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Packaging & criteria

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Universal Credit

Universal Credit is accepted with the following restrictions:

  • The benefit must be for the customer
  • Housing allowance must be deducted
  • At least 50% of income required to support the loan must be from non-benefit income

Child Tax Credit should only be included where payments are guaranteed for the next 5 years(13 years or younger) from date of application.

Box

Packaging guidance:

  • 3 months’ Universal Credit statements
  • Latest month’s bank statement

How to Calculate Benefits Using a Universal Credit Statement

  • Identify the net payment: Start with the monthly net payment shown on the statement
  • Deduct housing benefit: Subtract the housing benefit from the net payment
  • Deduct benefit for children: We will accept benefits for children that are no older than 13 years of age at the point of application. If the children are older, then this must be deducted
  • Check the net pay declared against the application income: Adjust benefits where the income level declared on the Universal Credit statement is less than the level of income used for affordability purposes

Scenario Summary

Universal Credit Entitlements

  • Standard Allowance: £393.45 (for a single individual)
  • Housing: £725.00 (total rent covered)
  • Children: £621.25 (support for two children age below 13)
  • Total Entitlement Before Deductions: £1,739.70

Deductions

  • Income deduction: £582.29 - based on a monthly income of £1,697.98 where the first £404 is ignored and every subsequent £1 reduces Universal Credit by £0.55 -- PLEASE NOTE For applicants with variable income (e.g., self-employment), one month of the total income must be used to accurately calculate the reduction. For example, if an applicant has £20,000 in self-employed income and £10,000 in employed income, the monthly income used for the calculation would be £2,500 (£30,000 ÷ 12).
  • Total Net Payment for This Month: £1,157.41

Steps to Calculate Benefit

  • Net Payment: £1,157.41
  • Deduct Housing Benefit: £1,157.41 − £725.00 = £432.41
  • Deduct Child Benefits (if applicable): In this scenario, the children are under 13 years and therefore no deduction is applied
  • Annualise the Benefit: £432.41 x 12 = £5,188.92

Based on this scenario, the annualised net benefit (after housing and any applicable child deductions) is £5,051.88.

If applicants have recently experienced a significant change in their circumstances, it is recommended to use an online calculator to accurately determine their current entitlement. Suitable options can be found on the government website here.