Universal Credit: what you get, and why earning cuts it by 55p

The question everyone asks about Universal Credit is the same: how much actually lands in the account, and how much is taken away if you go out to work. The answer runs on a simple formula with three moving parts — a standard allowance, extra elements, and 55p off every pound you earn.

What is the standard allowance?

You get one standard allowance per household, paid monthly. Single and under 25: £338.58 a month. Single and 25 or over: £424.90. A couple both under 25: £528.34 for you both. A couple where either of you is 25 or over: £666.97 for you both.

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That is only the base. Extra amounts that apply to you are added on top, and anything owed is taken off.

What is added for children?

£303.94 a month for each child who lives with you. If your first child was born before 6 April 2017, you get an extra £47.94 a month for that child.

The money runs until the 31 August after the child's 16th birthday, or after their 19th if they are in eligible education or training — GCSEs, A levels, BTECs, Scottish Highers, or SVQs and NVQs up to level 3.

A disabled child attracts a separate amount: £514.71 at the higher rate and £164.79 at the lower. The higher rate is for a child who gets the highest rate of the care component of DLA for children, the higher rate of the daily living part of PIP, or who is blind or severely sight impaired. The lower rate applies at any other rate of DLA or PIP.

How much childcare do you get back?

Up to 85% of your childcare costs — but only if you are working, and in a couple both of you must be working unless one is unable to because of a disability or health condition.

The monthly ceiling is £1,071.09 for one child and £1,836.16 for two or more. The provider must be registered: nurseries, childminders, breakfast clubs, after school care and holiday clubs all qualify.

The trap is the order of payment. You pay the childcare up front and claim it back as part of your Universal Credit. If you cannot cover that first bill, say so to your work coach straight after you claim — support to pay costs up front exists.

How much does working cut your payment?

For every £1 you earn, your Universal Credit goes down by 55p. That is the taper. There is no limit at all on how many hours you can work and still get Universal Credit.

The right way to read it: your income is your wages plus the new, reduced payment. Going out to work almost always leaves you better off — just not by the full amount you earn.

Most employers report your wages for you. Monthly earnings reporting is normally only for the self-employed, who have separate rules.

What is the work allowance, and who gets one?

It is the amount you can earn before the 55p taper starts. It is not for everybody: it applies if you are responsible for a child or young person, or if you live with a disability or health condition that affects your ability to work.

Housing decides the size. £427 a month if you get help with housing costs through Universal Credit, or live in temporary accommodation arranged by your council because you are homeless. £710 a month if neither applies.

Why does the amount move from month to month?

Your payment is calculated every month — the monthly assessment period. It stays the same only when three things hold: your employer pays the same amount, pays on the same date, and your circumstances do not change.

It moves if you are not paid at all during an assessment period, are paid more than once in one, or earn a different amount. Two pay dates landing in a single period is the most common unpleasant surprise.

What if your wages rise enough to stop the payments?

Payments reduce until they stop altogether, and you are told when that happens. If your wages fall again later, you can become eligible once more.

The timing matters. If it has been 6 months or less since your last payment, it restarts automatically. More than 6 months, and you have to reapply.