A Simple Guide to Universal Credit
The coalition government elected in 2010 believed the benefit system was "broken" and in need of radical overhaul. Previously three distinct bodies, HMRC - Her Majesty's Revenue & Customs, DWP - Department for Work & Pensions and local Councils have been involved in making benefit payments. This resulted in much confusion and some duplication of payment. The key part of the Government solution was the introduction of a Universal Credit (UC).
This new benefit will absorb no fewer than six existing benefits:
- Income Support
- Job Seeker's Allowance (JSA)
- Employment & Support Allowance (ESA) - Child benefit
- Carer's Allowance
- Maternity Allowance
These benefits will be phased out as UC becomes more widespread. Every recipient of UC will need to apply in one or other of the following ways:
- Online via www.gov.uk
- By telephone to 0345 6000 723 between 8.00am and 6.00pm Monday to Friday - By a face-to-face interview at a Job Centre Plus office
There will be NO automatic transfer from existing benefits to UC. If applications are not made in a timely fashion, the benefit payments will cease and claimants will be left without any income. Inevitably, this will result in the landlord not receiving payment of rent. The UC scheme will at present only be paid monthly in arrears to a single recipient in each household. Previously, benefits were paid weekly, fortnightly or four weekly to individual claimants. The UC scheme as it stands only caters for claimants who have the most straightforward claims i.e. no dependants, no disabilities etc. UC is gradually being developed and rolled out nationally.
The government introduced a cap, or a ceiling of £26000. As of Autumn 2016 the benefit cap will be £23,000 for anyone receiving benefits in London and £20,000 outside of London. State pensions will not be affected by the above changes.
All these changes will inevitably lead to uncertainty for landlords who would be wise to keep a closer eye on their tenant's payment of rent in the future.
Landlords will need to build up their knowledge of UC so they know how best to deal with tenants who claim benefits.
Our more detailed guide on Universal Credit is available here.
For further technical advice from an independent consultant, click here.