Universal Credit: Surplus earnings rules could affect your payment – check now

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Universal Credit is designed by the Department for Work and Pensions (DWP) to provide a regular amount of financial assistance. The payment is issued once a month to those who are eligible to receive the sum. However, a large proportion of those claiming Universal Credit do have some degree of income they gain from paid employment.

How much Universal Credit a person receives from the DWP is dependent on their earnings if they are employed.

While there is no limit to how many hours a person can work when claiming Universal Credit, there are some rules to bear in mind.

For every £1 a person earns from employment, their Universal Credit payment will reduce by 63p.

However, the rules also state individuals are permitted to earn a certain amount before this kicks in, but only in particular circumstances.

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This will be the case if someone is living with a health condition which affects their ability to work, or is responsible for a child or young person. 

Known as the ‘work allowance’, this is lower if a person receives aid with housing costs.

It is £512 for those who do not get help with housing costs, and £292 for those who do.

Payment can eventually stop because a person’s earnings increase to the level where they can no longer claim Universal Credit.

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But in certain circumstances, there are important rules to bear in mind known as ‘surplus earnings’.

The government explains surplus earnings kick in if  a person’s earnings per month are more than £2,500 over the sum where a payment was first stopped.

Surplus earnings are carried forward to the following month, and will count towards a person’s earnings.

People will not receive a Universal Credit payment if their earnings – including those which are surplus – remain over the amount where a payment was stopped.

Surplus earnings can decrease if overall earnings fall below the amount where a payment stopped again.

Once a surplus is eradicated, Britons will be able to receive a Universal Credit payment from the DWP once again.

However, claimants will be required to reclaim Universal Credit each month until earnings reduce enough to get another payment.

If one’s circumstances are confusing when it comes to surplus earnings, claimants are encouraged to reach out to their work coach.

The details should be contained within an individual’s online journal, which clearly maps out when the surplus reduces.

How earnings affect Universal Credit is a process likely to differ from person to person.

As such, the DWP has directed Britons towards benefit calculators, tools which allow claimants to gain an estimate of what their Universal Credit payment will be.

These tools also show how increasing hours or starting at a new job could affect how Universal Credit is paid.

The DWP recommends the calculators offered by turn2us, Policy in Practice and entitled to.

These tools are independent, free to use and anonymous for all who wish to utilise them. 

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