Universal Credit (UC) responds to your personal circumstances and payments are designed to increase or decrease depending on your circumstances and your income during each Assessment Period.
Universal Credit aims to smooth the transition between moving from benefits and into work.
This short video gives an overview of how Universal Credit is paid while you are in work:
Most employees will be on a PAYE (Paye As You Earn) Real Time Information system, therefore your wage details should be automatically reported to the Universal Credit office. You will also be expected to confirm your earnings each month on your online UC account.
Moving into work if you are on UC
If you move into work while claiming Universal Credit you won’t need to ‘sign off’ and close your Universal Credit claim. Instead you’ll need to add a note to your UC Journal to let your work coach and your UC service centre know.
If you move into work your UC claim may close, this will depend on whether or not your earnings exceeded your maximum UC award.
UC takes into account earnings and (any other income) received during your Assessment Period. This is best explained in the following example:
Example: John is 22 years old, he has no health issues and he is actively seeking work. He lives alone and his rent is £300 per month. He is claiming Universal Credit.
John’s assessment period starts on 8th of each month and ends on the 7th of the following month, so John receives his UC payment on the 14th of every month:
Standard Allowance (under 25): £251.77pm
Housing Element: £300.00pm
Maximum UC Award: £551.77pm
John then starts a job on 24 June. He has missed his new employer's cut-off date for getting his first wage at the end of June, so he’ll not get his first wage until 31 July. John notified the UC Service Centre and his work coach that he started work, so his claimant commitment was amended to show his new circumstances, he also advised that he wouldn’t get his first wage until 31 July.
As John didn’t get any wages during his 8 June to 7 July assessment period he will still get his full UC entitlement on 14 July, (even though he was working since 24 June). In summary, John will still receive his UC payment on 14 July because he did not receive any wages within his relevant Assessment Period.
However, if John had started work a week earlier and received a partial wage from his new employer at the end of June then his Universal Credit payment due on 14 July would be affected.
How earnings effect UC payments
The amount that you can earn before your UC payments stop will vary from person to person. This is because the amount you can earn is directly related to how much your maximum award of Universal Credit is.
The amount of Universal Credit paid to you will reduce by 63p for every £1 that you earn.
If you have children or a disability then a portion of your earnings are ignored and 63% of what is left is taken into account. This is known as the ‘Work Allowance’.
If the level of your earnings which are taken into account exceeds the award of UC that you receive, your payments of UC will stop. If you need to claim UC again after your award ends then you should log back into your UC account and make a new claim.
Earnings lower than your UC award
If your earnings are below your maximum award then your income will be topped up with a UC payment.
Once 63% of your earnings have been taken into account and your award has been reduced you will be paid the difference.
Please remember that if you continue to receive an award of UC while you are working then you will still have a Claimant Commitment.
If you receive more than one wage each calendar month
If you are paid weekly, fortnightly or 4-weekly then there may be times when your earned income is too high to qualify for a payment of Universal Credit. This could also happen if you receive overtime or bonuses. In these circumstances you will be notified that you have earned too much for Universal Credit and your claim will stop. To re-apply you will need to log into your Universal Credit account.
This useful guide explains how different earning patterns effect your Universal Credit.
Help with travel costs
Some unemployed Universal Credit claimants may be entitled to a Jobcentre Plus Travel Discount Card. Speak to your JCP work coach about this, or add a enquiry for them on your online Journal. They can also advise you about help with travel costs through the flexible support fund, e.g. for attending interviews or training, or help towards travel costs for the first months of travelling to work.
Self-employed people can also claim Universal Credit. Find out more on the Revenues Benefits website.
Information, advice and support
If you have any queries about how Universal Credit can support your employment prospects then please speak to your JCP work coach. Additional advice and information regarding Universal Credit is available from our welfare rights service or your local Citizens Advice Bureau.