personal finance

What is the Universal Credit work allowance? How earnings can affect your payment

Universal Credit may be claimed in order to help with a person’s living costs. It is replacing six benefits, and these are Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit. The payment is made up of a standard allowance, in addition to any extra amounts which may apply to the claimant. A Universal Credit recipient’s circumstances are assessed every month and what a person’s paid may change, the website says.

If a person is employed, the amount of Universal Credit they get will depend on earnings.

The payment will reduce gradually as one earns more. For every £1 that is earned, the payment reduces by 63p.

There is no limit as to how many hours a person can work when it comes to claiming Universal Credit.

It’s possible to use a benefits calculator in order to see how increasing a person’s hours or starting a new job could affect what a person can get.

What is the Universal Credit work allowance?

The work allowance means that eligible people can earn a certain amount before their Universal Credit is reduced.

This applies if the claimant or their partner are either responsible for a child or young person, or living with a disability or health condition that affects their ability to work.

If a person gets help with housing costs, their work allowance is lower.

This monthly work allowance is £287 if one does get help with housing costs.

If they don’t get the help with housing costs, the monthly work allowance is £503.

Payments will reduce as one’s income increases, until they’re earning enough to no longer claim Universal Credit.

If one’s earnings later decrease, the website states that the individual will need to make a new Universal Credit claim online, should they wish to restart the payment.

If a person’s monthly earnings are more than £2,500 more than the amount where a payment stopped, this becomes “surplus earnings”.

These surplus earnings will be carried forward to the following month, where they count towards the earnings.

Should the total earnings then still be greater than the amount when a payment stops, a person will not get a Universal Credit payment.

READ MORE: What does Universal Credit replace? How the UK roll out affects existing benefit claimants


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