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Universal Credit earnings taper: What it is and how it affects your benefit cash


Universal Credit can be a lifeline for people who are in work but on a low wage, those out of work or those who simply cannot work.

Claimants get a standard allowance plus extra money if they have a particular reason for needing more.

Around 6 million people claim the benefit, and each get their money once per month. When being assessed for the cash you have to declare if you’re single or in a couple as this affects how much you might get.

READ MORE: How do I apply for the Household Support Fund? Money to help families after axing of Universal Credit uplift

If you’re in work but on a low wage and claiming Universal Credit, or if you’re looking for work and wonder how your finances might look if you get a part-time or full-time position, here’s everything you need to know about the Universal Credit earnings taper.

Universal Credit earnings taper: What is it and how does it affect my benefit money?

If you’re receiving Universal Credit or thinking of going on Universal Credit, you may have come across the Universal Credit earnings taper.

This is the reduction in your benefit you get as you work more hours and get a combination of pay: some from your job and some from your Universal Credit benefit.

The amount you lose has been set at 63 percent. In other words, for every one pound you work beyond your work allowance, you will lose 63 pence. That amount will be removed from your benefit automatically by the Department for Work and Pensions.

You may wonder, then, what a work allowance is. This is something you get before your Universal Credit payment is affected, but not everyone is eligible for it. To get a work allowance, either you and/or your partner must have responsibility for a child and/or a limited ability to work.

If you qualify and you receive benefits for housing, you will get a work allowance of £293 per month. If you don’t get support for housing, your work allowance is set at £515 per month.

The important thing to note here is that if you can work and you don’t have responsibility for a child, then you will not qualify for a work allowance. In other words, the Department for Work and Pensions will take 63 pence for every one pound you earn while you’re working.

As your earned income increases, the amount you get from Universal Credit decreases. You might wonder, though, how you can afford to pay for things like heating, clothing and other essential items if the loss of benefit is too much.

Throughout the coronavirus pandemic, the Government had a Universal Credit uplift payment of £20-a-week to help people through the unprecedented times.

But that was removed earlier this month, potentially leaving many without a vital source of money.

Nonetheless, if you are struggling with what you have, there is something called a Household Support Fund.

This is money from the Government which has been given to local authorities and devolved administrations to give to people who really need a boost to their finances.

You have to approach your local council for the cash, but it may be worth it, particularly with the autumn and winter months settling in.

Otherwise, have a chat with your benefits adviser or speak to your local Citizens Advice, who may be able to tell you what else you might be eligible for.




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