NOTE: If using our basic UC Calculator - just enter the total amount of assessable unearned income (see below) - the calculator will do the rest!
The way unearned income is dealt with in UC is different to earned income - for unearned income it is taken into account £ for £ over the period in respect of which the unearned income is paid.
Unearned income includes the following:
Benefits that are not disregarded or treated as earnings are counted in full as income in a Universal Credit assessment and thereby reduce the maximum award of Universal Credit £1 for £1.
Benefits that are totally disregarded when a claimant' Universal Credit award is assessed are:
- Disability Living Allowance / Personal Independence Payment / Armed Forces Independence Payment / Attendance Allowance / Constant Attendance Allowance
- Guaranteed Income Payments under the Armed Forces Compensation Scheme
- Child Benefit
- Guardians Allowance
- Special Guardianship Allowance
- Bereavement Support Payment (not to be confused with Widowed Parents/Mother Allowance)
- Discretionary Housing Payments
- New Enterprise Allowance
- War Disablement Pension
- War Widows', Widowers' or surviving Civil Partners' Pension
NOTE: The UC Regulations do not state that these benefits as disregarded, instead they are not listed as benefits that need to be taken into account as income under UC Regulation 66.
Retirement Pensions are generally counted in full as income in a Universal Credit assessment and thereby reduce the maximum award of Universal Credit £1 for £1.
There are special rules for 'pension pots'.
Other income that is not disregarded or treated as earnings are counted in full as income in a Universal Credit assessment and thereby reduce the maximum award of Universal Credit £1 for £1.
Income that is not counted as earnings or benefits and that is totally disregarded includes:
- Child Maintenance.^
- Fostering Allowance / Adoption Allowance / Kinship Care Payment / Special Guardians Allowance.
- Payments in kind / charitable payments / voluntary payments.
- Payments from the London Bombings Relief Charity Fund (LBRCF), the ‘We love Manchester Emergency Fund’ (WLMEF) and the ‘London Emergencies Trust’ (LET)
- Payments from third parties ie if a relative pays the phone bill.
- Payments for compensation for a personal injury.
- Work expenses.
- Juror expenses.
- Income from a lodger.
- Payments under the Windrush Compensation Scheme
This is not an exhaustive list
The Universal Credit Regulations state that if there is an unearned income that would be available to a claimant upon the making of an application for it, then that person is to be treated as having that unearned income - called 'notional income' - although there are some exceptions.
Assumed Income for Savings / Capital
Savings between £6,000 and £16,000 are deemed to generate an income. This is set at £4.35 a month for each £250 (or part of) a claimant has above £6,000.