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How to claim Universal Credit when working

We explain how it's possible to work and claim Universal Credit to increase your earnings. Find out what the work allowance is and how to report your earnings.

You can work and earn money while claiming Universal Credit payments until you make enough to no longer require benefit help.

Unlike Income Support or Working Tax Credits, there are no time limits to the amount of work you can do when you claim Universal Credit. Instead, it is the amount you earn that counts.

How your wages affect your Universal Credit payments

When calculating how your wages and other income will affect your Universal Credit payments, you need to understand two terms:

  • Universal Credit work allowance.
  • Universal Credit taper rate.

If you are eligible for a work allowance and earn below it, these will be ignored.

However, If your circumstances mean that you haven't qualified or you receive more than your work allowance, your Universal Credit payment will be reduced by 55p for every £1 you earn - known as a 55% taper rate.

What is the Universal Credit work allowance?

A Universal Credit work allowance is the amount you are allowed to earn before your Universal Credit payment is affected.

You will qualify for a Universal Credit work allowance if you or your partner either have:

  • Limited capability for work (because of a mental health condition or disability)
  • Responsibility for a child

If you don't qualify for a work allowance, your Universal Credit payments will be affected at the taper rate when you start earning money from paid work.

There are two work allowance rates that are determined by what you claim on Universal Credit:

Universal Credit claim Monthly work allowance
If your Universal Credit payment include housing support £344
If you do not receive housing support for Universal Credit £573

Unreimbursed work expenses

When you are working or have started a new job, you may have to spend money on one-off costs which are necessary for you to work such as:

  • Work uniform.
  • Safety equipment.
  • Travel.
  • Licenses.

If your employer does not pay for these, and you have to pay for them yourself, under Universal Credit, they are classed as unreimbursed work expenses.

If you have unreimbursed work expenses, you should speak to your work coach as you may be able to offset these against your Universal Credit payment.

What if I earn more than my Universal Credit work allowance?

If you earn more than your work allowance, your Universal Credit payment will be reduced by a Universal Credit taper rate.

The Universal Credit taper rate is 55% and will be deducted automatically from your Universal Credit payment each month. This means for every £1 you earn over your work allowance your Universal Credit payment will be reduced by 55p.

If you don't qualify for a work allowance, your Universal Credit payments will be affected at the taper rate when you start earning money from paid work.

If you claim Universal Credit as a couple both of your earnings are considered when calculating how much Universal Credit you will receive.

Your earnings are assessed monthly - called an assessment period. The assessment period begins on the date that you made your claim and will be the same date every month for the period you claim Universal Credit.

What is the current Administrative Earnings Threshold?

From 30 January 2023, the Universal Credit Administrative Earnings Threshold will increase:

  • for an individual, from £494 per calendar month to £618
  • for a couple, from £782 per calendar month to £988

This change affects people who are subject to all work-related requirements and who have earned income. If earned income is above the AET, claimants are subject to a light touch regime. The increase in the AET will bring more people into the intensive work search requirements group and they will be expected to complete more intensive work search conditions to increase their earned income.

What happens if I earn too much in a month to receive Universal Credit?

If you earn so much in a month that you receive no Universal Credit payment, your Universal Credit claim will be automatically closed.

If your circumstances change within the next six months - your earnings go down - it's easy to reapply for Universal Credit. You will need to log in to your online account and confirm the details are correct and you will keep your original payment dates.

If your earnings decreased and your last Universal Credit payment was more than six months ago, you will have to apply for Universal Credit again.

If your Universal Credit payment includes housing cost element

If you claim Universal Credit and receive the housing element that is paid directly to your landlord, you may receive no Universal Credit payment. Still, your landlord will continue to receive money towards your rent. If this happens, your Universal Credit account will remain open.

If your Universal Credit payment is reduced to lower than your housing costs, you will need to make up the difference. Your Universal Credit account will only close if there is no payment to either yourself or your landlord.

Surplus earnings

Your earnings from previous months can also affect how much Universal Credit you will get. For instance, if you earn over the £2,500 you're allowed to make before your account is closed, you will be classed as having surplus earnings.

If you restart your Universal Credit claim, the surplus earnings will be used when calculating your payment - meaning you may have a reduced payment or no payment at all for that month. Surplus earnings stop being considered six months after they were received.

How will I get paid Universal Credit if I work?

Your Universal Credit is paid every month on the same day. However, your Universal Credit payment can be affected by how often your employer pays you if you're paid monthly.

For instance, If you're paid weekly, every two weeks or every four weeks, you'll receive more than one set of wages during some Universal Credit assessment periods.

This could result in your earnings being too high for you to claim Universal Credit. The DWP will inform you if you have reached the Universal Credit limit and if you need to reapply to continue to receive Universal Credit payments.

You should, therefore, manage your money and budget for any future lower payments. Use our free budget planner tool.

If a reduced Universal Credit payment means you are having trouble meeting your basic needs, you should speak to your work coach to see what other help may be available. You can also use our free Universal Credit Money Manager tool.

How to report your earnings for Universal Credit if you're employed

If you are working and claiming Universal Credit you will need to report your earnings. Your employer may be able to report your earnings automatically for you if they use the government's Real Time Information system (RTI).

If your employer uses the RTI system

Speak to your employer and ask for your PAYE scheme number. Once you have this, you can phone the Universal Credit helpline or give the number to your work coach.

If you work multiple jobs, you will need to get a PAYE scheme number from each employer.

Once your PAYE scheme number is registered with your claim, your earnings will be updated each month automatically, and you won't be required to do anything else.

If your employer does not use the RTI system

If your employer doesn't have access to the RTI system, you will have to report how much you earned each month by the last day of your assessment period either by phoning the Universal Credit helpline or to your work coach.

To report your earnings, you will need to provide the following:

  • Your PAYE number.
  • Gross taxable pay.
  • Employer's name.
  • Date of pay.
  • How much tax you paid.
  • How much National Insurance you paid.
  • Details of any contributions made to a pension scheme.

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