Universal Credit, What’s it all about?

What is Universal Credit?

Universal Credit will increase the financial benefits of work and provide employers like you with a more flexible workforce.

It is a new benefit that replaces six existing benefits, including Working Tax Credit and Child Tax Credit with a simpler, single monthly payment for people out of work or on a low income. It is delivered by the Department for Work and Pensions (DWP) and ends the 16 hour rule that may previously have led employees to restrict the hours they work to avoid losing benefits. Universal Credit is being rolled out gradually. Areas of Greater Manchester and Cheshire have started to test the approach before the progressive national roll out begins in October 2013.

How does it work?

Universal Credit forms part of the wider reforms to the welfare system and has been designed to help ensure work pays and that employees can be more responsive to what employers need. The system also handles changes in hours worked more flexibly, with Universal Credit payments adapting quickly to changes in pay’. This means your existing part time employees can be more flexible to help meet business peaks and troughs without the overheads associated with recruiting and training new staff.

Universal Credit payments are linked to how much money an employed Universal Credit claimant has earned. This is captured through the new way of reporting PAYE information in real time.

What do employers need to do?

Your employee’s Universal Credit payments are linked to PAYE information reported in real time, so:

• it is very important to make accurate real time submissions when they are due, so that the amount of Universal Credit employees receive can be calculated correctly

• getting the right identity details for new employees at the point of hiring is vital in helping with both PAYE and Universal Credit.

Provided by HMRC’s Employer Bulletin –  September 2013 Issue 45

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