Universal Credit work allowance and taper explained

How much you can earn each month before Universal Credit goes down, and by how much.

The short answer

When you work on Universal Credit, your payment goes down by 55p for every £1 you earn above your work allowance. The work allowance is an amount you can earn each month before the reduction starts. GOV.UK currently gives it as £427 a month if you get help with housing costs through Universal Credit, and £710 a month if you do not. Not everyone gets one. Our Universal Credit guide explains the benefit itself.

Who gets a work allowance?

A work allowance is for people who are responsible for a child or young person, or who have limited capability for work. If neither applies, there is no work allowance and the 55p reduction starts from your first pound of earnings. Check the current rules on GOV.UK for your situation.

A worked example

Suppose you have a work allowance of £427 a month and you earn £900 a month after tax and National Insurance:

Earnings above the allowance: £900 minus £427 = £473.
Reduction: 55% of £473 = about £260.
So your Universal Credit is about £260 lower than it would be with no earnings, and you keep your £900 pay.

The reduction is always less than your extra pay, so you are better off working than not working. This is an illustration, not a forecast. Your real payment depends on your full circumstances.

How earnings are counted

Universal Credit is calculated for each monthly assessment period.
Most employers report your pay to HMRC and DWP for you, so you do not need to report it yourself. If you are self-employed you usually report your earnings monthly.
Pay dates matter. If your employer pays you early or late, or you get two pay packets in one assessment period, that month's payment can change.

Savings

Under £6,000 in savings and investments does not affect your award.
Between £6,000 and £16,000, your payment is reduced by £4.35 for every £250 above £6,000.
With over £16,000 you usually cannot claim.

Our free help page lists organisations that can check your claim, such as Citizens Advice and Turn2us.

Where to learn more

This guide is for information only and is not tax, benefits or financial advice. Rules and amounts can change, so check the official pages before you rely on them.