Calculating universal credit
Last updated: 22/01/2020
The actual amount of universal credit you receive depends on the number of children you have, any disabilities, housing costs, childcare costs, savings, earnings and any other income. The amount you receive will be based on your circumstances in the month before you are paid. This is called the assessment period. Your universal credit could vary each month if your circumstances change in the assessment period before your universal credit is paid.
Universal credit is made up of different amounts called elements. The elements are all added together to give the maximum monthly amount of universal credit you could receive. This amount may be reduced depending on any other income you are getting.
Standard allowance element
This is an amount given for the person making the claim. It includes the extra amount added, until at least the end of March 2021, because of the coronavirus.
Single claimant under 25: £342.72
Single claimant 25 or over: £409.89
This is an amount given for each child but it is usually only given for two children but there are exceptions to this.
It is given for all children born before 6 April 2017 but if you already have 2, or more, children born before this date and have another after it you will not get universal credit for this child. Exceptions also apply where a third, or subsequent child, born on or after 6 April 2017, has been adopted, there is a kinship care arrangement, or the child was conceived as a result of rape. If your third or subsequent child has a disability you will receive a disabled child element but not the child element for that child.
If you already receive universal credit for more than two children, born on or after 6 April 2017, you will continue to get it for all of them for as long as they remain your responsibility. If you have two or more children born after 6 April 2017 then have another child, you will not get universal credit for the new baby.
Mary has a daughter born on 9 January 2014 and a son born on 16 February 2018. She will get universal credit for both these children. If she has another child she will not get universal credit for this child unless the child has a disability.
If Mary had 3 children born before 6 April 2017 she would get universal credit for all of them but would not get it for any other child born after this date unless that child had a disability.
First child or qualifying young person born before 06.04.17: £281.25
Child or qualifying young person: £235.83
Disabled child or qualifying young person lower rate: £128.25
Disabled child or qualifying young person higher rate: £400.29
Disabled child elements
If your child has a disability you will get one of these elements added to your award as well as the child element.
There are two disabled child elements:
- A lower amount for children getting disability living allowance or personal independence payment
- A higher amount for children getting the highest rate of disability living allowance care component, the enhanced rate of personal independence daily living component or who are severely sight impaired.
If your 3rd or subsequent child, born on or after 6 April 2017, has a disability you will get one of these disabled child elements but not the child element.
Limited capability for work elements
These elements are given to adults whose ability to work is affected by a health condition or disability. They are paid instead of the standard allowance. If you get one of these you are not expected to take a job. There are two elements:
- limited capability for work
- limited capability for work and work related activity
To qualify you need to undergo an assessment. The result of this would determine what element would be added to your universal credit award. The amount for both is equal to the standard allowance but there is an additional amount added if you have limited capability for work and work related activity.
Standard allowance: £409.89
Limited capability for work and work related activity additional amount: £341.92
This would be added to your award if you are caring for a severely disabled person for at least 35 hours per week.
Carer’s element £162.92
Housing costs element
If you pay rent an amount up to the full cost will be added to your calculation.
Childcare costs element
An amount to help pay for registered childcare is added to your award if you are working. It does not matter how many hours you work but there is a limit on how much you can get. 85% of your childcare costs will be considered, but the most you can be paid for one child is £646.35 per month or up to £1108.04 per month for two or more children.
You can get help with childcare costs for more than two children.
Maximum amount for one child (85% of £760 limit): £646.35
Maximum amount for two or more children (85% of £1,300 limit) £1,108.04
Example of a universal credit calculation
Jenny is a single parent with 2 children aged one and nine. Her nine-year-old gets disability living allowance high rate care.
Jenny is not working but gets carer’s allowance and pays rent of £477 per month.
Calculate maximum universal credit
Standard allowance: £409.89
First child element: + £281.25
Child element: + £235.83
Disabled child element high rate: +£400.29
Carer’s eement: +£162.92
Housing element: + £477.00
Maximum universal credit: £1967.18
Adjust for unearned income:
Jenny has unearned income (carer’s allowance) which reduces her maximum award pound for pound:
Maximum universal credit:£1967.18
Unearned income (carer’s allowance): −£291.42
Universal credit award: £1675.76
Jenny will receive a universal credit award of £1675.76 per month. She will also receive child benefit, carer’s allowance, disability living allowance for her daughter and help with council tax.
How savings affect universal credit
If you have savings or capital over £16,000, you will not get universal credit. If you have savings or capital between £6,000 and £16,000, your universal credit award will be reduced by £4.35 per month for every £250 your capital exceeds £6,000.
How earnings and income affect universal credit
If you are working your earnings could affect the amount of universal credit you receive. Some of your earnings will be ignored when calculating your universal credit. These disregarded amounts are called the ‘work allowances’.
There are two work allowances that apply to single parents:
- Lower work allowance of £292.00 if you have housing costs included in your universal credit calculation.
- Higher work allowance of £512.00 if you do not have housing costs included in your universal credit calculation.
Any earnings over these work allowances will reduce the maximum amount of universal credit you will receive.
Other taxable income, such as a pension or a contribution-based benefit, will also reduce the amount of universal credit you receive.
Disability living allowance, personal independence payment and maintenance paid for children do not affect universal credit.
Universal credit if you’re self-employed
If you are self-employed you will have to report your earnings (i.e. profit after deductions and expenses) to the DWP every month. This information will then be used to calculate your universal credit. If no profit is made a maximum universal credit award will be paid each month during the first year. After this start-up period an income will be assumed based on minimum wage at the number of hours (16 for single parents) you are expected to work.
Universal credit for students
Single parents are one of the groups of students who can claim universal credit. Bursaries, loans and grants may affect how much you get.