A key feature of Universal Credit (UC) is that it promises to ensure we’re better off in work. Anyone with dependent children living with them, can earn up to a certain amount before anything is deducted from their benefits. This ‘work allowance’ also applies to some people with health conditions limiting how much they can work. How much we keep is affected by whether we claim money towards rent or not. The exact amount changes each year but we can find the official details here.
After the work allowance, and on everything for anyone who doesn’t qualify, we lose 63p from our UC payment for every pound we earn. (Correct as of Summer 2020, check here for the latest rate.) This is more generous than the old benefit system and means people have a fighting chance of earning their way out of financial worries. This was impossible before when claimants saw little or no financial benefit when they took on anything other than a full-time job.
There are many who feel this is not enough but one positive way to think about it is when other parts of the system hold us back. Consider people hit by the spare room subsidy rules, ie, the Bedroom Tax. If that costs us, say, £14 a week, and if we don’t have kids at home, by taking a few hours’ work and earning £38, we would cover the Bedroom Tax at least. It’s complex but it should mean all UC claimants are better off working than claiming.
Getting All You’re Worth
All claimants moving onto UC should do an online benefit checker and also a ‘better off calculator’ to look at how getting some paid work would affect things. Remember, UC replaces six of the biggest benefits but others are still claimed separately, such as Child Benefit and Council Tax Support (or reduction). See our overview of benefits and how to check what we can claim here.