
If you’re not able to apply online, or you need additional support with an application, you can contact the Universal Credit helpline.
How can MoneyPlus help?
If you’re struggling with overwhelming debt repayments, UC can provide a crucial lifeline. However, it’s rarely a full solution. If you’re already claiming Universal Credit and it still feels like you are drowning in debt, seeking professional advice from a debt management specialist may be what you need to finally regain control over your finances.
Here at MoneyPlus, we can help you find the tailored debt solution that best suits your specific needs. From affordable Debt Management Plans (DMPs) to formal Individual Voluntary Arrangements (IVAs), by combining the support of Universal Credit with professional debt guidance, we can help you take meaningful steps toward managing your finances more effectively and once again finding long-term financial stability.
