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Income and Capital

In working out your Universal Credit award, firstly your maximum award is calculated, then if you have any earnings, other income, capital or savings, these are taken into account to work out your actual Universal Credit award.

Earnings and other income

In working out the effect your net earnings and other income will have on your UC award there are two important terms: Work Allowance and Taper Rate.

 

Work Allowance: The amount of money that you can earn before your maximum Universal Credit award starts to be reduced.

 

 

Your work allowance is based on your needs so, for example, a couple with children have a higher disregard than a couple without children.

See our Work Allowance rates page to find out your work allowance.

Earnings below your work allowance are ignored. Earnings over your work allowance will be subject to a taper of 65%.

 

Taper Rate: The rate at which your maximum Universal Credit award is reduced as your earnings increase.

 

 

A taper rate of 65% means losing 65p of your maximum Universal Credit award for every £1 you earn over your work allowance.

Your earnings will be assessed monthly to ensure your UC award is always accurate. The assessment period begins with the first date of entitlement and will then run from the same date each month during your award.

Unearned Income

Most unearned income which you could use to meet your living costs will be taken into account in full, so your maximum Universal Credit award will be reduced by £1 for every £1 of unearned income.

Benefit income taken into account:

  • Jobseeker's Allowance (contributory)
  • Employment and Support Allowance
  • Carer's Allowance
  • Bereavement Allowance
  • Widowed mother's allowance
  • Widowed parent's allowance
  • Widow's pension
  • Maternity Allowance
  • Industrial Injuries Benefit - excluding any increase where constant attendance is needed and for exceptionally severe disablement

Capital/Savings

Any capital/savings you have under £6,000 is ignored.

Any capital/savings you have between £6,000 and £16,000 is treated as if it gives you a monthly income of £4.35 for each £250, or part of £250, regardless of whether it does or not.

 

Example: If you have £6,300 in a savings account, £6,000 of it will be ignored and the other £300 will be treated as giving you a monthly income of £8.70.

 

 

If you have capital / savings over £16,000 as a single claimant or as a couple you will not be entitled to Universal Credit.

If you are a member of a couple but have to make a claim as a single person, your partner's capital / savings will still be included in your £16,000 maximum.

Last updated: 1 April 2013

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