Universal Credit explained: 2026 Guide

Universal Credit (UC) is a UK government benefit designed to support people on low incomes or out of work. It’s set to change in the coming years, with planned allowance increases and updates to health-related payments.

This guide explains who is eligible for Universal Credit, how to apply. and the changes expected in 2026.

Universal Credit (UC) is a means-tested benefit payment for people below State Pension age who are out of work or on a low income. The payment is designed to help with living costs such as rent and childcare. It also provides extra support for people with disabilities, carers, or those unable to work due to illness. 

Universal Credit was introduced to replace and encompass six previous types of benefit payments:

• Housing benefit
• Child tax credit
• Income support
• Working tax credit
• Income-based jobseeker’s allowance
• Income-related employment and support allowance

You may be eligible for Universal Credit if:

• You’re out of work, working, or unable to work (for example, because of a health condition)
• You’re aged 18 or over (there are some exceptions if you’re 16 or 17)
• You or your partner are under State Pension age
• You and your partner have less than £16,000 in savings or investments
• You live in the UK

If you’re already receiving tax credits or housing benefits, the Department for Work and Pensions (DWP) may ask you to switch to Universal Credit. 

There are some situations in which you can claim Universal Credit if you’re aged between 16 and 17, including if you’re pregnant, supporting a child, or have no parental support. Under 21s may i be able to make a claim if they are studying. It’s important to note that you must claim Universal Credit yourself online. If you don’t have access to a computer at home, your local library or Jobcentre may be able to help.

Below are the monthly standard allowance rates for 2025/26. You may get more money on top of your standard allowance if you’re eligible. The amount you receive depends on your age and whether you live with a partner. It also depends on if you’re employed, and if so, how much you earn.

Some people may get additional payments, such as the child element for children or young people, the carer element for people caring for someone with a disability, or the health element for those with disabilities or long-term illness.

Your savings balance might affect your eligibility to receive Universal Credit. If you have savings or capital from  bank accounts, shares or investments, this could reduce how much Universal Credit you’re eligible for.

• Your Universal Credit claim is unaffected if you or your partner have £6,000 or less in savings or capital.  your claim for Universal Credit. 
• If you have more than £16,000 in savings or capital, you won’t be eligible for Universal Credit.
• If you have between £6,000 and £16,000 in savings or capital the first £6,000 is disregarded. The rest will be treated as income and reduce your monthly payment.

Your Universal Credit payment is reduced by £4.35 for every £250 in savings you have above £6,000.

Example:

Total savings: £8,000 (£2,000 over £6,000).

£2,000 ÷ 250 = 8

8 x £4.35 = £34.80

Therefore, the total deduction for someone with £8,000 in savings is £34.80 per month. 

If you’re unsure, this benefits calculator can help you work out how your savings may affect your entitlement to Universal Credit. You can read more about the savings and benefits rules.

Two types of income are counted for Universal Credit purposes. These are known as earned income and unearned income. Earned income is money you make from working. Unearned income is money received from other sources, which can affect your Universal Credit payment.

Forms of unearned income include:

• Pension income, including payments from state pensions, occupational or personal pensions
• New-style Jobseekers Allowance
• New-style Employment and Support Allowance (ESA)
• Some benefits that aren’t replaced by Universal Credit (for example, Carer’s Allowance)
• Spousal maintenance
• Income from overseas
• Income protection insurance payments
• Payments from a trust fund

Not all unearned income is fully deducted from your Universal Credit. To find out more, the government has a guide to unearned income.

If you’re entitled to claim Universal Credit in the UK, you can apply online on the government’s Universal Credit web page. If you don’t have access to the internet at home, locations such as your local library or Jobcentre may be able to assist you. You can also get support by calling the Universal Credit number on 0800 328 5644. 

Some information is required before applying for Universal Credit, including:

• Proof of identity (passport, driving licence, or similar)
• Bank account details for payments
• Information about your rent, income, savings, and other benefits
• Any other information related to your claim

If you are making a joint claim with your partner, only one of you will need to complete the online form (but that person will need to enter details for both of you).

When you claim Universal Credit in the UK, you agree to a claimant commitment. This sets out what you need to do in return for receiving the benefit. It might mean you are required to:

• look for work or increase your earnings if you’re able
• attend appointments with your work coach
• report any changes in your circumstances

The specific claimant commitments are individual to each person’s situation. Parents or people with health issues may have fewer requirements. In some cases, if you don’t meet your commitments without a good reason, your payments could be reduced.

Universal Credit is designed to provide support as you work, which is why you can work while receiving it (although the amount you earn may affect your payment and claimant commitments). 

If you have children or a health condition or disability that prevents you from working, you may qualify for a work allowance. The allowance is £427 if your Universal Credit helps with rent or mortgage interest, and £710 if it doesn’t. Once your earnings go above the work allowance, payments are reduced at a taper rate of 55%. Your payment will go down by 55p for every £1 you (or your partner) earn over the threshold.

Part-time workers may also have their Universal Credit reduced if they don’t take “active steps” to increase their earnings or attend regular meetings with a work coach. The Administrative Earnings Threshold (AET) is £991 per assessment period for individual claimants, or £1,597 per month for couples. Those with earnings below that amount may need to work to improve their income.

In England, Wales and Scotland, Universal Credit is paid monthly in arrears, similar to a normal wage. In Scotland, you can ask for fortnightly payments instead of a single monthly payment. In Northern Ireland, the default is every fortnight, but you can opt to receive monthly payments.

Payments are made directly into a current account in your name, such as a bank or building society account. You cannot use a savings account for Universal Credit.

It can take up to five weeks from the date you submit your claim to receiving your Universal Credit payment. This period is called your assessment period. Once the payment is processed, it can take up to seven days to reach your bank account.

No, income tax is not payable on Universal Credit. Other state benefits that are not taxed include Pension Credit, the Winter Fuel Payment, and the Christmas Bonus.

There are other types of support UC benefits recipients might be able to make use of. Those who still want to save money have access to Help to Save, which is a government scheme where you save small amounts regularly and earn a tax-free bonus. While Help to Save bonus payments are tax-free and do not count as income, any total savings held across accounts (including Help to Save balances) exceeding £6,000 may reduce your Universal Credit entitlement.

Depending on where you live, there may be grants or discounts available to help with housing or other essential costs. Organisations such as Citizens Advice can help you make sure you’re receiving all benefits you’re entitled to.

To compare interest rates on fixed rate bonds and savings accounts, explore options with Raisin UK. Please note: holding cash savings over £6,000 reduces your Universal Credit payments, and savings above £16,000 render you ineligible. Eligible deposits held with Raisin UK partner banks are protected up to £120,000 per individual, per authorised bank under the Financial Services Compensation Scheme (FSCS).

Figures correct as of September 2026, based on official DWP benefit data for the 2026/27 tax year. Rates and benefit rules are subject to statutory updates.