Universal Credit is impacted by earnings but some who claim qualify for work allowance | Personal Finance | Finance

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Universal Credit is replacing six different benefits, and these are Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit. Unlike other benefits, there is no limit as to how many hours can be worked while receiving Universal Credit.

This is unlike Jobseeker’s Allowance, as Universal Credit payments won’t stop simply because they work for more than 16 hours per week.

That said, when a person starts work, the amount of Universal Credit they get will gradually reduce as they earn more.

“Your claim continues when you start work, so you can take temporary or seasonal jobs without worrying about making a brand new claim or any gaps between paydays as you move in and out of work,” explains the government.

A taper rate applies when combined with earnings.

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The Universal Credit earnings taper is currently 63 percent.

This means that for every £1 that is earned, the Universal Credit will reduce by 63 pence.

The amount will be deducted automatically from their Universal Credit payment.

It’s possible to use a benefits calculator to see how increasing hours or starting a new job can affect what a person gets.

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There are several independent benefits calculators signposted on the government website.

These include Turn2us, Policy in Practice, and entitledto.

Some people may be able to keep more of their Universal Credit despite having earnings.

This is via the work allowance, which enables the qualifying person to earn a certain amount before their Universal Credit is reduced.

The monthly work allowance rises to £512 if they don’t get help with housing costs.

As income increases, the payment will reduce until the person earns enough to no longer claim Universal Credit.

Payment will then be stopped, however if earnings decrease after this, Universal Credit can be claimed again.

However, the time since the last payment is received will impact whether a new claim needs to be started or not, and claimants should be aware they may be affected by having “surplus earnings”.





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