New to Universal Credit

7. Universal Credit and work

You may still be able to receive Universal Credit payments when you start work or increase your earnings. You will continue to receive Universal Credit until your earnings are high enough, at which point your payments will stop. That amount will depend on your circumstances.

If your job ends and you are already getting Universal Credit, your next Universal Credit payment will be paid as normal.

If you are self-employed, your earnings from your self-employment will be taken into account. Please read more about self-employment and claiming Universal Credit below.

How earnings affect your payments

Your Universal Credit payments will adjust automatically if your earnings change. It doesn’t matter how many hours you work, it’s the actual earnings you receive that count.

If your circumstances mean that you don’t have a Work Allowance, your Universal Credit payment will be reduced by 63p for every £1 you earn.

In other words, you will receive an additional 37p for every £1 you earn (up to a limit that depends on your circumstances), and your total income from earnings and Universal Credit will be more than you would have received from Universal Credit alone.

This means that you will receive an additional 37p for every pound you earn up to a certain limit, and that your total income from earnings and Universal Credit will be more than you would have received from Universal Credit alone.

Self-employment

The amount of Universal Credit you receive will depend on your circumstances, and will take into account your earnings, whether they are from your own business, from a SEISS grant, or if you are working as an employee.

If you currently receive tax credits from HMRC, please be aware that if you submit a Universal Credit application, your tax credit award will end immediately. If your tax credit award ends, it cannot be re-opened and it will not be possible to make a new claim for tax credits in the future. Find out more about tax credits and claiming Universal Credit

If you are also claiming SEISS, this will be treated as earnings and so may affect your Universal Credit payment. If you are able to start working again, either full time or on limited hours, you may still be eligible to receive Universal Credit even if you are no longer eligible for SEISS. This will depend on your earnings. Find out more about self-employment and Universal Credit here.

If you are self-employed and claiming Universal Credit, it’s important that you let DWP know about your income every month so that your Universal Credit payment can be processed. This includes reporting if you have had no income at all. You will be prompted to report your income and expenses in your online account as you get close to your payment date.

Find out more about self-employment and claiming Universal Credit

Work Allowance

If you and/or your partner are in paid work you may be able to receive some earnings before your Universal Credit payment starts to be affected. This is called a Work Allowance.

The Work Allowance only applies to you if:

  • you have responsibility for one or more children (or qualifying young persons), or
  • you or your partner have limited capability for work (a health condition or disability)

If neither of these circumstances apply to you, your Universal Credit payments will be affected as soon as you start earning money from paid work.

There are 2 Work Allowance rates. Which one you get depends on whether your receive help with housing costs, either as part of your Universal Credit payment or through Housing Benefit:

  • If you receive money to help with housing costs your Work Allowance will be £292 per month
  • If you do not receive money to help with housing costs your Work Allowance will be £512 per month

Graphic showing how a claimant's situation affects their Work Allowance

Read more about Universal Credit Work Allowances

If you earn more than your Work Allowance

If you earn more than your Work Allowance, your Universal Credit payment will be reduced. For every £1 you earn above your Work Allowance, your Universal Credit payment will be reduced by 63p. This means that you will receive an additional 37p for every £1 you earn (up to a certain limit), and that your total income from earnings and Universal Credit will be more than you would have received from Universal Credit alone.

If your circumstances mean that you don’t have a Work Allowance, your Universal Credit payment will be reduced by 63p for every £1 you earn.

If you are part of a couple and receive a joint Universal Credit payment, both your earnings will be used to calculate how much Universal Credit you get.

How often you’re paid

Universal Credit payments are made every calendar month, but if you’re working your earnings may be paid weekly, fortnightly or every 4 weeks.

This will mean that every now and again you will get more payments from work than is usual during a calendar month.

For example, if you are paid every 2 weeks, you will usually get 2 payments from earnings in a month. But because calendar months are mostly longer than 4 weeks, sometimes you will get 3 payments from earnings in a single month.

In these months your earnings will be higher than usual, and this will mean that you get a smaller Universal Credit payment. You will need to make sure that you have managed your money to be able to cope with this smaller payment. It may be the case that your extra payment means that you earn enough that month to receive no Universal Credit payment at all.

If a smaller payment means you are having trouble paying your bills and household expenses, speak to your work coach or call the helpline to talk about the help that may be available.

For more details about this and other payment patterns see different earning patterns and your payments

Closing your claim because of earnings

If your earnings are high enough to receive no Universal Credit payment in a month, your Universal Credit claim will be closed.

As a temporary measure during the Covid-19 pandemic if your earnings go down enough to start your Universal Credit payment again, and this is within 6 months of your last Universal Credit payment stopping, you won’t need to complete a new application. However, you will still need to declare any other changes of circumstance you have during that time to ensure any new Universal Credit payments have been made correctly.

If your Universal Credit has stopped for another reason during the 6 months since you last payment stopped, you’ll need to re-apply for Universal Credit by logging into your online account and confirming that the details you gave before are still correct.

In both of the above cases you will still keep your original payment dates.

If it is more than 6 months after your last Universal Credit payment you will need to make a completely new application.

If your Universal Credit payment includes an amount for housing that is paid straight to your landlord, it’s possible that you may not receive any money from Universal Credit but your landlord continues to receive money towards your rent. In these circumstances your Universal Credit claim remains open.

In cases like this, if your total Universal Credit payment is reduced to less than your housing costs, you’ll need to make up the difference yourself. Your Universal Credit claim will only be closed when there is no payment to either you or your landlord.

Surplus earnings

If you’re claiming Universal Credit, your earnings from previous months may affect how much you get.

If you earn more than £2,500 over the amount you can earn before you receive no Universal Credit payment, you are said to have surplus earnings. These surplus earnings will be taken into account in the next monthly assessment period. This may reduce the amount of Universal Credit you receive, or perhaps mean that you don’t get any Universal Credit payment that month.

Surplus earnings will stop being taken into account once you start receiving Universal Credit payments again, or 6 months after the original surplus was created – whichever is earlier.

If you are part of a couple that has surplus earnings and you separate, the surplus earnings will be divided equally between the two of you. Your half will usually be taken into account if you make an individual Universal Credit claim.