Universal Credit: Employed people can claim but earnings will affect payments
Universal Credit payments are dependent on the claimant’s circumstances but certain minimums are in place. Claimants can receive “standard allowances” which can be as high as £594.04 per month.
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Some people may assume that Universal Credit can only be claimed by people who are unemployed but this is not the case.
Universal Credit can be claimed by people who are employed but may still need further support.
This could be especially useful at the moment as many people are reportedly having their hours reduced.
However, earnings can affect how much income can be received from Universal Credit.
Universal Credit payments will gradually reduce the more the claimant earns.
Currently, for every £1 that a person earns their Universal Credit payment will reduce by 63p.
There are some exceptions to this though where a certain amount can be earned before payments are reduced.
These are known as work allowances which are focused around certain lifestyle circumstances.
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The government detail that a claimant can earn certain amounts without their payments being affected if they, or their partner, are either:
- responsible for a child or young person
- living with a disability or health condition that affects their ability to work
The claimants work allowance can also be lower if the claimant gets help with certain housing costs.
A claimant’s monthly work allowance will be £292 if they get help with housing costs.
The monthly allowance will rise to £512 of the claimant does not get housing support.
So, for example, a claimant may have a child and receives money for housing costs within their Universal Credit payment.
The claimant could be working and earns £500 during an assessment period.
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The work allowance would therefore be £292.
This means that £292 can be earned before any deductions are made but the remaining earnings will be affected.
For every £1 of the remaining £208 the claimant earns, 63p will be taken away from the Universal Credit payment.
So the calculation is £208 multiplied by £0.63 which equals £131.04.
In conclusion, this would mean that the claimant earning £500 for that period would have £131.04 deducted from their Universal Credit payment.
Universal Credit is designed to encourage people to seek out work and so as income increases, payments will be reduced until the claimant no longer needs it at all.
The government points out that it may be possible to receive Universal Credit while being furloughed.
As coronavirus continued to affect the economy, Rishi Sunak provided a support package for both struggling workers and employers.
So long as both parties agree, an employee can be placed on furlough where up to 80 percent of wages can be covered.
While this can relieve financial pressures it can obviously reduce a person’s income, which may put them in a position where they need support through the welfare system.
With all these new rules and circumstances, claimants could become very confused about where they stand. Fortunately, the government is regularly updating their website with the latest news on coronavirus.
On top of this, impartial advice can be sought from organisations such as the Money and Pensions Service, Citizens Advice and the Money Advice Service.
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