Universal Credit
How your wages reduce Universal Credit
Two numbers decide it: the work allowance, if you have one, and the 55p taken from every pound above it.
Checked by Radif Partners · Editorial policy · How we calculate
Universal Credit falls by 55p for every £1 of take-home pay above your work allowance, so working more always leaves you better off. The work allowance is the amount you can earn each month before any reduction starts, and only some households get one: those responsible for a child, and those where a claimant has limited capability for work. In 2026/27 it is £427 a month if your award includes help with rent, or if the council has placed you in temporary accommodation, and £710 if it does not. A single person or couple without children or a health condition has no work allowance, and the 55 % taper applies from the first pound. Pay is counted after income tax, National Insurance and pension contributions, in the monthly assessment period when your employer reports it, which is why two paydays in one period can shrink a single payment. There is no limit on the hours you can work while claiming.
How much of your pay Universal Credit takes
Taken off your Universal Credit
£370.15
| Work allowance | £427 |
| Pay counted at 55p in the pound | £673.00 |
| Pay you keep on top of the award | £729.85 |
Who gets a work allowance
Regulation 22 gives a work allowance to a single claimant, or a couple, who is responsible for at least one child or qualifying young person, or where a claimant has limited capability for work. Everyone else has a work allowance of nil.
| Your household | Work allowance a month | Taper |
|---|---|---|
| Children or limited capability for work, no housing costs in the award | £710 | 55 % |
| Children or limited capability for work, housing costs in the award (or council temporary accommodation) | £427 | 55 % |
| No children, no limited capability for work | None | 55 % from the first pound |
Last year the figures were £411 and £684. A health condition counts only once the DWP has decided you have limited capability for work, after a Work Capability Assessment; a fit note alone does not open the allowance. The health element page covers that assessment.
Three payslips worked through
A lone parent renting from a housing association
Aisha is 29, has one child and pays £520 rent. Her maximum Universal Credit is £1,248.84. Her work allowance is £427 because rent is in the award. In a month when she takes home £1,000, £573 is above the allowance and 55 % of it, £315.15, comes off. Universal Credit is £933.69, and her income for the month is £1,933.69 against £1,248.84 if she did not work. Her award would only run out at take-home pay of about £2,698 a month.
A single man without children
Dev is 40 and lives with his parents, paying no rent. With no children and no health condition he has no work allowance. Out of work his Universal Credit is the standard allowance, £424.90. Taking home £600 from a part-time job, he loses £330.00 and receives £94.90, so his month brings £694.90 in all: £270.00 better off than not working.
A couple where both start working
Ben and Chloe, 38 and 36, have two children and own their home outright. With one of them taking home £1,400, the higher work allowance of £710 applies and their award is £895.35. When the second partner starts work and household take-home pay doubles to £2,800, the award falls to £125.35: the extra £1,400 in wages costs £770.00 of Universal Credit, which is 55 %, and leaves them £630.00 better off each month.
Assessment periods and the timing of pay
Universal Credit is worked out for monthly assessment periods that start on the day you claimed. Your employer reports each payday to HMRC through payroll, and the DWP counts the pay in the period in which it is reported. GOV.UK warns that the award changes when you are not paid during a period, paid more than once in a period, or paid a different amount each time. Someone paid every four weeks gets thirteen paydays a year, so once a year two of them fall in the same assessment period: that month’s Universal Credit drops sharply, sometimes to nothing, and the following month returns to the usual level. Weekly and fortnightly pay produce the same effect with four or five paydays per period. Seeing a low payment after a double payday is normal; it is not an overpayment. Universal Credit payment dates shows how to find the dates of your own periods.
Why working more always pays
Because the taper is 55 %, every extra pound earned above the work allowance leaves £0.45 in your pocket, before any tax or National Insurance on that pound. Income tax and National Insurance on the gross pound come off first, because the taper works on take-home pay, so the real gain is lower still. It is a modest reward, but it is never negative. Childcare costs can tip the balance the other way, which is why Universal Credit refunds 85 % of them; see childcare costs in Universal Credit.
Earnings and the benefit cap
Wages do a second job in Universal Credit: once the household takes home £881 a month or more between you, the benefit cap no longer applies. For a family with high rent this threshold can matter more than the taper. Going from £800 to £900 a month of take-home pay costs £55 of Universal Credit through the taper, but if the award was being capped it can also release the whole amount the cap was holding back. Someone who stops work after a year of earning at least that much gets a grace period of 9 months before the cap starts.
Reporting earnings
Most employees do not report pay at all: it flows from payroll. Check the earnings figure on each statement against your payslip, because a late or wrong employer report is the most common reason a statement looks odd. If the figure is wrong, tell Universal Credit through your journal with the payslip attached. Self-employed claimants report their own earnings each month and follow different rules.