5. Earnings

Your earnings and your partner’s earnings are taken into account in the universal credit (UC) assessment. Your net monthly earnings are taken into account – ie, after deducting:

•income tax;
•class 1 national insurance contributions; and
•any contribution you make towards a personal or occupational pension.

Some of your earnings are disregarded if you have children or if you are ill or disabled. This is known as a ’work allowance’. The lower work allowance if you get help with housing costs (rent or service charges) in your UC is £293 a month. You get a higher work allowance of £515 if you have no help with housing costs in your UC. Earnings above your work allowance are deducted at 63 pence for every pound above the allowance. If you do not get a work allowance, 63 pence for every pound of your earnings is deducted from your UC amount.

For full details of the way earnings are treated, see CPAG’s Welfare Benefits and Tax Credits Handbook.