Answers · UK 2025/26
What is the Universal Credit work allowance?
The Universal Credit work allowance is the amount you can earn before your UC payment is reduced — £404/month if you have no housing element, or £673/month if you do, with a 55p taper on each £1 earned above that in 2026/27.
Full answer
The Universal Credit work allowance is the earnings threshold below which your UC payment is not affected. Once you earn above this amount, your UC reduces by 55p for every £1 of net earnings (the taper rate). **2026/27 Work Allowance amounts:** | Housing element? | Monthly work allowance | |---|---| | **No housing element in award** | **£404/month** | | **Housing element included in award** | **£673/month** | **Who qualifies for a work allowance?** Only claimants who are responsible for a child or qualifying young person, or who have a limited capability for work (LCW/LCWRA) receive a work allowance. Those without children and with full work capability do not have a work allowance — earnings reduce UC from the first pound. **The 55% taper:** For every £1 earned above the work allowance (after deducting income tax and NI), UC reduces by **55p**. This means you keep 45p in the pound from each pound earned above the threshold. **Childcare element:** Working parents in UC can claim back **85%** of eligible childcare costs, up to £1,330.27/month for one child (or £2,279.73 for two or more) — this is payable in arrears. **Self-employed and the Minimum Income Floor (MIF):** Self-employed UC claimants (after 12 months in business) are subject to the Minimum Income Floor — HMRC assumes they earn at least the equivalent of the National Living Wage even if actual earnings are lower. This limits how much UC a self-employed person can claim. **Moving from legacy benefits:** The DWP has issued Migration Notices to all legacy benefit claimants (Tax Credits, Housing Benefit, Income Support etc.) to move to UC. Once you receive a Migration Notice, you have 3 months to claim UC.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.