What is the Universal Credit taper rate for 2026/27 and how does it work?

Full answer

The Universal Credit (UC) taper rate is the rate at which your UC award is withdrawn as your earnings increase. It applies to net earnings -- that is, pay after Income Tax, employee National Insurance and any pension contributions -- above your work allowance (if you qualify for one). For every GBP 1 of net earnings above the allowance, your UC is reduced by the taper percentage, and you keep the remaining portion. Who it affects: all UC claimants who have earnings from employment or self-employment. Those who do not have a work allowance (claimants without children or limited capability for work) see the taper applied from the first pound of net earnings. How the mechanism works: UC is calculated each monthly assessment period. The DWP starts from your maximum UC (standard allowance plus any housing, child, childcare, disability or carer elements), subtracts your work allowance from your net earnings, multiplies what remains by the taper rate, and deducts that from your maximum UC. Because Income Tax (Personal Allowance GBP 12,570, basic rate 20%) and employee NI (8% on earnings between GBP 12,570 and GBP 50,270) already reduce your gross pay, the taper bites on the lower net figure -- so the combined deduction rate on gross earnings can be substantial once you cross the NI and tax thresholds. Worked illustration of the mechanism: suppose you earn an extra GBP 100 net in a month above your work allowance. Your UC falls by GBP 100 multiplied by the taper rate, and you keep the difference, so total household income still rises -- work always pays under UC, just at a reduced marginal gain. The exact taper percentage and work allowance figures for 2026/27 are not in our rate card, so check GOV.UK for the current rate rather than relying on a number here. To see how a pay rise or extra hours change your net pay before the taper applies, use a take-home pay or National Insurance calculator.

Try the calculator