Glossary · UK
What is Work Allowance?
The amount some Universal Credit claimants can earn before the taper rate starts to reduce their award, available only to claimants with dependent children or limited capability for work.
Full Definition
The work allowance is the amount of monthly earnings a Universal Credit claimant can keep in full, before the taper rate (which reduces Universal Credit by 55p for every £1 earned above the allowance) starts to apply, but it is not available to every claimant -- only households that include a dependent child or where the claimant (or their partner) has limited capability for work qualify for a work allowance at all; everyone else's Universal Credit starts tapering from the very first pound earned. There are two rates: a higher work allowance for claimants who do not receive the housing costs element of Universal Credit, and a lower work allowance -- £427 a month for 2026/27 -- for those whose award includes help with rent or mortgage interest costs, reflecting that the lower allowance group already receives more support elsewhere in their award. The work allowance is designed to smooth the transition from benefits into work by making sure that, up to the allowance threshold, earnings do not reduce Universal Credit at all, before the taper then reduces the award gradually rather than pound for pound, helping to avoid the very high effective marginal deduction rates that existed under the legacy benefits system it replaced.