Universal Credit – earnings policy
Summary
This explains the policy for encouraging claimants to find work, more work or better
paid work
Content
Universal Credit is intended to make sure that claimants are better off if they take a
job or increase the hours they work.
Universal Credit Work Allowance and Earnings Taper
So that claimants understand how their earnings will impact on their Universal Credit
award, there is a simple system of Work Allowances and a single Earnings Taper
rate:
the Work Allowance is the amount a household can earn before their
Universal Credit award is affected
there are different levels of the Work Allowance depending on the
circumstances of the household
each household will only have one Work Allowance
once people earn more than the Work Allowance, their Universal Credit will be
reduced by an Earnings Taper rate of 65%
the Earnings Taper rate will mean that many people in work will receive more
support than in the current system
Work-related requirements
Different thresholds have been introduced to determine the requirements placed on
individuals who are in work and receive earnings, or are in a household with
earnings. This determination ensures claimants are allocated to the correct Labour
Market regime relevant to their individual earnings or the household earnings.
Claimants are expected to be looking for work up to an expected number of hours
each week. This is called the Conditionality Earnings Threshold (CET).
Once the claimant has achieved earnings equivalent to CET they are considered to
be within the 'working enough' regime and their conditionality group and the work-
related requirements placed on them will change.
Joint claims
If a claimant is part of a couple, each partner's individual CET will be combined to
form a household CET.
Where the household earnings reach the household CET (either through one or both
claimant's earnings) the household is considered to be 'working enough'. Both
members of the couple will be placed in the 'working enough' regime and their
conditionality group and the work-related requirements placed on them will change,
assuming they remain entitled to Universal Credit.
Administrative Earnings Threshold
The Administrative Earnings Threshold (AET) has been introduced to ensure that
only claimants on no income or very low income will receive intensive support.
The current AET has been set at £338 per month for a single person and £541 for
couple based on gross taxable pay. From February 2015 the AET is likely to be
defined in the Universal Credit regulations and be linked to the Jobseeker's
Allowance (JSA) rate. Unlike the CET, the individual/household AET are static
amounts that are not variable.
The AET will need to be increased each April in line with JSA rates (where the JSA
rate has been uprated).