How Much Can You Earn And Still Get Universal Credit?

This article aims to explore how much you can earn and still be able to claim Universal Credit. For this purpose, we will explore the eligibility criteria, income level and qualifying threshold for the benefit that can affect a claimant’s payments.  

How Much Can You Earn And Still Get Universal Credit?

You can continue to claim Universal Credit as long as you are on a low income and your savings or capital are below the £16,000 threshold. 

Low income is defined as earnings that are at least 60% more than the median income within a given period. According to statistics, the median income of the UK in August 2022 was £2,111 per month. This means that as long as a claimant earns less than 60% of this amount; which comes to £1,266, they can claim Universal Credit.

Earnings are assessed every month for Universal Credit claims. This means that months when a claimant’s income exceeds the “low income” mark, they will not be able to claim Universal Credit while they will receive regular payment when their earnings can still be classed as low income.  

Earnings that come from any of the following sources will count towards your monthly financial assessment while you claim Universal Credit:  

• salary
• overtime
• tips
• commission
• bonuses
• holiday or pay
• maternity or paternity pay
• adoption or shared parental pay

Since Universal Credit is based on the net earnings of claimants, income after the deduction of tax, national insurance and pension deduction will be taken into account for a means test.

If you earn £2,500 more than the low-income threshold, you are said to have “surplus earnings”. These earnings can reduce your future payments of Universal Credit.

Additionally, earnings from previous months are taken into consideration for your Universal Credit claim. If your earnings are above the low-income threshold, future payments for Universal Credit will be reduced.

How Much Can I Claim With Universal Credit?

The amount that you can claim with Universal Credit depends on your circumstances and income.

For instance, 

• you can claim £265.31 per month if you are single and under 25 years of age
• if you are single but older than 25, you can claim £334.91on a monthly basis 
• if you are part of a couple and both of you are younger than 25, you can make a joint claim of £416.45 per month
• if you are a couple and you are older than 25 years, you will be eligible for a monthly payment of £525.72

If you have a child or even children, you will be able to claim an additional amount on top of this basic rate. This is called the child element and what be classified as follows:

• if your first child was born before 6 April 2017, you will get an additional amount of £290 per month 
• if your first child was born on or after 6 April 2017, you will get £244.58 added to your Universal Credit payment
• for your second child onwards, you can claim £244.58 per child in addition to your basic Universal Credit claim 

What Can Cause Universal Credit Payments To Reduce?

Generally speaking, as a claimant’s savings or capital increase from the minimum floor limit of £6,000, their Universal Credit payments will start to reduce.

To be more specific, Universal Credit payments can reduce in case a claimant faces any of the following situations:

• returning a Universal Credit advance payment
• having more than £6,000 in money, savings and investments
• getting above the benefit cap amount
• having overpaid amounts from welfare benefits
• owing money to the state for Council Tax, court fines, electricity, gas, water or Child Maintenance
• paying gas or electricity bills through their Universal Credit payment
• Increase in income through a job, pension or benefits
• starting to receive amounts through pensions, annuities or insurance payments
• getting maintenance payments from a current or former spouse or civil partner 
• increase in payments through benefits such as Carer’s Allowance, Incapacity Benefit, Maternity Allowance, Employment and Support Allowance and Jobseeker’s Allowance

Does A Tax Rebate Reduce Universal Credit?

Yes, a tax rebate can reduce your Universal Credit payments as it counts as income when a means test is carried out for benefits claims. 

Since your entitlement for Universal Credit depends on your household income, an increase in this income through a tax rebate is likely to reduce your Universal Credit payments. 

However, the challenge occurs when you’ve received a tax rebate as a result of an incorrect tax code and have been allowed a tax rebate in error. Even though the error may be corrected at a later stage by the HMRC and the claimant will have to return the excess amount that they received, it may take some time before the underpaid amount of Universal Credit can be corrected.

How Does A Work Allowance Affect Universal Credit?

If a claimant (and their partner) are in paid work, there is a certain amount of their earnings that will not affect their earnings. This is a work allowance.

However, to claim a work allowance for Universal Credit, you should be able to meet the below eligibility criteria:

• the claimant (and their partner, if any) is responsible for one or more children 
• the claimant (and their partner, if any) has limited capability for work

Claimants who receive help with housing costs as part of their Universal Credit claim will get a monthly Work Allowance of £335 while those who do not get help with housing costs will get a monthly Work Allowance of £557.

If your earnings exceed the Work Allowance, you will lose 55p against each additional £1 you get from your Universal Credit claim. 

How Many Hours Can You Work And Still Get Universal Credit?

The number of hours an individual works do not have an impact on the claim for Universal Credit.

Universal Credit provides financial support to individuals who are either out of work or on a low income. It is a monthly payment that claimants receive to help them to cover living costs.

The amount of Universal Credit that an individual receives depends on their personal circumstances and income (if any). 

For instance, someone who is single and younger than 25 years of age will be eligible for Universal Credit amounting to around £257 per month. Meanwhile, this amount will rise to around £509 for someone who is living with a partner and either one of them or both of them are above the age of 25.

Conclusion:

The discussion in this article has helped to conclude that as long as your earnings are within the limits of “low income” and your savings are less than £16,000, you can continue receiving your Universal Credit claim or apply for one. However, as earnings start to increase, your Universal Credit payments will start to reduce until you surpass the “low income” threshold and are no longer eligible for a Universal Credit claim.  

FAQs: How Much Can You Earn And Still Get Universal Credit?

What counts as income for Universal Credit?

Income for Universal Credit includes cash, stocks and shares, savings, assets, investments (rent, dividend, interest), as well as unearned income from pension payments and student income.

How much money can you have in the bank on Universal Credit?

If you and your partner (in the case of a joint claim) have equal to or less than £6,000 in savings, you can continue to claim Universal Credit. The amount of your benefit claim will decrease as your savings increase and if you have more than £16,000 as savings, you will not be able to claim Universal Credit.

What happens if I have to pay back Universal Credit?

If you have to pay back Universal Credit, you can expect a deduction of 25% of your standard allowance until you are debt-free.

What is the minimum Universal Credit payment?

The minimum Universal Credit payment that you can receive is £257.33 a month if you are a single claimant under the age of 25 years, £324.84 a month if you are a single claimant aged 25 years or above and £403.93 a month for joint claimants who are both under 25 years of age.

How many hours do you have to work to get Universal Credit?

There is no minimum or maximum limit to the number of hours that claimants need to work to claim Universal Credit. However, in most cases, Universal Credit claimants will be expected to work at least 16 hours per week. 

References:

Universal Credit: How your earnings affect your payments – GOV.UK (www.gov.uk)

Understanding Universal Credit – How earnings affect Universal Credit

Check how much Universal Credit you’ll get – Citizens Advice