Universal Credit Decoded
The UK's working-age benefit, in plain English

The taper and the work allowance

A wooden side chair
A wooden side chair Photo: Wikimedia Commons, CC0.
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An alarm clock Photo: Wikimedia Commons, CC BY-SA 4.0.

Universal Credit is designed so that work always pays, but only up to a point. For every £1 you earn from working, your Universal Credit payment goes down by 55p — the taper rate. You keep 45p of each extra pound, plus the pound itself, so your total income (wages plus Universal Credit) still rises as you earn more. There is no hours limit and no earnings cliff: the payment falls gradually and stops only when your earnings are high enough to reduce it to zero.

The work allowance: earnings that are ignored first

If you or your partner are responsible for a child or young person, or have a health condition or disability that affects your ability to work, you get a work allowance: an amount of monthly earnings that is ignored entirely before the taper starts. In 2026/27 it is:

CircumstancesMonthly work allowance
You get help with housing costs through Universal Credit (or live in council-arranged temporary accommodation)£427
Neither of those applies£710

If you do not qualify for a work allowance — for example, a single adult with no children and no health condition — the taper applies from the first £1 of earnings. A household gets one work allowance, not one per earner. Source: GOV.UK Universal Credit guide, "How your wages affect your payments".

Worked examples (stated assumptions, no other deductions)

CaseArithmeticReduction
Single parent, no housing element, earns £1,000(£1,000 − £710) × 55%£159.50
Same parent with a housing element, earns £1,000(£1,000 − £427) × 55%£315.15
Single adult, no work allowance, earns £500£500 × 55%£275.00
Single parent, no housing element, earns £710Nothing above the allowance£0

When the payment stops — and restarts

As wages rise, the payment falls until it reaches zero, and DWP will tell you when payments stop. If your wages then fall again within 6 months of your last payment, payments restart automatically; after more than 6 months you must reapply. Monthly assessment periods matter here: if your employer pays you twice in one assessment period, or not at all in another, your Universal Credit for those months will swing even though your pay has not really changed. GOV.UK warns about exactly this pattern, and it is worth checking your statement in any month your pay date moves.

Stale figures to ignore

Work allowances of £673 and £404 are the 2025/26 rates, and £631 and £379 — found on two low-quality secondary pages — match no DWP year. This site uses £710 and £427 throughout, as GOV.UK states them for 2026/27. The taper itself has been 55% since November 2021; any page still quoting the old 63% taper is years out of date.

Self-employed? Most employers report wages for you; self-employed claimants normally report their own monthly earnings. The taper applies to your reported earnings in the same way, and the minimum income floor rules that used to complicate self-employed claims are outside the scope of this explainer — check GOV.UK's self-employment guidance for your position.
General information only. This page explains Universal Credit in plain English. It is not legal, financial, or benefits advice, and it cannot decide whether you qualify. Only the Department for Work and Pensions (DWP) can decide a claim. Rates and rules change over time — the figures here are for 2026/27, from April 2026 — so always confirm the current position with GOV.UK before you act on it. Contact: hello [at] tapetoolhq.com.