Net earnings from employment affect the amount of Universal Credit awarded - if the claimant's total net earned income is above their Work Allowance (see below) then their award of Universal Credit gets reduced by 63p for every pound in earned income they have above it.
Steve works full time, his net monthly wage is £1200. His work allowance is £293. His earnings will reduce his Maximum UC award by £1,200 - £293 x 0.63 = £571.41
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.
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