Universal Credit UK: What is the work allowance? Monthly amount depends on this factor

Universal Credit may be claimed by a person if they’re needing help with living costs, such as perhaps if they’re out of work or on a low income. However, if a person is employed, then the amount of Universal Credit they get will dpeend on their earnings.

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The Universal Credit payment will reduce gradually as more is earned.

It means that for every £1 earned, the payment will reduce by 63 pence.

There is no limit as to how many hours a person can earned on Universal Credit, with the payment instead simply reducing.

It’s possible to use an independent beenfits calculator in order to see how increasing work hours or starting a job could have an effect on how much a person gets in Universal Credit.

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

This is what’s known as the work allowance.

Gov.uk explains that it applies to people if they or their partner are either:

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

However, the monthly work allowance for those eligible is dependent on one particular factor.

This is if they get help with housing costs or not.

Should the circumstances be that one gets help with housing costs, the monthly work allowance is £292.

People who do not get help with housing costs have a monthly work allowance of £512.

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So, what does this mean in practice? In order to provide some context, an example can be found on the Gov.uk website.

In this hypothetical situation, a person has a child and gets money for housing costs in their Universal Creidt payment.

The claimant is working and earns £500 during their assessment period.

Due to their circumstances, they have the work allowance of £292.

As such, this means they can earn £292 without any money being deducted from the Universal Credit payment.

Then, for every £1 of the remaining £208 of earnings, 63 pence is taken from the Universal Credit payment.

This works out at a deduction of £131.04 from the Universal Credit.

“This means you earn £500 and £131.04 is deducted from your Universal Credit,” Gov.uk explains in the example.

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