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Universal Credit reduces depending on earnings – but some can benefit from work allowance | Personal Finance | Finance

Universal Credit is a six-in-one benefits payment which is replacing Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit. Statistics published last month showed that, at the time, more than five million people were claiming Universal Credit.

The figures, published by the Department for Work and Pensions (DWP), show on October 8, 2020, 5.7 million people were on Universal Credit.

There were 4.6 million households on Universal Credit with an assessment period covering August 13 2020.

Of the 5.7 million people on Universal Credit at October 8, 39 percent were in the “Searching for work” conditionality, while 38 percent were in employment.

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

READ MORE: Universal Credit UK: Thousands to receive higher payments as rule change kicks in today

As the individual earns more, their Universal Credit payment will gradually reduce.

It means that for every £1 that is earned, the payment reduces by 63 pence.

Unlike other benefits, there’s no limit as to how many hours which can be worked.

However, clearly, the more that a person earns, the less Universal Credit they will get, meaning it could end up being stopped.


The recipient will be told when this happens, and should earnings decrease after this, then they can claim Universal Credit again.

It’s also possible to see for oneself how increasing hours or starting a new job could affect the payments.

This can be done via a benefits calculator – of which three independent tools are cited online on the GOV.UK website.

The calculators are hosted by Turn2us, Policy in Practice, and entitledto.

If a person gets help with housing costs, the monthly work allowance is £292.

Those who don’t get help with housing costs can get the £512 monthly work allowance.

Universal Credit is paid once a month, usually into a person’s bank, building society or credit union account.

It will usually take around five weeks to get the first payment – a wait made up of a one month assessment period and up to seven days for the payment to reach a person’s account.

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