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How Universal Credit is calculated

Calculate how much Universal Credit you’re likely to get and find out how the payments work

In this article
How much Universal Credit will I get? Universal Credit standard allowance Universal Credit additional elements How to calculate your Universal credit payment Does your income reduce your Universal credit payment?
Universal Credit work allowance 2019-20 How savings reduce your payments Other benefits and Universal Credit How Universal Credit works in practice

How much Universal Credit will I get?

The amount of money you'll receive from Universal Credit will depend on your circumstances. 

Everyone eligible for Universal Credit will receive a standard allowance, but this varies depending on how old you are and whether you’re claiming as part of a couple. You may also be entitled to additional amounts – known as elements –depending on your circumstances.

This maximum amount may be reduced if you earn more than a certain amount or have significant savings. We explain how this works in our section on your income and Universal Credit.

You can find out more about what Universal Credit is and who is eligible in our guide: what is Universal Credit?

 

Universal Credit standard allowance

The standard allowance you may be entitled to is set out below.

Your circumstances Universal Credit monthly standard allowance
Single, aged under 25 £251.77
Single, aged 25 and over £317.82
In a couple, both aged under 25 £395.20 (per couple)
In a couple, either or both aged 25 and over £498.89 (per couple)

Universal Credit additional elements

In addition to the standard allowance, you may be eligible to claim additional elements if they apply to you – we explain these in the table below.

Universal Credit additional elements Extra monthly amount
Child element - if you have one child £277.08 (if born before 6 April 2017)
£231.67 (if born on or after 6 April 2017)
Child element - if you have two children £231.67 per child
Disabled child element £126.11
Severely disabled child element £383.86
Childcare element Up to 85% of costs (max £646.35 for one
child, or £1,108.04 for two or more children)
Limited capability for work and
work-related activity element
£328.32
Limited capability for work and
started health-related Universal Credit
and Employment and Support Allowance
claim before 3 April 2017
£126.11
Carer for a severely disabled person element -
this must be for at least 35 hours a week
£156.45
Housing element This depends on the type of housing and
your circumstances - see below

Child element

If you're responsible for children, you’ll generally only receive extra amounts to cover two children. You may be able to claim for more if you were already claiming for more than two children before 6 April 2017, or you’re renewing a claim that stopped within the last six months for more than two children.

Other exceptions include having more than two children through multiple births, if you have children who are adopted, if the children are living with you as part of a formal or informal caring arrangement, or if any children were conceived as a result of non-consensual sex (including rape).

If your child or children are disabled, you’ll receive extra amounts regardless of how many children you have. 

If you care for a severely disabled child, you may be able to claim the disabled child element, plus the element for being a carer – but you'll need to be providing at least 35 hours a week of care. 

Limited capability for work element

To qualify for this element, you’ll need to complete the Universal Credit capability for work questionnaire (UC50), and you’ll then have a Work Capability Assessment.

You’ll then be placed into one of three groups:

  • fit for work – you are judged to be capable of working.
  • limited capability for work – you can’t work now, but you could work in the future and are able to prepare by doing things like writing a CV.
  • limited capability for work and work-related activity – you can’t work and it’s not expected that you’d be able to prepare to work in the future.

If it’s decided that you’re fit for work, you’ll have to agree to look for work that's suitable for your health condition in order to claim Universal Credit. 

Housing element for homeowners

You may be able to claim extra money to put towards rent and service charges if you are a tenant or help with mortgage costs if you are a homeowner without an income. 

To be eligible if you're a homeowner and part of a couple, neither of you can earn any income.

You can get help with leaseholder costs if applicable, but you normally have to wait around nine months from the date of your Universal Credit claim.

For help with mortgage interest, you’ll only be able to take out a Support for Mortgage Interest Loan, which has an upper limit of £200,000 and is calculated using a standard rate of interest. This is currently 2.61% – so if your mortgage interest rate is higher, this loan is unlikely to cover the full payments.

Housing element for tenants

If you are a tenant, you won’t usually qualify for help with housing costs if:

  • a close relative owns the property
  • you’re a full-time student (unless you have a disability or children)
  • you're a single person aged 18-21 – but there are exemptions to this. 

Your housing costs will be calculated using the Local Housing Allowance for your area, which is based on average rental prices and the number of rooms you need based on your circumstances, e.g. if you have children.

If you rent somewhere with above average rent or deemed too large, you may not get enough Universal Credit payments to cover the rent. You may also have your payments decreased if you have non-dependent adults living with you.

If you’re aged 18-21, you may still be able to claim the housing element if any of the following exceptions apply:

  • you are responsible for a child or qualifying young person.
  • you're in work and your income is equal to or more than working 16 hours a week at National Minimum Wage.
  • you receive the care component of disability living allowance at the middle or highest rate.
  • you receive the daily living component of personal independence payment.
  • you were a care leaver before the age of 18.
  • you have been subject to, or threatened with, domestic violence by your partner, former partner, or family member.
  • you cannot live with your parents because they do not have a home in the UK, or it's inappropriate for you to live with them for another reason.
  • you cannot live with your parents due to a serious risk to your physical or mental health.
  • you are claiming Universal Credit in a live service area.
  • you have been receiving Universal Credit in a full digital service area since 31 March 2017.
  • you are a housing benefit claimant who moved to a Universal Credit full service area.

For the full list of situations where you might receive the housing element as an 18 to 21-year-old, you can read the government's guide.

How to calculate your Universal credit payment

Calculating your payments is a complicated process, but we explain how to make an estimate in our guide.

Step 1.  Add up everything you might qualify for, including the standard allowance and any additional elements. This will give you your maximum credit entitlement.

Step 2. Make reductions for your income from any jobs, rent or other earnings. If you have more than £6,000 in savings, you’ll also have to make reductions for those, and further reductions for other benefits or pensions you receive. 

Step 3. The amount you receive could be affected by any sanctions ordered against you. We explain how these work in our guide to Universal Credit sanctions.

Step 4. You may hit the benefits cap, which is the maximum amount of benefits a household can receive in one year. Throughout most of England, the benefits cap is £20,000 for couples and families, and £13,400 for single people without children. In London, it’s £23,000 for couples and families or £15,410 for single people without children.

That said, it's very difficult to arrive at an accurate result, so you may need to wait until the DWP confirms how much you’re entitled to.

Does your income reduce your Universal credit payment?

If you're in work, your earnings will affect how much Universal Credit you receive. For every £1 you earn, you’ll lose 63p of your Universal Credit award – unless you qualify for work allowance.

As your earnings increase, you may eventually receive no Universal Credit and your payments may stop. You’ll be told before this happens.

If your salary is later reduced and you want to start claiming Universal Credit again, you’ll have to make a new claim.

 

Work allowance

If you qualify for 'work allowance', you can earn a set amount before your Universal Credit payments are reduced. To be eligible, you (and/or your partner) must be responsible for at least one child, or have an illness or disability that means you’re unable to work.

If you qualify for work allowance and receive the housing element of Universal Credit, you'll be able to earn up to the ‘Lower work allowance’ in the table below. If you don't receive the housing element, you'll benefit from the 'Higher work allowance'.

For every pound you earn over the work allowance, your Universal Credit payment will be reduced by 63p. So, for example, if you earn £600 a month, you'd exceed your work allowance by £191, meaning your payment would be reduced by £120 (191 x 0.63).

Your circumstances Higher work allowance Lower work allowance
Single - responsible for one or more children

£409 per month or
£4,908 per year

£198 per month or
£2,376 per year

Single - limited capability for work
Couple - responsible for one or more children
Couple - limited capability for work

Self-employed earnings

If you’re self-employed, your income will reduce at the same rate as if you’re employed. But there’s also what’s known as a ‘minimum income floor’. This is the amount that the government assumes all self-employed people earn.

The minimum income floor equates to what someone would earn if they worked for 35 hours a week at the National Minimum Wage for their age group.  So, for someone over the age of 25, this would be £1,137.50 per month, or £7.50 per hour.

If you earn less, your payments will still be calculated as if you did earn the minimum income floor. If you earn more, then your payments will be calculated using your actual earnings.

The minimum income floor won’t apply to you for the first 12 months of you being self-employed. This is called the ‘start-up period’ and is supposed to help you grow your business.

Universal Credit work allowance 2019-20

Philip Hammond, the chancellor, announced in the autumn Budget 2018 that work allowance will increase by £1,000. Working families and those with disabilities will reportedly be better off by up to £630 each year.

Simply put, you’ll be able to earn more each year while still getting your full Universal Credit payments. 

The 2019-20 work allowance thresholds are in the table below. These new rates will come into force from 6 April 2019.

As in the previous table, you’ll get the lower work allowance if you also claim the housing element of Universal Credit.

Your circumstances Higher work allowance Lower work allowance
Single - responsible for one or more children

£492.33 per month or
£5,908 per year

£281.33 per month or
£3,376 per year

Single - limited capability for work
Couple - responsible for one or more children
Couple - limited capability for work

How savings reduce your payments

The amount you have stashed away in a savings account or Isa could also affect how much Universal Credit you receive.

If you have less than £6,000 saved, this won’t have any effect on your payments.

If your savings are between £6,000 and £16,000, it will be treated as if you’re receiving an income from this money when calculating your Universal Credit.

This income will be £4.35 for each £250, or part of £250 you hold – regardless of whether you receive any income from your savings or not.

What’s more, if you’re part of a couple but have to make a Universal Credit claim as a single person, your partner’s savings will still be taken into account.

Other benefits and Universal Credit

Unearned income is the money you receive from other benefits and allowances. 

This is taken into account when calculating how much Universal Credit payments you receive. For every £1 of income you receive from other benefits, your maximum Universal Credit payment will be reduced by £1.

Income from the following benefits will reduce your Universal Credit payments:

  • contribution-based Jobseeker’s Allowance
  • contributory Employment and Support Allowance
  • Carer’s Allowance
  • widowed mother’s allowance
  • widowed parent’s allowance
  • widow’s pension
  • Maternity Allowance
  • Industrial Injuries Benefit – excluding exceptionally severe disablement where constant attendance is needed.

Find out more: what is Universal Credit? – our guide explains how the application process works and whether you might be eligible to claim.

How Universal Credit works in practice

To help show how the various allowances and reductions work, we’ve come up with some example scenarios for people claiming Universal Credit.

 

Example 1: single, with one child and self-employed

 

Julia is 23 years old. She’s single and has one child. She’s self-employed and earns £13,000 a year. She has £7,000 in savings. 

Julia’s maximum Universal Credit amount is £1,129.79 per month for the general element, childcare element for a child born after 6 April 2017, and the maximum childcare element. However, it would be cut for several reasons. 

While she earns less than the ‘minimum income floor’ in place for self-employed people – which, for her age, would be £1,119.30 per month – she will still be treated as if she earns this much.

Her savings will also push up her assumed income. The first £6,000 can be ignored, but the remaining £1,000 contains four £250 parts. Each of these adds £4.35 to her income, adding £17.40 per month, which means her total assumed income will be £1,136.70.

Due to her child, she qualifies for the ‘higher work allowance’ of £409. But it’s assumed she earns £727.70 more than this, so her payments will be reduced by £458.45 (£727.30 x 0.63).

With these deductions, Julia’s maximum Universal Credit payment of £1,129.79 would be reduced by £458.45, leaving her with a payment of £671.34 per month.

 

Example 2: couple, no children, limited capability for work

 

John is 30 years old. He is not in work, does not have any children, and receives the limited capability for work and work-related activity element, as well as £110.75 per week in Employment and Support Allowance. He has £5,000 in savings. 

John lives with his partner Sarah, who earns £500 a month from employment and has £3,000 in savings. They claim Universal Credit as a couple, which will get paid to John’s account.

John and Sarah’s maximum Universal Credit payment would include the basic element couple’s allowance of £498.89, plus John’s element for limited capability for work and work-related activity of £328.32, totalling £827.21.

The couples’ combined savings exceed the £6,000 limit by £2,000. This can be split into eight £250 parts, adding £34.80 to the couple's assumed income (£4.35 x 8).

So, their total income is assumed to be £534.80.

John doesn’t work, so he doesn’t qualify for the work allowance. As Sarah is able to work and they don’t have children, she won’t qualify for it either. 

As their assumed income is £534.80, their Universal Credit payment will be reduced by £336.92 (£534.80 x 0.63p).

Plus, there’ll be an additional reduction of £1 for each £1 of the other benefits John receives, a further £443 per month.

Overall, the maximum possible payment of £827.21 per month would be reduced by £779.92, bringing their payment to £47.29 per month.

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