Chapter 12: How income affects universal credit

CPAG

This chapter explains how much weekly income is taken into account when working out your entitlement to universal credit (UC). If you are getting income-related employment and support allowance or housing benefit, see Chapter 13.

Basic facts

•Student loans for maintenance 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 for maintenance 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 for maintenance 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 So if you have left or finished your course and you get a payment of student income, it is disregarded. Note also that one-off lump-sum payments of student income count as capital (see here).

Step	Action
Step 1	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 2	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 3	Divide income throughout the year. Divide the amount in Step 1 by the number of months over which your student income counts for that year (see here).
Step 4	Deduct disregard. Deduct a set amount of £110 from the monthly amount of income from grants and loans.
Step 5	Add other income to the monthly amount. Add any other income to be taken into account (eg, earnings) to the monthly grant and loan amount you arrived at after deducting the disregard at Step 4. This 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 maintenance

If you are awarded a loan for maintenance, it counts as income when working out 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 loan is ignored, because it is for course costs.

If you do not have a loan for maintenance, but you could get one by taking ‘reasonable steps’, you are treated as if you have one – it counts as ‘notional’ income. If you have a principled and conscientious objection to taking out a loan (eg, because of religious beliefs), this may mean there are no reasonable steps you can take to get a loan. If this applies, there should be no loan income taken into account.2IB v Gravesham BC and SSWP (HB) [2023] UKUT 193 (AAC)

Any other 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 payments that are met by UC.3Reg 68(3) UC Regs A lone parents’ grant paid as well as your loan counts as income. Discretionary fund payments are 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 discretionary funds counts as capital rather than income (see here).

Taken into account	Ignored
Postgraduate loan for living costs	Postgraduate tuition fee loan
Undergraduate loan for maintenance	Special support loan
Lone parents’ grant	Estranged students’ bursary
	Young students’ bursary
	Independent students’ bursary
	Tuition fees
	Disabled students’ allowance
	Travel expenses
	Lone parents’ childcare grant and childcare fund payments

1 Regs 68 and 69 UC Regs »

2 IB v Gravesham BC and SSWP (HB) [2023] UKUT 193 (AAC) »

3 Reg 68(3) UC Regs »

If you do not get a student loan for maintenance

If you do not get a loan for maintenance, 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 it does not include education maintenance allowance payments.2Reg 68(7) UC Regs It includes any other grants or awards – eg, stipends paid to PhD students (as long as these are not provided under a contract of employment).

Grant income is taken into account, excluding any payment 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 for maintenance, and receive discretionary fund payments, they are disregarded if they are paid for any of the above but otherwise count as income. Note: a one-off payment from discretionary funds counts as capital rather than income (see here).

Taken into account	Ignored
All students	Help with tuition fees
	Special support loan
Undergraduate students
Care-experienced students’ bursary	Disabled students’ allowance
Lone parents’ grant	Lone parents’ childcare grant and childcare fund payments
Summer accommodation grant*
Paramedic, nursing and midwifery students
Paramedic, nursing and midwifery bursary	Childcare allowance
Dependants’ allowance for adult and child	Disabled students’ allowance
Single parent’s allowance	Travel and placement expenses
	Initial expenses allowance
Further education students
Bursary maintenance allowance	Education maintenance allowance
Dependants’ allowance	Additional support needs for learning allowance
Care-experienced bursary maintenance allowance	Study and travel expenses allowance
	Lone parents’ childcare grant and childcare fund payments

*Note that the summer accommodation grant is paid as a lump sum, so it counts as capital rather than income (see here).

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 must be divided over the number of assessment periods in the course year to arrive at the monthly amount that is used to work out UC. If your UC award starts during the course, each period of a month before your award starts is treated as an assessment period when working out over how many assessment periods your student income counts – ie, some student income is ‘allocated’ to notional assessment periods before the UC award starts.

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 course ends or the long vacation starts; and

•in any assessment period that falls completely within the long vacation; and

•if you abandon or leave your course completely, in the assessment period in which you leave.3para H6152 ADM

Long vacation

The ‘long vacation’ is the longest holiday in a course which lasts at least two years, and it must last for at least one month.4Reg 68(7) UC Regs

Note that for courses with no long vacation (such as paramedic, nursing and midwifery courses), this may mean that student income is taken into account over 12 months of the year. Masters courses are also usually one full year.

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. £110 of student income is disregarded in each assessment period.5Reg 71 UC Regs

Examples

Laura has a five-year-old daughter and is single. She starts a degree course. Year one of her course runs from 22 September 2025 to 8 May 2026. Her assessment periods run from the third of the month to the second of the following month.

Step 1: Laura gets a loan of £10,400 (£8,000 maintenance loan and £2,400 special support loan), independent students’ bursary of £1,000 and lone parents’ grant of £1,305.

Step 2: her independent students’ bursary and special support loan are disregarded. Her maintenance loan and lone parents’ grant (total £9,305) count as income over eight assessment periods in the first year of her course (from 3 September 2025 to 2 May 2026).

Step 3: £9,305 ÷ 8 = £1,163.12

Step 4: £1,163.12 – £110 = £1,053.12

Step 5: she has no other income. Laura’s UC is calculated on student income of £1,053.12 a month from 3 September 2025 to 2 May 2026. From 3 May 2026, weekly income from her student funding is nil. Laura’s next UC payment in June 2026 will be based on £0 student funding.

Paula has a seven-year-old son and is single. Her course runs from 1 September 2025 to 29 May 2026. Her assessment periods run from the 14th of the month to the 13th of the following month.

Step 1: Paula gets a further education bursary maintenance allowance of £1,120 (40 weeks at £28).

Step 2: her bursary counts as income over nine assessment periods (from 14 August 2025 to 13 May 2026).

Step 3: £1,120 ÷ 9 = £124.44

Step 4: £124.44 – £110 = £14.44

Step 5: she has no other income. Paula’s UC is calculated on student income of £14.44 a month from 14 August 2025 to 13 May 2026.

Jack is a nursing student and is single with a six-year-old son. Year one of his course runs from 15 September 2025 to 11 September 2026. His assessment periods run from the 6th to the 5th of each month.

Step 1: Jack gets a nursing bursary of £10,000, a dependants’ allowance of £3,640 and a single parent’s allowance of £2,303.

Step 2: his student income of £15,943 counts as income over 12 assessment periods (from 6 September 2025 to 5 September 2026).

Step 3: £15,943 ÷ 12 = £1,328.58

Step 4: £1,328.58 - £110 = £1,218.58

Step 5: Jack has no other income. His UC is calculated on student income of £1,218.58 from 6 September 2025 to 5 September 2026.

1 Reg 68 UC Regs »

2 Reg 13 UC Regs »

3 para H6152 ADM »

4 Reg 68(7) UC Regs »

5 Reg 71 UC Regs »

4. 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; and

•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 £411 a month. You get a higher work allowance of £684 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 Handbook.

5. Benefits

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

Benefits taken into account include:

•carer support payment;

•new-style jobseeker’s allowance;

•contributory employment and support allowance;

•most industrial injuries benefits;

•maternity allowance;

•retirement pension.

Benefits that are ignored include:

•adult disability payment;

•attendance allowance;

•bereavement support payment;

•Best Start grant;

•carer’s allowance supplement and young carer grant;

•child benefit;

•child disability payment;

•disability living allowance;

•funeral support payment;

•pension age disability payment;

•personal independence payment;

•Scottish adult disability living allowance;

•Scottish child payment.

For full details, see CPAG’s Welfare Benefits Handbook.

6. 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 Handbook.

7. 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 Handbook.

One-off lump-sum payments of student income count as capital rather than income. This may include the summer accommodation grant and discretionary fund payments that are not paid regularly or by reference to a period.1Reg 46(1)(a) and (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) and (3) UC Regs »

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