Increase in universal credit if you are working
The calculation used to work out how much universal credit you get is changing. This change will only affect you if you are working but could mean you will receive more universal credit.
How universal credit is calculated
The amount of universal credit you get is based on your family circumstances and how much you earn. A maximum amount of universal credit is calculated based on the number of people in your family. You will get this if you are not working. If you are working this maximum amount is then reduced by your earnings.
You can earn over a certain amount before the reduction. This is called the work allowance. There are 2 work allowances – one if you are getting universal credit to pay rent and the other if you don’t. A percentage of your earnings, over the work allowance, then reduces the amount of universal credit you get. This percentage reduction is called the taper rate.
What are the changes and how will they affect me?
From December the universal credit work allowances and the taper rate will change.
If you get money to pay rent in your universal credit award your work allowances will increase from £293 to £335. If you do not get money in universal credit to pay rent your work allowance will increase from £515 to £557. This means you can keep more of your earnings before they reduce universal credit.
The taper rate will decrease from 63% to 55% meaning a smaller reduction will be made so you will get more universal credit.
Jo is a single parent
Jo is 30 and has 2 children aged 6 and 8. Jo works 20 hours a week and earns £183.60 per week.
UC calculation for Jo if she pays rent
If Jo pays rent of £819 per month she will get £1,346.79 universal credit per month. After the changes to the universal credit calculation she will get £1,410.09. This is £63.30 more per month.
UC calculation for Jo if she has no rent to pay
If Jo has no rent to pay she will get £667.65 universal credit per month. After the change to the universal credit calculation she will get £713.19. This is £45.54 more per month.