What if I start work?
A Universal Credit claim does not end just because someone starts work.
Universal Credit can be paid to top up earnings.
So, you may still be able to receive Universal Credit payments when you start work if your earnings are not too high. That amount will depend on your circumstances.
You need to report the fact that you have started work to the DWP so that:
- You get the right amount of Universal Credit each month.
- Your Claimant Commitment can be changed.
- You don’t get sanctioned.
IMPORTANT: Even if you have started work and this stops or reduces your requirements to look for work, you must still have your Claimant Commitment changed and accept the revised commitment within 7 days.
How earnings affect your Universal Credit
Any earnings – or income from self-employment – that you receive during an Assessment Period will be taken into account when your Universal Credit award is assessed.
So usually the Universal Credit you receive at the end of that Assessment Period will be less than when you weren’t working.
It might be that your earnings are high enough to take you off Universal Credit completely for that month.
But not all your earnings will be taken into account.
See How income affects an award for more information.
Do I need to tell the DWP how much I earn every month?
If you are paid by PAYE you don’t need to tell the DWP how much you have earned as this happens automatically – your employer reports everyone’s earnings to HMRC, and HMRC send the information directly to the DWP.
You should check that the amount of earnings included in your UC award are correct though, see ‘I don’t agree with the wages figured used’ if you have any issues.
If you’re not paid by PAYE e.g. because you work for a very small organisation, or if you are self-employed, you will need to report your earnings and expenses every month.
Starting self-employment
If you (or your partner) have started self-employment you / they may need to attend an interview at the JobCentre where the adviser will explain how claiming Universal Credit works whilst self-employed.
You will need to report your income and expenses every month – at the end of your Assessment Period.
To ensure your Universal Credit award runs smoothly it is best to talk to a Benefits Adviser who can explain what you will need to do and what issues to watch out for.
See What if I am self-employed for more information.
What if I have childcare costs?
You may be able to get extra help in your Universal Credit towards costs of childcare that you need to pay because you’re working. If you need to pay childcare upfront you can request a Flexible Support Fund Payment to help.
See Help with childcare costs on this page for more information.
What if I am finishing work?
If your job ends you must report this to DWP, on your online account. If you cannot access this you can phone the UC Helpline.
If you don’t report ending work within 5 working days you could be sanctioned.
Your Claimant Commitment
Because you are no longer in work you will probably need to agree a new Claimant Commitment with your Work Coach. You must agree to the revised commitment within 7 days or the claim could be closed.
If you are fit for work and have no caring responsibilities this will probably mean having to look for work for 35 hours a week.
For the first 4 weeks you’re out of work your Work Coach might let you limit the type of work you have to look for, or how much you earn, if they think it’s reasonable and that you have reasonable prospects of getting that type of work soon.
How do my final earnings affect my Universal Credit?
Even though you’re no longer working, your final earnings from work (which could include holiday pay, pay in lieu of notice, tax refund) will be taken into account in the Assessment Period you receive these payments.
Example:
Chloe has been getting Universal Credit to top up her earnings from work. Her Assessment Periods run from 24th of one month to 23rd of the next. Her 12 month contract ends on 31st July and she gets paid her final wages. Nearly four weeks later, on 27th August, she receives a further payment of £280.00 for holiday that she is owed. The DWP will take the £280 into account as earnings when they assess Chloe’s Universal Credit award for the Assessment Period 24th August to 23rd September even though she did no actual work during that period.
See How income affects an award for more information.
What if I get a Redundancy Payment?
Statutory and contractual redundancy payments, whether paid as a lump sum or over a given period, don’t count as earnings but as capital/savings.
So the effect on your Universal Credit depends on how much redundancy pay you get.
- If you get a redundancy payment that takes the total assessable capital/savings you have over £16,000, you won’t be entitled to Universal Credit from the start of the Assessment Period in which you get it.
- If it takes your total assessable capital/savings to anywhere between £6,000 and £16,000 then your Universal Credit will take this into account and it will be deemed to be generating you an income – so this will either reduce your Universal Credit award or could take you off Universal Credit.
- If you get less than £6000, and it doesn’t take the assessable capital/savings you have over £6000, then it doesn’t affect your Universal Credit amount.
See How savings affects an award for more information.
What if I still have to pay for childcare?
If you have had a Childcare Element in your Universal Credit award while you were working, and you are still paying for childcare (for example because your childcare provider requires payment for a notice period or you hope to find a new job quickly and want to keep the place open) you can still have the Childcare Cost Element included for the Assessment Period in which the job finishes, and in the following Assessment Period. Make sure you continue to pay for and report the childcare in the normal way.
See Help with childcare costs for more information.
I know that while I was in work the Benefit Cap didn’t apply to me – will it apply now I’ve stopped working?
Not everyone has their Universal Credit reduced by the Benefit Cap – but some do.
If you’ve been in work for at least 12 months, you may be entitled to a 9 month ‘grace period’ when your job ends, to protect you while looking for work.
If you’re worried about the Benefit Cap, speak to a Benefits Adviser.
See Benefit Cap for more information.