Comparison · 2026/27
Universal Credit Work Allowance vs Taper Rate
The work allowance and the taper rate are two separate but connected mechanisms that determine how much Universal Credit you keep once you start earning. The work allowance is an earnings amount ignored completely; the taper rate is the percentage by which UC reduces above that point. This guide explains both and works through an example.
At a Glance
| Feature | Work Allowance | Taper Rate |
|---|---|---|
| What it is | Earnings ignored before UC reduces | % UC reduces per £1 above allowance |
| Who gets it | Claimants with children or LCW | All claimants with earnings |
| Current rate | Lower/higher, varies by housing support | 55% (since April 2023) |
| Applies to | First slice of earnings only | All earnings above the allowance |
| Changes over time? | Reviewed most Budgets | Fixed since April 2023 |
Exact work allowance figures change periodically — verify the current amount on gov.uk before relying on it for a specific calculation.
Worked Example
Consider a single parent with the higher work allowance (no help with housing costs through their UC) who takes a part-time job. Their first slice of monthly earnings, up to the work allowance, is ignored completely — UC stays at its maximum level. Once earnings exceed the work allowance, UC reduces by 55p for every additional £1 earned.
If they earn £200 above the work allowance in an assessment period, UC reduces by £110 (55% of £200), leaving them £90 better off overall for that £200 of extra earnings — on top of keeping the earnings ignored below the allowance threshold entirely. This structure means additional hours or a pay rise always leave a UC household with more total income, even though part of the gain is offset by the taper.
Lower vs Higher Work Allowance
Claimants who receive support with housing costs as part of their Universal Credit award get the lower work allowance; those who do not (for example, because they own their home outright, live rent-free, or their rent is covered separately) get the higher work allowance. The logic is that claimants already receiving substantial housing support through UC have a smaller earnings buffer before the taper applies, since they are already benefiting from one form of means-tested help.
Claimants with no children and no assessed limited capability for work get no work allowance at all — their earnings reduce UC at the 55% taper rate from the first pound. This group is expected to be more able to increase their hours or move into full-time work without the same childcare or health-related constraints that the work allowance is designed to soften for parents and disabled claimants.