Universal Credit is replacing Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit. New claims for the six-in-one benefit have surged recently, with official figures from the Department for Work and Pensions (DWP) confirming there were 1.5 million claims made between March 13 and April 9, 2020.
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This figure is six times more than in the same period in 2019.
It comes as millions of people have begun to feel the financial impact of the coronavirus crisis in the UK.
With so many new claims having been submitted, many may wonder how the payment is affected by earnings.
Unlike Jobseeker’s Allowance, payments don’t stop just because the claimant works more than 16 hours a week.
Rather, Universal Credit is affected by an earnings taper rate, meaning the amount that a person gets will reduce as they earn more.
In some cases, a person may be eligible for a work allowance, and this is an amount they can earn before their Universal Credit payment is affected.
Currently, the earnings taper rate is 63 percent.
It means that for every £1 that a person earns, their Universal Credit reduces by 63 pence.
This amount will be automatically deducted from the Universal Credit payment, DWP guidance explains.
“If you are part of a couple and receive a joint Universal Credit payment, both your earnings will be used to calculate how much Universal Credit you get,” the government website also states.
It may be that some people are eligible for a work allowance.
In this situation, the earnings taper rate applies on earnings over the work allowance.
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There are two situations in which a person would be eligible for the work allowance.
This is if the claimant (and/or their partner) either have:
- Responsibility for a child
- Limited capability for work.
How much is the work allowance?
There are two monthly work allowances, and the one an eliigble person gets will depend on whether they receive housing support or not.
If their Universal Credit does include housing support, then the monthly work allowance is £292.
Those who don’t receive housing support can get a monthly work allowance of £512.
Should a person have earnings but they or their partner are not responsible for a child, or they do not have limited capability for work, then they will not be eligible for a work allowance.
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