Universal Credit reduces as earnings rise – but some can earn certain amount before impact

Universal Credit: Work allowance explained

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Universal Credit has been a lifeline for many, with a multi-million rise in the number of people claiming the payment having been seen since the coronavirus outbreak hit the UK. The payment is made up of a standard monthly allowance, as well as any additional amounts which a person may be eligible for.

Examples of who could get the extra amounts include those who have children, need help paying rent, or have a disability or health condition which prevents one from working.

It’s possible to use a benefits calculator – such as those hosted by Turn2us, Policy in Practice, and entitledto – to check how much a person could get.

Circumstances are assessed each month.

Should there be a change in the person’s circumstances, how much they’re paid for the who assessment period can be affected – rather than it just having an impact from the date it’s reported.

Another factor to consider is that the benefit cap may limit the total amount of benefit a person receives.

It’s possible to work while claiming Universal Credit.

Unlike some legacy benefits, there is no limit to how many hours a person can work while claiming Universal Credit.

However, people who are employed should note their earnings can affect payments.

For those in employment, how much Universal Credit they will get depends on earnings.

The Government website states the payment will reduce “gradually as you earn more”.

It reduces by 63 pence for every £1 that is earned.

Claimants can use a benefits calculator to see how increasing their hours or starting a new job which could affect what a person gets.

Some people may be entitled to earn a certain amount of income before their Universal Credit payment is reduced.

This is known as the work allowance.

It may be a person qualifies 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.

There are two different work allowance rates.

The one a person gets will depend on whether they get help with housing costs or not.

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

It is £512 per month for those who don’t get help with housing costs.

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