The work allowance element of Universal Credit is one of the most important aspects of it, and seems to be one of the key reasons why the government is enforcing it. Similar to the 30 hour element of Working Tax Credits, the idea seems to be that it may encourage people to get back into work if they are currently on benefits. Critics argue that the entire system may leaving claimants worse off.
According to current UK Government legislation, the Universal Credits Work Allowance works as follows:
1. Universal Credit tops up your earnings
When you start work, the amount of Universal Credit you get will gradually reduce as you earn more. But unlike Jobseeker’s Allowance, your payment won’t stop just because you work more than 16 hours a week.
2. Total income
Your total income will be your earnings plus your new Universal Credit payment. The more you earn, the higher your total income will be.
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.
3. Work Allowance
In some cases, you may be eligible for a work allowance. A work allowance is the amount that you can earn before your Universal Credit payment is affected.
From 11 April 2016, the range of work allowances available was simplified. You will be eligible for a work allowance if you (and/or your partner) either have:
- responsibility for a child
- limited capability for work
The monthly work allowances are set at: £198 If your Universal Credit includes housing support £409 If you do not receive housing support
These work allowance rates will apply to all Universal Credit claimants.
If you have earnings but you (or your partner) are not responsible for a child or do not have limited capability for work you will not be eligible for a work allowance.