Consumer rights: How you can get to grips with the new world of Universal Credit

The online benefits system is supposed to be simpler – but beware of pitfalls with the rent

While the "Bedroom Tax" has been making the headlines there are other benefits system changes in the pipeline. If they're not affecting you yet they may do so soon.

New rules on housing and Council Tax benefit have just come into force and now the next raft of changes is upon us. This week, single unemployed people, capable of working, and making new claims for benefit in Ashton under Lyme near Manchester found themselves guinea pigs for the new Universal Credit. Oldham, Wigan and Warrington will be the next areas to become part of the trials in July.

Universal Credit will be rolled out over England, Wales and Scotland (Northern Ireland has a different system) for new claims by the middle of 2014. All existing claims will be transferred to Universal Credit between April 2014 and 2017.

Universal Credit is a means-tested benefit for people of working age. People old enough to claim Pension Credit needn't worry about it, but most other benefit claimants will eventually be affected. The Government wants a simpler system and designed the benefit to eventually replace Job Seekers' Allowance, Employment and Support Allowance, Income Support, Child Tax Credit, Working Tax Credit, Housing Benefit and Budgeting Loans. This should help to make the system more understandable but some changes may confuse many.

Universal Credit is means-tested. That's not new. It means the amount of benefit someone gets depends on how much income they have coming in from work, rent or interest on savings, and on how much savings they have. People don't have to be out of work to get it; they could be working but on a low income, looking for work, sick or disabled, or caring for a child or disabled person.

What is new is that people will be expected, if possible, to make their claims and manage their Universal Credit accounts online. Not everyone has the necessary computer skills and advice agencies are worried some won't be able to make a claim. People with no one to help or no friends with computer skills should seek help at the nearest agency such as the Citizens Advice Bureau.

To claim Universal Credit people have to meet various conditions. Part of the claim is a claimant commitment – a document that says someone agrees to do certain things such as go to job interviews and when they do get back into work (or if they are already in work) that they'll try to find better-paid work or work for more hours if possible. The "work-related" conditions in each claimant commitment will depend on the work someone does and their personal circumstances.

People already in work won't lose all their Universal Credit if their earnings go up, as it will go down as earnings rise. There's no limit on the number of hours a person can work as there is at the minute. The Government wants no one to be worse off by working than by claiming benefit.

People claiming successfully for Universal Credit will get monthly payments paid into an account of their choice. This is meant to prepare people for work as that's how employers pay. If both partners are entitled to a Universal Credit payment they will get it as one payment. Tenants will have to pay their rent from this to their landlord themselves. Many people claiming benefits, used to the rent being paid direct to the landlord, may be confused or tempted to spend their money without keeping enough for the rent. People in arrears could be evicted by landlords. It's really important for people who aren't sure about handling their Universal Credit payments to get help.

The system may be simpler for some but could lead to complications for others. People who previously didn't have a bank account or access to the internet will need both. Bank accounts must receive electronic payments. People who had their own payments may be paid jointly with their partner. They will have to spread money out over a longer period and hand over the rent themselves. The rent should be the priority. Many people will prefer having responsibility for their own money and will make budgets and stick to them. But others will find it difficult.

The Money Advice Service website at moneyadviceservice.org.uk has information on everything from bank accounts to budgets and the Citizens Advice site at adviceguide.org.uk has information on the dates of the benefit changes and who can claim.

I stupidly let out a small flat to a colleague's son and he's left it in a real mess. The carpet will have to be replaced, the kitchen and bathroom are filthy, crockery is missing and the washing machine has been leaking. I didn't ask for a deposit but I'll have to spend a lot before it can be let again. I don't know where he's gone and don't want to involve his father as we had a row. What can I do?

SJ, West Yorkshire

Your only hope is that his father will help you sort this out. You could make a list of the damage and costs and ask him to pass on a letter seeking payment by a certain date, after which you will take court action, or to call you to make payment proposals. It might work.

But you now know what can happen if you don't have a proper tenancy agreement, a deposit to cover damage or an inventory of everything in the flat before a new tenant moves in. In short you have no come-back and are left with the bill if things go wrong. You may be able to deduct for a new carpet and crockery and cleaning from the taxable income from the flat. Dot the i's and cross the t's with future tenants. And take a deposit – look at gov.uk/ tenancy-deposit-protection.

Q & A

Q. I stupidly let out a small flat to a colleague’s son and he’s left it in a real mess. The carpet will have to be replaced, the kitchen and bathroom are filthy, crockery is missing and the washing machine has been leaking. I didn’t ask for a deposit but I’ll have to spend a lot before it can be let again. I don’t know where he’s gone and don’t want to involve his father as we had a row. What can I do?

SJ, West Yorkshire

A. Your only hope is that his father will help you sort this out. You could make a list of the damage and costs and ask him to pass on a letter seeking payment by a certain date, after which you will take court action, or to call you to make payment proposals. It might work.

But you now know what can happen if you don’t have a proper tenancy agreement, a deposit to cover damage or an inventory of everything in the flat before a new tenant moves in. In short you have no come-back and are left with the bill if things go wrong. You may be able to deduct for a new carpet and crockery and cleaning from the taxable income from the flat. Dot the i’s and cross the t’s with future tenants. And take a deposit – look at gov.uk/tenancy-deposit-protection.

www.moneyagonyaunt.com

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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