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Universal Credit (UC) is the main working-age benefit in the United Kingdom, administered by the Department for Work and Pensions (DWP). Introduced gradually from 2013 and now almost fully rolled out, UC replaces six older "legacy" benefits with a single monthly payment. As of early 2026, approximately 7 million people in Great Britain receive Universal Credit. This guide covers everything you need to know about UC rates, how it is calculated, and your rights as a claimant — with all 2025/26 figures.
What Is Universal Credit?
Universal Credit is a means-tested benefit for working-age people who are on a low income or out of work. Unlike previous benefits, UC is designed to work seamlessly with employment — as you earn more, your UC reduces gradually rather than stopping abruptly. This is intended to make work always financially worthwhile.
UC is paid as a single monthly payment directly to the claimant. Housing costs are included within UC (rather than being paid separately as Housing Benefit). You claim and manage UC online through your Universal Credit account at gov.uk. UC is assessed over monthly "assessment periods" — your payment each month is calculated based on your circumstances and any earnings reported during that month.
Legacy Benefits Universal Credit Replaced
| Legacy Benefit | Replaced by UC Element | Status |
|---|---|---|
| Income Support | Standard Allowance | No new claims; existing moved via managed migration |
| Income-based Jobseeker's Allowance (JSA) | Standard Allowance | No new claims for working-age claimants |
| Income-related Employment & Support Allowance (ESA) | LCWRA/LCW element | No new claims; migration ongoing |
| Housing Benefit | Housing Cost Element (LHA) | No new claims for working-age; pensioners still on HB |
| Child Tax Credit | Child Element | No new claims; migration ongoing |
| Working Tax Credit | Childcare Element + standard allowance | No new claims; migration ongoing |
Standard Allowance 2025/26
The standard allowance is the basic amount of Universal Credit before any elements are added and before earnings are taken into account. The 2025/26 rates (applied from April 2025) are:
under 25
per month
aged 25 or over
per month
both under 25
per month
25+ (one or both)
per month
UC Elements: Child, Housing, Carer, Disability
On top of the standard allowance, you may qualify for additional "elements" depending on your circumstances:
| Element | 2025/26 Rate | Notes |
|---|---|---|
| Child element (first child born before 6 April 2017) | £333.33/month | Two-child limit applies to children born after 6 April 2017 |
| Child element (subsequent children / born after April 2017) | £287.92/month | Two-child limit; third+ children not eligible unless exception applies |
| Disabled child (lower rate) | £156.11/month | Where child receives DLA (lower or middle rate care) or PIP (daily living) |
| Disabled child (higher rate) | £487.58/month | Where child receives highest rate DLA care or enhanced PIP daily living |
| Limited Capability for Work (LCW) | £156.11/month | For claimants who are too ill to work but may be able to prepare for work |
| Limited Capability for Work-Related Activity (LCWRA) | £416.19/month | For claimants with most severe health conditions; replaces old ESA support group |
| Carer element | £198.31/month | Where you care for a severely disabled person for 35+ hours per week |
| Childcare costs element | Up to 85% of eligible childcare costs | Maximum £1,014.63/month (1 child) or £1,739.37/month (2+ children) from April 2023 |
| Housing cost element | Based on Local Housing Allowance (LHA) | Covers rent for private renters; social housing tenants may receive different amount |
Local Housing Allowance (LHA)
The housing element for private renters is set by the Local Housing Allowance, which varies by Broad Rental Market Area (BRMA) and by the number of bedrooms you are entitled to. From April 2024, LHA rates were reset to the 30th percentile of local rents. This means UC will cover the bottom 30% of rents in your area — meaning if you rent at or below the 30th percentile, your rent is fully covered; if you rent above this, you must make up the difference. LHA rates are typically reviewed annually in April.
Taper Rate and Work Allowances
The taper rate determines how your UC is reduced when you work and earn money. The taper rate is currently 55%. This means:
is deducted from your UC for every £1 you earn above your work allowance.
You keep 45p in every £1 earned.
Work Allowances 2025/26
Not all UC claimants have a work allowance. You only get a work allowance if you (or your partner) have a child or have limited capability for work. The work allowance is the amount you can earn before the taper applies.
| Claimant Type | Work Allowance 2025/26 |
|---|---|
| You receive a housing element | £404 per month |
| You do not receive a housing element | £673 per month |
The Five-Week Wait
One of the most criticised aspects of Universal Credit is the five-week wait for the first payment. When you make a new claim, there is an initial assessment period of around one calendar month, after which UC is paid in arrears. This results in approximately five weeks passing between claiming and receiving the first payment.
During this period, you can apply for an Advance Payment — a loan of up to 100% of your expected monthly UC. The advance must be repaid through deductions from future UC payments, typically over 24 months (maximum 25% of standard allowance per month). Citizens Advice and other organisations have raised concerns that advance payment repayments, combined with other deductions, can leave claimants with insufficient income.
Managed Migration
Managed migration is the DWP's programme to move all remaining legacy benefit claimants onto Universal Credit. The DWP sends a "migration notice" giving claimants at least 3 months to make a new UC claim. Managed migration differs from "natural migration" (where a change of circumstances triggers a move to UC).
Key Points About Managed Migration
- Migration notice: You receive a letter telling you to claim UC by a specific deadline (typically 3 months from the notice date).
- Transitional protection: If your UC entitlement at the time of migration is lower than your legacy benefit award, you receive a "transitional element" — an extra amount to make up the difference. This is not permanent: it erodes as your UC increases (e.g. from uprating) and is removed entirely if your circumstances change significantly.
- If you miss the deadline: Your legacy benefit will be stopped. You can still claim UC, but you lose the right to transitional protection.
- DWP target: The DWP aimed to complete managed migration of all legacy claimants by the end of 2025. Turn2Us and Citizens Advice provide free advice to claimants going through managed migration.
UC and Self-Employment: The Minimum Income Floor
Self-employed UC claimants face a rule called the Minimum Income Floor (MIF). After 12 months of self-employment (the "start-up period"), the DWP assumes — for UC calculation purposes — that you are earning at least the equivalent of the National Living Wage for your expected hours (typically 35 hours per week), even if your actual earnings are lower.
In 2025/26, the National Living Wage (for workers aged 21+) is £12.21 per hour. The MIF for someone expected to work 35 hours per week is approximately £1,868 per month (35 hours x 4.3 weeks x £12.21). If your actual self-employed earnings are lower than this, your UC is still calculated as if you earned the MIF.
This rule can significantly reduce UC payments for self-employed people in periods of low income (such as seasonal downturns, client losses, or startup phases). Exceptions apply during periods of illness, caring responsibilities, or other agreed circumstances. The MIF was suspended during COVID-19 but is now fully back in force.
UC and Savings
| Savings Level | Effect on UC |
|---|---|
| Below £6,000 | No effect — completely ignored |
| £6,000 to £15,999.99 | Tariff income of £4.35/month for every £250 (or part thereof) above £6,000 |
| £16,000 or more | Not entitled to UC at all |
Capital includes: cash savings, investments, shares, ISAs, property you do not live in, and some other assets. It does not include the home you live in, personal possessions, or business assets used in self-employment. If you or your partner have savings of £16,000 or more, you cannot get UC. If you share capital with someone (e.g. a joint bank account), each person is treated as owning half.
UC Sanctions
A sanction is a temporary reduction in your UC payment for failing to meet the conditions set out in your Claimant Commitment. Sanctions apply at three levels:
| Sanction Level | Example Triggers | Duration |
|---|---|---|
| Low | Failing to attend a work-focused interview; failing to take part in a scheme without good reason | Up to 7 days for first failure; up to 14 days for second; up to 28 days for third or more |
| Medium | Failing to comply with a work preparation requirement | Up to 28 days |
| High | Leaving a job voluntarily; refusing a job offer; failing to look for work | Up to 91 days (first failure); up to 182 days (second or subsequent) |
If you are sanctioned, you can challenge it through mandatory reconsideration and then appeal to an independent First-tier Tribunal. Data from the DWP shows that a significant proportion of sanctions are overturned at appeal. During a sanction, you can apply for a hardship payment — 60% of your standard allowance — which is recoverable from future UC payments.
Deductions from UC
Your UC payment can be reduced by deductions, separate from the taper rate. The maximum total deduction is 25% of the standard allowance. Common deductions include:
- Advance payment repayment: For the advance loan received during the five-week wait
- Rent arrears: If you owe rent to a social landlord, the DWP can deduct up to 20% of standard allowance and pay directly to the landlord
- Benefit overpayments: If you were overpaid UC or a legacy benefit, deductions can be made to recover the debt
- Third-party deductions: For gas, electricity, and water arrears; council tax arrears; court fines
- Child maintenance: Via the Child Maintenance Service in certain circumstances
Multiple deductions can stack up, leaving some claimants with significantly reduced payments. If deductions are causing hardship, speak to your work coach or contact Citizens Advice or StepChange for free debt advice.
Frequently Asked Questions
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