What counts as income for Universal Credit purposes?

Full answer

Universal Credit uses a broad definition of income to calculate a claimant's award, but with some important exclusions that are worth understanding. Earned income -- wages from employment, or profit from self-employment -- is counted on a net basis, meaning after Income Tax, National Insurance and any pension contributions have already been deducted, and it is this net figure that the 55% taper is applied to above any work allowance. Self-employed claimants who have been trading for more than 12 months are also subject to the Minimum Income Floor, which assumes they earn at least the equivalent of full-time National Living Wage hours even if their actual profit is lower, unless a start-up period or exemption applies. Most other unearned income counts too, including private and occupational pension income, most maintenance or child support payments received, rental income from a property the claimant owns but does not live in, and most other state benefits such as contribution-based JSA, ESA or Carer's Allowance (deducted pound-for-pound, unlike earnings). Crucially, several benefits are specifically disregarded and do not count as income at all: Personal Independence Payment (PIP), Disability Living Allowance, Attendance Allowance, Child Benefit itself, and the Scottish Child Payment are all excluded from the Universal Credit income calculation, meaning receiving them does not reduce a Universal Credit award. Understanding this distinction matters enormously for disabled claimants and their families, since disability benefits genuinely provide additional support on top of Universal Credit rather than simply substituting for part of it.

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