Chapter 21: How income affects universal credit

• 1. Working out your income
• 2. Grants and loans
• If you get a student loan for living costs
• If you do not get a student loan for living costs
• 3. Dividing income throughout the year
• 4. Other payments
• Professional studies loans
• 5. Earnings
• 6. Benefits
• 7. Maintenance
• 8. Savings and other capital

This chapter explains how much weekly income is taken into account when working out your entitlement to universal credit (UC). If you do not yet come under the UC system and are claiming income support, income-based jobseeker’s allowance, income-related employment and support allowance or housing benefit, see Chapter 22. If you are claiming child tax credit or working tax credit, see Chapter 23.

Basic facts

– Student loans and some grants count as income when working out how much UC you can get.

– Loans and grants are taken into account as income during the academic year, but ignored in the summer vacation.

– The maximum amount of student loan to which you are entitled is taken into account as income, whether or not you apply for it.

1. Working out your income

If you have student income (a student loan and grants paid to you for your course), it usually counts as income for universal credit (UC).1Reg 66(1)(e) UC Regs This chapter explains how much monthly income counts in the assessment. Note: you do not count as having student income if you are no longer ‘receiving education’ (see here).2Reg 68(1) UC Regs If you have left or finished your course and you get a payment of student income, that income is disregarded. Note: one-off, lump-sum payments of student income count as capital (see here).

 

Step one	Add together the annual income from grants and loans. Add the annual amount of any grants, ignoring those that are disregarded, to the annual amount of any loan (see below).
Step two	Work out the period over which your student income counts. Calculate this from the month in which you start your course until the month before the summer vacation, or end of your course, as applicable (see here).
Step three	Divide income throughout the year. Divide the amount in Step one by the number of months over which your student income counts for that year (see here).
Step four	Deduct disregard. Deduct a set amount of £110 from the monthly amount of income from grants and loan.
Step five	Add other income to the monthly amount. Add any other income taken into account (eg, earnings) to the monthly amount of your grant and loan (see here). This, added to the total at Step four, is the amount of income used in the UC assessment.

 

1     Reg 66(1)(e) UC Regs »

2     Reg 68(1) UC Regs »

2. Grants and loans

• If you get a student loan for living costs
• If you do not get a student loan for living costs

If you get a student loan for living costs

If you are eligible for a standard loan for your living costs, it counts as income when working out your entitlement to universal credit (UC). The maximum loan you could be entitled to is taken into account, as though there were no reduction for household income or another grant.1Regs 68 and 69 UC Regs The special support element (introduced for new students in England from 2016/17) is disregarded. If your loan entitlement is reduced because of a previous overpayment, only the amount of loan paid in the academic year being assessed should be taken into account, not the notional maximum entitlement.2Reg 68(2) and 69 UC Regs If you receive a postgraduate loan for either a master’s or a doctoral course in England or Wales, 30 per cent of the maximum amount to which you are entitled is taken into account, and the remainder is disregarded.3Reg 69(1a) and UC Regs

Any grants you receive are disregarded, except for any amount for the maintenance of your partner and/or child(ren), and any specific amount for rent if your UC includes an amount for rent.4Reg 68(3) UC Regs Discretionary payments from an institutional hardship fund are also ignored, provided they are not for the maintenance of your partner or child(ren) and not a specified amount for rent that is met by UC. Note: a one-off payment from hardship funds counts as capital not income (see here).

Note: at the time of writing, regulations had not been laid to make explicit the treatment of part-time undergraduate loans for living costs in England, and the arrangements for undergraduates in Wales introduced from 2018/19. However, in practice, loans for living costs for part-time students are treated in the same way as loans for full-time students, with the special support element disregarded and the loan then taken into account according to the usual rules. In Wales, the ‘special support payment’ that comprises up to the first £5,161 of any grant paid (see here) is disregarded, while any grant paid above this amount plus any loan paid is taken into account, subject to the monthly disregard. Note: it is arguable that the whole grant should be disregarded under current legislation. See CPAG’s Welfare Rights Bulletin for updates.

 

Taken into account	Ignored
England Loan for living costs (full-time students) Loan for living costs (part-time students) Adult dependants’ grant 30 per cent of postgraduate loan for master’s degrees 30 per cent of postgraduate loan for doctoral degrees Some hardship fund payments (see above)	England Tuition fee loan (full-time and part-time students) Maintenance grant Special support grant Special support loan element Parents’ learning allowance Childcare grant Disabled students’ allowance Travel expenses allowance 70 per cent of postgraduate loan for master’s degrees 70 per cent of postgraduate loan for doctoral degrees NHS bursary (means-tested and non-means-tested) NHS bursary dependants’ allowance NHS training grant NHS Learning Support Fund payments Teacher training bursary Social work bursary Most hardship fund payments (see above)
Wales Loan for living costs Maintenance grant after first £5,161 (2018 cohort students) Adult dependants’ grant 30 per cent of postgraduate loan for master’s degrees 30 per cent of postgraduate loan for doctoral degrees Some hardship fund payments (see above)	Wales Tuition fee loan Tuition fee grant Special support payment (2018 cohort students) Welsh government learning grant (pre-2018 students) Special support grant (pre-2018 students) Parents’ learning allowance Childcare grant Disabled students’ allowance Travel expenses allowance 70 per cent of postgraduate loan for master’s degrees 70 per cent of postgraduate loan for doctoral degrees NHS bursary NHS bursary dependants’ allowance Teacher training grant Social work bursary Most hardship fund payments
Northern Ireland Loan for living costs Adult dependants’ grant Department of Health bursary dependants’ additions Some hardship fund payments (see above)	Northern Ireland Tuition fee loan Maintenance grant Special support grant Parents’ learning allowance Childcare grant Travel expenses allowance Postgraduate loan for tuition fees Social work bursary Department of Health healthcare student bursary Most hardship fund payments (see above) Disabled students’ allowance

 

1     Regs 68 and 69 UC Regs »

2     Reg 68(2) and 69 UC Regs »

3     Reg 69(1a) and UC Regs »

4     Reg 68(3) UC Regs »

If you do not get a student loan for living costs

If you do not get a loan, but you receive a grant, the grant income is taken into account for UC (subject to the disregards below).1Reg 68(2) and (4) UC Regs A grant is an educational grant or award, and does not include 16–19 bursary payments, education maintenance allowance payments or other payments for people under 21 to enable them to complete a course of non-advanced education.2Reg 68(7) UC Regs

Grant income is taken into account, excluding any payments for:3Reg 70 UC Regs

•tuition fees or exams;
•your disability;
•extra costs of residential study away from your usual place of study during term time;
•the costs of your normal home (if you live elsewhere during your course), unless these are included in your UC;
•the maintenance of someone not included in your UC claim;
•books, equipment, course travel costs or childcare costs.

If you get a grant but no loan, and receive a discretionary payment in either further or higher education, this is disregarded if it is paid for any of the above; otherwise it counts as income.

You should ensure your funder, university, college or learning provider gives you clear information on what any payment is for, especially if a grant is paid for course costs, as this may not be obvious from its title. For example, if you receive one of the new postgraduate bursaries for over-60 year olds in Wales, ask your university to be clear on the purpose for which it is paid, otherwise this may be taken into account.

Taken into account	Ignored
England Some learner support fund payments (see above) Dance and Drama maintenance grant Some bursary loan fund payments (see above) Social work bursary Postgraduate stipend/studentship Some hardship fund payments (see above)	England Advanced learner loan Tuition fee grant Dance and Drama tuition fee grant 16–19 bursary fund payment Some learner support fund payments (see above) Some bursary loan fund payments (see above) Parents’ learning allowance Childcare grant Disabled students’ allowance Travel expenses allowance
Wales Social work bursary Postgraduate stipend/studentship Some hardship fund payments (see above)	Wales Tuition fee grant Education maintenance allowance Welsh government learning grant for further education Parents’ learning allowance Childcare grant Disabled students’ allowance Travel expenses allowance
Northern Ireland Further education grants Nursing and midwifery bursary Nursing and midwifery bursary dependants’ additions Postgraduate stipend/studentship Some hardship fund payments (see above)	Northern Ireland Education maintenance allowance Tuition fee grant Parents’ learning allowance Childcare grant Disabled students’ allowance Travel expenses allowance

 

 

 

1     Reg 68(2) and (4) UC Regs »

2     Reg 68(7) UC Regs »

3     Reg 70 UC Regs »

3. Dividing income throughout the year

Universal credit (UC) is paid monthly, for an ’assessment period’. Each assessment period runs from the day of the month you claimed UC, for one month – eg, if you claim on the second of the month, each assessment period runs from the second of the month to the first of the following month. The annual amount of your student income is divided over the number of assessment periods in the course year, to arrive at the monthly amount that is used to work out UC.

Student income counts for each assessment period during your course, excluding the one at the end of each academic year and those in the long vacation.1Reg 68 UC Regs

Student income counts as income:

•from the start of the assessment period in which the course/course year begins; and
•for every subsequent assessment period during the course/course year.

Student income is ignored:2Reg 13 UC Regs

•in the assessment period in which the last week of the course or the start of the long vacation falls;
•in any assessment periods that fall completely within the long vacation; and
•if you abandon or leave your course completely, in the assessment period in which you leave.

Long vacation

The ‘long vacation’ is the longest holiday in a course which lasts at least two years, and must last for at least one month.3Reg 68(7) UC Regs

Once you have calculated the number of assessment periods in the course year, divide the total annual amount of loans and/or grants by this number, and apply the monthly disregard. In each assessment period, £110 of student income is disregarded.4Reg 71 UC Regs

Examples

Laura has a five-year-old daughter and is single. She starts a full-time degree course at her local university in Liverpool. Year one of her course runs from 26 September 2022 to 12 May 2023. Her assessment periods run from the 3rd of the month to the 2nd of the following month. Laura gets a tuition fee loan of £9,250, a loan for living costs of £6,958, a special support element of £4,106, a parents’ learning allowance of £1,863 and a childcare grant of £3,900. She also receives child benefit of £21.80 a week.

Step one Laura’s tuition fee loan, special support element, parents’ learning allowance and childcare grants are disregarded, as well as her child benefit.

Step two Her loan for living costs counts as income over eight assessment periods in the first year of her course (from 3 September 2022 to 2 May 2023).

Step three £6,958 ÷ 8 = £869.75

Step four £110 per assessment period is ignored. £869.75 - £110 = £759.75

Step five She has no other income. Laura’s UC is calculated on student income of £759.75 a month from 3 September 2022 to 2 May 2023. From 3 May 2023, the monthly income from her student funding is nil. Laura’s next UC payment in June will be based on £0 student funding.

Paula is 27, has a seven year old son and is single. She is undertaking a full-time access to higher education course in Plymouth. Her course runs from 5 September 2022 to 19 May 2023. Her assessment periods run from the 14th of the month to the 13th of the following month. She has taken out an advanced learner loan of £1,700 to pay for her course. She also receives £700 over the year from the loan bursary fund for childcare.

Both her loan and her bursary payment are disregarded, although she must provide evidence that the bursary payment has been made for childcare, not general costs. Her student income over the year is £0.

Nadiya is a lone parent with one child. She is undertaking a master’s course in Hull. Her course runs for one year between 26 September 2022 to 9 June 2023. Her assessment periods run from the 8th of the month to the 7th of the following month. Nadiya receives a postgraduate loan for a master’s degree of £11,836. She also receives child benefit of £21.80 a week.

Step one 70 per cent of Nadiya’s loan is disregarded, as well as her child benefit.

Step two The remaining loan counts as income over nine assessment periods in the first year of her course (from 7 September 2022 to 6 June 2023).

Step three £3,550.80 ÷ 9 = £394.53

Step four £110 per assessment period is disregarded. £394.53 - £110 = £284.53

Step five She has no other income. Nadiya’s UC is calculated on student income of £284.53 a month from 7 September 2022 to 6 June 2023. From 7 June 2023, the income from her student funding is nil. Nadiya’s next UC payment in June will be based on £0 student funding.

 

1     Reg 68 UC Regs »

2     Reg 13 UC Regs »

3     Reg 68(7) UC Regs »

4     Reg 71 UC Regs »

4. Other payments

• Professional studies loans

Professional studies loans

These educational loans count as capital if paid as a lump sum. If paid in instalments, they normally also count as capital.1Reg 46(4) UC Regs

 

1     Reg 46(4) UC Regs »

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 £344 a month. You get a higher work allowance of £573 if you have no help with housing costs in your UC. Earnings above your work allowance are deducted at 55 pence for every pound above the allowance. If you do not get a work allowance, 55 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.

6. Benefits

Some benefits are taken into account in the assessment of your universal credit, and others are ignored.

Benefits taken into account include:

•carer’s allowance;
•contribution-based jobseeker’s allowance;
•contributory employment and support allowance;
•most industrial injuries benefits;
•maternity allowance;
•retirement pension.

Benefits that are ignored include:

•attendance allowance;
•child benefit;
•disability living allowance;
•personal independence payment.

7. Maintenance

Child maintenance payments are ignored completely for universal credit. Other types of maintenance (eg, money from your former spouse to maintain you) may count as income. For details, see CPAG’s Welfare Benefits and Tax Credits Handbook.

8. Savings and other capital

There are limits on the amount of savings and other capital you can have and still claim universal credit (UC). Some kinds of capital are not counted in the assessment. For details, see CPAG’s Welfare Benefits and Tax Credits Handbook.

One-off, lump-sum payments of student income count as capital rather than income. This may include the care-experienced accommodation grant, and discretionary fund payments that are not paid regularly nor by reference to a period.1Reg 46(1)(a) & (3) UC Regs

You cannot get UC if your savings or other capital are above £16,000.

If your capital is £6,000 or less, it does not affect your UC at all.

If your capital is between £6,000.01 and £16,000, you are treated as though you have income from this capital of £4.35 a month for every £250 or part of £250 between these limits. For example, if you have savings of £6,525, your assumed income is £13.05 a month.

 

1     Reg 46(1)(a) & (3) UC Regs »