A rule change to Universal Credit payments will stop thousands missing out on cash from November - what you need to know

Wednesday, 21st October 2020, 1:13 pm
Updated Wednesday, 21st October 2020, 1:14 pm

Thousands of people who claim Universal Credit are to benefit from a new rule change which will prevent them losing money if they receive payment twice in one month.

The change is estimated to benefit around 85,000 workers who claim the payment, with the rule to take effect from next month.

Why is the change being made?

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From 16 November, if workers are paid twice in the same month by their employer, the benefits system will only register one payment in the following assessment period, preventing people from losing money.

The change comes following a ruling by the Court of Appeal in June which said the “irrational and unfair” system pushed four single mothers into poverty, and forced them to rely on foodbanks.

The Department for Work and Pensions (DWP) was ordered to fix the flaw, and a new way to process payments has now been confirmed.

How will payments be processed?

Under the current automatic system, monthly payments are supposed to be adjusted based on changes in a claimant’s income. However, the system is flawed and only takes wages into account that are received in the same calendar month.

Because of this, it fails to make allowances for claimants who are paid multiple times in the same month. This could be due to payday falling on a weekend or a bank holiday.

As the system doesn’t take this into account, it can leave workers without any benefits for a whole month when they don’t get paid.

A portion of the “double payment” is then deducted from their next Universal Credit payment because of the taper rate. This is when 63p for every £1 earned over the work allowance is subtracted.

The amendment won't change the day workers are paid, it will simply be recorded in the following Universal Credit assessment period instead.

However, it will only apply to employees who are paid monthly, rather than workers who receive weekly or fortnightly payments.

Who can claim Universal Credit?

Universal Credit is a payment that is made to help support those who are on a low income, or out of work, with their living costs.

The benefit is paid in monthly installments, or twice a month for some people in Scotland, and was introduced to replace Child Tax Credit, Housing Benefit, Income Support, Income-based Jobseeker’s Allowance, income-related Employment and Support Allowance (ESA) and Working Tax Credit.

To be eligible to claim it, you need to meet one of the following criteria:

you’re on a low income or unemployedyou’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 and your partner have £16,000 or less in savings between youyou live in the UK

The number of children you have does not affect your eligibility for Universal Credit, but it may affect how much you get.

If you live with your partner, their income and savings will be taken into account - even if they are not eligible for Universal Credit.

You cannot claim Universal Credit if you receive, or are entitled to, the severe disability premium.

A version of this article originally appeared on our sister site, The Scotsman.