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Welfare Benefits Handbook 2025/26
This content was last updated:
01 Dec 2025
Part 2: Universal credit
Welfare Benefits Handbook 2025/26
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Welfare Benefits Handbook 2025/26
Part 2: Universal credit
Back to previous
Part 2: Universal credit
Chapter 2: Transferring to universal credit
Key facts
1. The universal credit system
2. When you come under the universal credit system
What has happened to legacy benefits?
Tax credits
Income-related employment and support allowance and housing benefit
How your legacy benefits are affected
New-style jobseeker's allowance and employment and support allowance
3. Transferring to universal credit
Natural migration
People who are severely disabled
Managed migration
4. Change of circumstances
Couples
Chapter 3: Universal credit
Key facts
1. Who can get universal credit
Couples
Receiving education
2. The rules about your age
16/17-year-olds
3. People included in the claim
4. The amount of benefit
Working out your universal credit
Step 1: calculate your maximum amount
Step 2: work out your earnings and how much can be ignored
Step 3: work out your other income and how much can be ignored
Step 4: calculate your total income
Step 5: calculate your universal credit entitlement
Transitional protection
5. Special benefit rules
6. Claims and backdating
Making a claim
When you do not need to make a claim
Who should claim
Information to support your claim
The date of your claim
Backdating your universal credit
If you claim the wrong benefit
Claiming in advance
7. Getting paid
Alternative payment arrangements
Budgeting advances
Change of circumstances
8. Tax, other benefits and the benefit cap
Tax
Means-tested benefits
Non-means-tested benefits
The benefit cap
Passports and other sources of help
Chapter 4: People included in your universal credit
Key facts
1. Couples
Spouse or civil partner
Living together as a married couple or civil partners
Living in the same household
Being in a sexual relationship
Your financial arrangements
A stable relationship
Children
Your appearance in public
Households
Couples living apart
Challenging a decision that you are a couple
2. Children
Who counts as a child
Who does not count as a child
Responsibility for a child
Chapter 5: The maximum amount
Key facts
1. What is the maximum amount
After a death
2. The standard allowance
3. Elements
Child element
The two-child limit
Limited capability for work element
Transfers to universal credit
Joint claims
Limited capability for work-related activity element
Transfers to universal credit
Joint claims
Carer element
Childcare costs element
Housing costs element
Transitional element
Calculating your indicative amount
Calculating the transitional element
When the transitional element 'erodes' or stops
Changing a decision about the transitional element
Chapter 6: The housing costs element
Key facts
1. Who can get a housing costs element
When you cannot get a housing costs element
2. The payment condition
Rent payments
Payments that are not eligible
Service charge payments
Payments that are not eligible
Extra conditions for social rented sector tenants and owner-occupiers
3. The liability condition
Liability to pay rent
People treated as liable to make payments
Another person is liable but is not paying
People treated as not liable to make payments
Contrived agreements
4. The occupation condition
Moving home
More than one home
Temporary accommodation while repairs are carried out
Fear of violence or abuse
Temporary absence from home
5. How the housing costs element is calculated: general rules
If you have more than one home
Extended benefit unit
Who counts as a non-dependant
People who are not non-dependants
The number of bedrooms you are allowed
Additional bedrooms
Temporary absence from home
What counts as a bedroom
Housing costs contributions
When no deduction is made
The amount of the deduction
6. The housing costs element for private rented sector tenants
Core rent
Jointly liable for payments
Cap rent
Categories of dwelling
Local housing allowance rates
7. The housing costs element for social rented sector tenants
Solely liable to make payments
Jointly liable to make payments
The bedroom tax
8. The housing costs element for owner-occupiers
The waiting period
Exceptions
Chapter 7: Income
Key facts
1. Whose income counts
2. What counts as income
Income or capital?
3. Earnings
Employed earnings
What counts as earnings
What does not count as earnings
Payments when you stop work
Working out net earnings
Self-employed earnings
Receipts from self-employment
Permitted expenses
Offsetting losses
Minimum level of earnings
Running your business as a sole trader, partner or limited company
Surplus earnings from employment and self-employment
4. Other income
Benefits
Benefits that are taken into account
Benefits that are not taken into account
Maintenance payments
Student loans and grants
Employment and training schemes
Occupational and personal pensions and annuities
Insurance payments
Trusts, personal injury payments and special compensation schemes
Income from capital
Assumed monthly income from capital
Rental and other income from capital
Sports awards
Specified miscellaneous income
Other income
5. Notional income
Deliberately getting rid of income
Cheap or unpaid labour
Failing to apply for income
Deferring a state pension
Leaving funds in an occupational or personal pension
6. Working out monthly income
Earnings
Other income
Chapter 8: Capital
Key facts
1. The capital limits
Temporary disregard after a move from tax credits to universal credit
2. Whose capital counts
3. What counts as capital
Savings
Fixed-term investments
Property and land
Ownership of capital and loans
Trusts
Money held by your solicitor
Income treated as capital
4. Disregarded capital
Your home
When the value of the property is disregarded
The home of a partner, former partner or relative
Personal possessions
Business assets
Personal pension schemes
Insurance policy and annuity surrender values
Benefits
Arrears of benefits and tax credits
Other benefits and payments
Personal injury payments and special compensation schemes
Special compensation schemes
Funeral plan payments
Social services and community care payments
Miscellaneous payments
5. Deliberately getting rid of capital
Paying off debts and bankruptcy
Paying for goods and services
Intention to claim or increase universal credit
The diminishing notional capital rule
6. How capital is valued
Market value
Expenses of sale
Debts
Jointly owned capital
Treatment of assets after a relationship breakdown
Shares
Unit trusts
The right to receive a payment in the future
Overseas assets
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CPAG. "Part 2: Universal credit." In
Welfare Benefits Handbook 2025/26.
, 2025. Accessed February 26, 2026.
CPAG,
https://askcpag.org.uk/?id=-263805CITANCHOR.
CPAG. "Part 2: Universal credit." In
Welfare Benefits Handbook 2025/26.
, 2025. Accessed February 26, 2026. https://askcpag.org.uk/?id=-263805CITANCHOR.
Contributor(s):
CPAG
Title:
Welfare Benefits Handbook 2025/26
Site name:
CPAG
Publisher:
Publication date:
March 21, 2025
Date accessed:
February 26, 2026
URL:
https://askcpag.org.uk/?id=-263805CITANCHOR
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