Universal Credit is designed to support individuals and families with low incomes, even if they are working. Unlike some other benefits, there is no limit on the number of hours you can work while receiving Universal Credit. However, the amount you receive will depend on how much you earn.
If your wages increase, your Universal Credit decreases. If your wages decrease or you stop working, your Universal Credit increases. Understanding how earnings impact your payment will help you plan your finances effectively.
How Work Affects Universal Credit Payments
Your Universal Credit is reduced by 55p for every £1 you earn. This means that as you earn more, your Universal Credit payment gradually decreases.
Example: If you earn £100 from work, your Universal Credit payment will be reduced by £55.
Key Points About Work and Universal Credit
- No limit on working hours
- Payments decrease as wages increase
- Payments increase if wages go down
- Special rules apply if you are self-employed
- Most employers report your wages automatically
To see how changes in your wages affect Universal Credit, you can use a benefits calculator.
Work Allowance: How Much Can You Earn Before Universal Credit Is Reduced?
If you have children or a disability that affects your ability to work, you can earn a certain amount before your Universal Credit starts to be reduced. This is called a work allowance.
Work Allowance Limits
| Circumstance | Monthly Work Allowance |
|---|---|
| If you receive help with housing costs | £404 |
| If you do not receive housing cost support | £673 |
Once your earnings go beyond these limits, Universal Credit will be reduced by 55p for every £1 you earn.
How Your Earnings Are Assessed for Universal Credit
Universal Credit is calculated monthly. This period is called your monthly assessment period.
Your Universal Credit Remains the Same If:
- Your employer pays you the same amount each month
- Your payday falls on the same date every month
- Your personal circumstances do not change
Your Universal Credit May Change If:
- You do not receive a paycheck during a monthly assessment period
- You get paid twice in one assessment period (e.g., due to early wage payments)
- Your wages fluctuate each month
You can check your Universal Credit payment details by logging into your online account.
If Your Universal Credit Stops Due to Higher Wages
If your earnings increase to a point where you no longer qualify for Universal Credit, your payments will stop. You will receive a notification when this happens.
Can You Get Universal Credit Again If Your Wages Decrease?
- If your wages decrease within 6 months – Your Universal Credit payments will restart automatically.
- If more than 6 months have passed – You will need to reapply for Universal Credit.
This system ensures that you can quickly regain financial support if your income drops.
Universal Credit and Self-Employment
If you are self-employed, different rules may apply. Unlike employees whose wages are automatically reported by employers, self-employed individuals must report their earnings each month.
Universal Credit provides financial support while allowing recipients to work as many hours as they need. However, payments decrease as wages increase. If you have children or a disability, you may benefit from a work allowance, which lets you earn a certain amount before Universal Credit is reduced.
If your wages rise to the point where your Universal Credit stops, you may still be able to reclaim it within 6 months without reapplying. Understanding how work affects your Universal Credit can help you manage your finances and plan for the future.
FAQ’s
Can I work while receiving Universal Credit?
Yes, there is no limit to the number of hours you can work while receiving Universal Credit. However, your payment will be reduced based on your earnings.
How does working affect my Universal Credit payment?
For every £1 you earn, your Universal Credit is reduced by 55p. If your earnings increase, your payment decreases. If your earnings drop, your payment increases.
What is a work allowance in Universal Credit?
A work allowance is the amount you can earn before Universal Credit starts to reduce. It is £404 if you receive housing support and £673 if you don’t.
Will my Universal Credit stop if my wages increase?
Yes, if your earnings increase beyond the eligibility threshold, your Universal Credit will stop. You may reapply if your income decreases again.
What happens if I stop working while on Universal Credit?
If you stop working or your wages decrease, your Universal Credit payment will increase accordingly, based on your circumstances.
