Universal credit and coronavirus - a summary
This briefing explains changes to universal credit (UC) as result of the outbreak of coronavirus disease (COVID-19). As more information becomes available, the briefing will be updated.
The standard allowance, which is used in the calculation of a claimant’s maximum UC, has been increased to the following amounts:
£342.72 for a single claimant younger than 25
£409.89 for a single claimant aged 25 or older
£488.59 for joint claimants who are both younger than 25
£594.04 for joint claimants who are both aged 25 or older
These increased amounts will apply to the first UC assessment period that ends on or after 6 April 2020. These rates apply for the 2020/21 year; it remains to be seen whether the rates will be reduced again.
Self-employed people with low earnings who are claiming UC are often treated as earning more income than they actually have earned. The DWP compare real earnings with how much they expect self-employed people to earn each month. These expected earnings are called a claimant’s ‘minimum income floor’ (MIF). UC payments to claimants who have a MIF are worked out as if they have earned that amount, whether they have or not. The government has announced that from 6 April 2020 the MIF will be temporarily relaxed. Self-employed people who claim UC will not be treated as earning more income than they actually have earned. This change will apply to all UC claimants, will last for the duration of the coronavirus outbreak, and new claimants will not need to attend the job centre to demonstrate gainful self-employment as they would normally.
To give effect to this announcement, the DWP will use their discretion to:
treat the amount that claimants are expected to earn as being a lower rate (including zero) than that set out in the regulations
delay deciding whether or not someone is in gainful self-employment
treat someone who is already in gainful self-employment as no longer being in gainful self-employment
extend the first twelve-month period of gainful self-employment for as long as the DWP considers appropriate
exempt a claimant from a work-search requirement or a work-availability requirement if, as a result of the rules explained in the above points, these requirements would normally apply to the claimant.
The government is providing support for some self-employed people through the Self-Employment Income Support Scheme (SEISS).
When earnings from self-employment are calculated for UC, the SEISS payment counts as a receipt from self-employment in the assessment period in which it is received. No deduction can be made from self-employed earnings in respect of wages paid by the claimant to an employee where those wages are covered by the furlough scheme.
Any payment that a claimant receives in respect of a furloughed employee or a grant or loan to meet the coronavirus-related expenses or losses of their trade, profession or vocation, is disregarded as capital for UC for 12 months from the date of receipt.
UC Entitlement
The DWP has confirmed that UC claimants will only be reimbursed for childcare that has actually taken place during an assessment period. Claimants who continue to pay their childcare provider in order not to lose the childcare place, but are not receiving any childcare, will not be reimbursed for the costs.
The Local Housing Allowance (LHA) rates are used to work out your UC housing costs element. From 6 April 2020 LHA rates have been made more generous by setting the LHA level at the lower of either the rent at the 30th percentile of local rents or the revised national caps. You can check the LHA rates for each area on gov.uk.
Where UC is claimed but no award made, or an award ends, because the claimant’s income is too high, then the DWP may treat the claimant as making a new UC claim on the first day of each subsequent assessment period for up to five months. By treating the claimant as making a new claim it also allows for surplus earnings to be applied to the UC award – see the CPAG Handbook for further information about surplus earnings.
There have been no formal changes to the rules regarding Universal Credit entitlement during periods of absence from the UK. However, a DWP minister has said that 'the DWP continues to support existing benefit recipients in exceptional cases where their absence abroad goes over the period allowed under the temporary absence benefit rules and are awaiting repatriation due to covid-19 travel restrictions'.
The NHS test and trace self-isolation payment will not count as income for UC.
In the first months of the crisis DWP announced the following temporary changes to their usual processes:
Access to job centres is being limited. Note that the Secretary of State has said that she is ‘working with local managers to start fully reopening jobcentres in July'.
People affected by coronavirus will be able to apply for UC and can receive up to a month’s advance without physically attending a job centre.
All face-to-face disability and sickness assessments are suspended; anyone with such an assessment booked should be contacted by the DWP to rearrange this meeting. DWP have confirmed that this suspension will continue. Some assessments are taking place by telephone – DWP have said that people who fail to attend a telephone assessment could have their benefit stopped.
Claimants are mostly accessing DWP services by phone and online, claimants do not need to attend the jobcentre unless invited to do so by DWP.
DWP paused arrears deductions from Universal Credit from late-April until 10 May 2020. Third party payments that were suspended included those for arrears of rent, service charges, and council tax arrears.
Recovery of overpayments from UC were paused until July 2020. Recovery of UC advances continued throughout this time. DWP have announced that recovery of overpayments will start again.
For a period of three months from 30 March 2020:
There will be no work-search requirements imposed on claimants.
Any work-search requirement already imposed on a claimant ceases to have effect.
The requirement on claimants to be able and willing to take up paid work has been changed to a requirement to be able and willing to take up paid work, or to attend an interview, at the end of the three-month period.
The three-month period may be extended for some or all individuals if deemed necessary.
Guidance has been updated to make clear that the three month period is not being extended. The following text has now been deleted from understandinguniversalcredit.gov.uk: ‘All requirements to attend appointments, undertake work preparation, undertake work search and be available for work have been temporarily suspended in response to the coronavirus outbreak’.