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UC Taper Rate: How is the Universal Credit taper rate calculated?

Around five million households in the United Kingdom receive payments through Universal Credit (UC), which is a different kind of benefit since it doesn’t stop entirely just because a claimant starts working. The amount of Universal Credit you receive will gradually decrease as you work more, through a mechanism known as the Universal Credit taper rate.

Here, we’ll explain more about the UC taper rate, what rate it’s at and how your benefits are calculated.

What is the current Universal Credit taper rate?

Right now, the Universal Credit earnings taper rate is 63 percent. In other words, for every 1 earned above a certain work allowance, if you have one, your UC payments will be reduced by 63p.

This is about to change, though. UK chancellor Rishi Sunak has announced that the Universal Credit taper rate will go down to 55p, which is good news for claimants. This means those in employment can earn an extra 8p more for every extra 1 earned.

It’s not exactly clear when this change to the Universal Credit taper rate will be applied, but it is supposed to come into force no later than December 1. When the change does take place, it’ll be applied automatically, meaning there is no need to apply for this extra cash.

What is the Universal Credit work allowance and how does it affect the taper rate?

Some people are eligible for a work allowance, which allows them to earn more before their Universal Credit payments start to be reduced.

If you have responsibility for a child or limited capability for work then you can qualify for this, with monthly allowances currently at 293 if your UC includes housing support and at 515 if it doesn’t.

These UC work allowances are also set to go up, following another Universal Credit announcement by chancellor Rishi Sunak.



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