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Universal credit and earnings

The calculation of your earnings is based on a net figure after tax, national insurance contributions and any contribution you make to an occupational or personal pension scheme has been deducted.

If you are claiming universal credit jointly with your partner, your combined earnings are taken into account.

Your earnings will reduce your universal credit by 63p in the pound. However, in some circumstances, you may be able to keep some of your earnings up to a certain limit before your universal credit is affected. This limit is called the ‘work allowance’. The work allowance will only apply if you or your partner:

There are two different rates: 

  • a ‘lower work allowance’ of £292 if a housing costs amount is included in your universal credit award (or, if you are in temporary accomodation, you receive housing benefit); and

  • a ‘higher work allowance’ of £512 in any other case.

In each case, the same rate will apply, whether you are single or claiming jointly with your partner.

If a work allowance does apply to you, earnings in excess of that allowance will reduce your universal credit by 63p in the pound.

If you are self-employed, have been in business for more than 12 months and your earnings in any month are below a certain amount, the 'minimum income floor', your universal credit may be worked out using this figure instead.

The minimum income floor rules can be relaxed over the period of the coronavirus outbreak.  

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