How does Universal Credit work for workers?

Universal Credit can be paid to workers. How much you get will depend on your circumstances and income. Universal Credit is a ‘top up’ benefit, so you may be earning too much to qualify.

Each month the DWP will work out your award based on your circumstances at the end of your Assessment Period and the wages you (and any partner) received in that period.

So if your earnings change – so will your Universal Credit award.

For every £1 net you earn over any work allowance your Universal Credit reduces by 63p.

What is a Work Allowance?

If you and/or your partner are in paid work you may be able to earn a certain amount before your Universal Credit payment starts to be affected. This is called a Work Allowance.

Once you earn more than your work allowance your Universal Credit payments will be reduced at a steady rate. This is known as the Universal Credit earnings taper.

The Universal Credit earnings taper rate is currently 63%. This means that for every £1 you earn over your work allowance (if you are eligible for one) your Universal Credit will be reduced by 63p. this amount will be deducted automatically from your Universal Credit payment.

The Work Allowance only applies to you if:

  • you have responsibility for one or more children (or qualifying young persons), or
  • you or your partner have limited capability for work (a health condition or disability)

If neither of these circumstances apply to you, your Universal Credit payments will be affected as soon as you start earning money from paid work.

There are 2 Work Allowance rates. Which one you get depends on whether your Universal Credit payment includes help with housing costs:

If you receive money to help with housing costs your Work Allowance will be £287 per month

If you do not receive money to help with housing costs your Work Allowance will be £503 per month.

Situation UC does include housing costs UC does not include housing costs
Single Claimant – no children £nil £nil
Lone Parent £287 £503
Single Claimant – Limited Capability for Work £287 £503
Couples – no children £nil £nil
Couple – with children £287 £503
Couples – one or both Limited Capability for Work £287 £503