Universal Credit (UC) is the biggest change to the welfare system in a generation. It is now the main benefit for most working-age people, and millions are being moved onto it from older, legacy benefits including housing benefit and income support.
Understanding how Universal Credit works is essential and so in this short guide, we explain what Universal Credit is and how it works. For more information on whether you are eligible for Universal Credit and how it impacts other benefit payments, check out our more detailed guide 'UK Benefits Explained: Your Complete Guide for 2025'.
What is Universal Credit?
Universal Credit is a single monthly payment designed to support people who are on a low income or out of work. It merges six older benefits, known as 'legacy benefits', into one. The six legacy benefits being replaced are:
- Housing Benefit
- Income-related Employment and Support Allowance (ESA)
- Income-based Jobseeker's Allowance (JSA)
- Income Support
- Child Tax Credit
- Working Tax Credit
If you are currently receiving any of these, you will eventually be moved to Universal Credit.
The Move to Universal Credit
There are two main ways you will move from a legacy benefit to Universal Credit:
A Change of Circumstances
If you have a significant change in your life - for example, you move in with a partner, have your first child, or move to a new local authority area - you may have to make a new claim for Universal Credit. This is known as 'natural migration'. Your old benefits will stop once you claim UC.
Managed Migration
The DWP is actively moving everyone else from legacy benefits to UC in a phased process. When it's your turn, you will receive a 'Migration Notice' letter in the post. This letter is very important. It will give you a deadline, usually three months, by which you must make a claim for Universal Credit. If you do not claim by this deadline, your current benefit payments will stop.
Key Features of Universal Credit
- Monthly Payments - Unlike many older benefits that were paid weekly or fortnightly, UC is paid as a single lump sum, once a month, in arrears. This is designed to mirror a monthly salary and help people budget.
- The Claimant Commitment - When you claim UC, you will have to agree to a 'Claimant Commitment'. This is an agreement that sets out what you are expected to do in return for receiving the benefit. For most people, this will involve activities to find work or increase their earnings, such as writing a CV or applying for jobs.
- Transitional Protection - To ensure people aren't financially worse off at the point they are moved to UC through the 'managed migration' process, a system of 'Transitional Protection' exists. This means if your calculated UC entitlement is less than what you were receiving from your old benefits, you may receive a top-up amount to bridge the gap. This extra amount erodes over time as your UC award increases for other reasons.
- Run-on Payments - To help with the transition, if you are moving from income-based Job Seeker's Allowance (JSA), income-related Employment and Support Allowance (ESA), Income Support, or Housing Benefit, you will receive an extra two weeks of your old benefit after you claim UC. This is an automatic payment and does not need to be repaid.
The transition to Universal Credit can be daunting, but the key is not to ignore any letters you receive. If you get a Migration Notice, act on it and make your claim before the deadline. If you need help, services like Citizens Advice offer a dedicated 'Help to Claim' service to guide you through the process.
For further information on whether you are eligible and how to claim for Universal Credit, check out our more detailed guide 'UK Benefits Explained: Your Complete Guide for 2025'.
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