NOTE: If using our basic UC Calculator - just enter the total amount of the net monthly earnings - the calculator will do the rest!
Net earnings (see below) from employment affect the amount of Universal Credit awarded - if the claimant's total net earned income is above their Work Allowance (click here) then their award of Universal Credit gets reduced by 55p* for every pound in earned income they have above it.
Steve works full time and has a 10 year old daughter, his net monthly wage is £1200. His work allowance is £344. His earnings will reduce his Maximum UC award by £1,200 - £344 x 0.55 = £470.80
Net earnings -
To work out the claimant's net earnings the DWP will deduct any:
- National Insurance
- 100% of any contribution to an occupational pension scheme
- Any charity payments under a payroll giving scheme approved by HMRC
No other deductions will be ignored - for example if they pay subs to a union or are part of a Christmas saving scheme.
*The taper rate and work allowance rates were changed due to the Autumn Budget 2021. The taper rate used to be 63p per £1.
Statutory Sick Pay and Statutory Maternity, Paternity and Adoption Pay count as earnings
Certain expenses do not count as earnings - including those that are 'wholly, exclusively and necessarily' incurred as part of the duties of employment and mileage expenses.
Redundancy payments count as savings rather than earnings