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Changes in Circumstances: Work / Childcare Changes

Click on the buttons below to find out what happens to the Universal Credit award when a claimant's income changes:

 

What happens depend on whether the claimant:

  • is on Universal Credit already, or
  • is making a new claim for Universal Credit, or
  • is making a re-claim.

If they are on Universal Credit already, then:

  • They need to report the fact that they are finishing work promptly - otherwise they could be sanctioned.
  • Their claimant commitment may change - so they will need to agree any new one.
  • If they are now in the 'all work-related requirements' conditionality group, they will need to start looking for work straight away.
  • Any Childcare Costs Element can continue for another Monthly Assessment Period.
  • If their UC award includes a Transitional Element, then they could lose this.
  • Certain payments they may receive from work, such as holiday pay or pay in lieu of notice will count as earnings as reduce their UC award.




  • When someone on Universal Credit makes the move into work they will need to notify the DWP and ensure that their claimant commitment is altered.

  • Their Universal Credit assessment will include any net earnings from work paid within their Monthly Assessment Period (MAP) - click here to find out how earnings affect a Universal Credit award.

  • Where someone starts work and does not receive any earnings within the MAP in which they started, then their award of Universal Credit should be the same as the previous months - assuming they've not had any other changes in circumstances.

  • Where a claimant who has already been found to have a Limited Capability for Work (or LCWRA) starts work they do not automatically lose their LCW/LCWRA status! (Although the fact that they are managing to work will be taken into account next at their next assessment).

  • Where the claimant has to pay for childcare, they may become entitled to have a Childcare Costs Element included in their UC award - click here.

  • Where someone has third party deductions in place for arrears these will continue for a while but could end when the claimant's (or joint claimant's) earned income equals or exceeds their work allowance for the three MAPS immediately preceding the date on which the next deduction could be made.

  • Where someone has an APA managed payment in place due to being / having been two months' in rent arrears, these can continue (although the DWP may review whether they are still needed) - but they might be at a lower amount, or different amounts depending on the claimant's ongoing monthly entitlement to Universal Credit.



  • When someone on Universal Credit makes the move into self-employment they will need to notify the DWP and ensure that their claimant commitment is altered.

  • They will need to attend a 'Gateway Interview' with their work coach to establish whether or not they are going to be 'gainfully self-employed'.

  • Their Universal Credit assessment will include any net earnings from work paid within their Monthly Assessment Period (MAP) - the claimant will need to report their self-employed income and allowable expenses at the end of each Assessment period. Click here to find out how self-employed earnings are calculated and how they affect a Universal Credit award.

  • Where someone starts work and does not receive any earnings within the MAP in which they started, then their award of Universal Credit should be the same as the previous months - assuming they've not had any other changes in circumstances.

  • Where the claimant has to pay childcare then they could have a Childcare Costs Element included in their assessment - click here.

  • Where someone has third party deductions in place for arrears these will continue for a while but could end when the claimant's (or joint claimant's) earned income equals or exceeds the work allowance for three MAPSs immediately preceding the date on which the next deduction could be made.

  • Where someone has an APA managed payment in place due to being / having been two months' in rent arrears, these can continue (although the DWP may review whether they are still needed)  - but they could be at a lower amount, or different amounts depending on the claimant's ongoing monthly entitlement to Universal Credit.



For employed claimants

The DWP are sent information about the claimant's earnings by HMRC and therefore any wage changes will be picked up. If their earnings drop, then their UC award will generally increase. If their earnings increase, then their UC award will usually drop.

It is what is paid in each Monthly Assessment Period (MAP) that counts - even if this includes earnings in respect of past (or future) periods.

A drop in earnings could affect the conditionality group the claimant is in. In which case they will need to agree a new claimant commitment and ensure they complete any tasks required.

For self-employed claimants

The claimant has to report their earnings and allowable expenses at the end of each MAP, so any changes in income will be picked up.

If the claimant makes a loss in any one MAP this can be carried forward and offset against future income.

However, they may be affected by the Minimum Income Floor, which means the DWP may take a higher income figure into account when working out their UC award than they actually received.

Transitional Element

If they have a Transitional Element in their UC award, and their earnings drop, then they may lose this Element.

Surplus Earnings

If they receive a large payment of earnings, and their UC award drops to nil, then they may be affected by the surplus earnings rules.




Where a UC claimant starts paying for childcare costs, either because they are starting work or even when they are already in work, they could be entitled to a Childcare Costs Element included in their UC assessment to help them pay for those costs.

The Childcare Costs Element acts as a refund - so the claimant has to have paid for the childcare and reports that payment every Monthly Assessment Period (MAP), so changes in the amount paid will be picked up by the DWP.

If starting work they may be able to get help with the upfront costs of childcare from the Flexible Support Fund.

The Childcare Costs Element can continue to be included in a claimant's UC award whilst they are off work sick or on maternity leave.

It will also continue (if the claimant continues to pay for childcare costs) for the MAP in which they finish work, and the following one.

Where the claimant's UC award includes a Transitional Element, the inclusion of or increase to the Childcare Costs Element should NOT erode it.