Universal Credit UK: Earnings affect payments – how other forms of income impact amount

Universal Credit is replacing six legacy benefits, with these being Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit. It’s possible to find out how much a person could get online, by using an independent benefits calculator.


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The amount a person gets will depend on earnings.

It’s important to be aware that circumstances are assessed every month.

Should there be any changes in circumstnaces, these can affect how much the person is paid for the whole assessment period – not just from the date they are reported.

On Universal Credit, there is no limit at to how many hours a person can work.

However, those who are employed should note that how much Universal Credit they get will depend on their earnings.

The Universal Credit payment will reduce gradually as the recipient earns more.

The taper rate means that for every £1 earned, the payment reduces by 63 pence.

The Money Advice Service states: “Employer-paid benefits, such as Statutory Maternity, Paternity, Adoption and Sick Pay are treated as earnings and are affected by the taper.”

Some people may be able to earn a certain amount before their Universal Credit is reduced.

This is what is known as the “work allowance”.

Gov.uk explains a person can earn a certain amount before the Universal Credit is reduced if they or their partner are either:

  • Responsible for a child or young person
  • Living with a disability or health condition that affects their ability to work.

The work allowance is lower if a person gets help with housing costs.


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For those who do get help with circumstances, the monthly work allowance is £292.

This rises to £512 per month if the circumstances are that the person does not get help with housing costs.

It’s also important to be aware that some forms of income that have not been received from working can be deducted from the maximum award.

This is called unearned income, and it includes:

  • New-style Jobseeker’s Allowance (JSA)
  • New-style Employment and Support Allowance (ESA)
  • Pension Income
  • Some benefits that aren’t replaced by Universal Credit.

The Money Advice Service states: “Usually £1 will be deducted from your Universal Credit payment for every £1 of unearned income.”

However, it seems that some forms of unearned income will not be deducted from a Universal Credit.

The Money Advice Service explains that unearned income that won’t be taken off a Universal Credit payment includes:

  • Child Benefit
  • Maintenance payments
  • Disability Living Allowance
  • Personal Independence Payment
  • Income from boarders and lodgers.

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