What happens to my Universal Credit if I start working?

Starting a job does not end your Universal Credit claim. UC is designed to taper away as your earnings rise, rather than cutting off at a fixed point.

How the taper works

Your UC award is reduced by 55p for every £1 you earn above your work allowance. The work allowance — the amount you can earn before the taper starts — applies only if you have children or limited capability for work, and for 2026/27 it is:

• £710 per month if your UC does not include a housing costs element
• £427 per month if it does

If you have no work allowance, the 55p taper applies from your first pound of earnings. Unearned income, such as other benefits, reduces UC pound for pound instead.

Because UC is assessed monthly in arrears, your award adjusts automatically each assessment period based on what your employer reports through PAYE. A month with more earnings means less UC; a month with less means more. You do not need to report PAYE earnings yourself, but you must still report other changes — such as starting self-employment — promptly.

If your earnings rise high enough

If your pay rises to the point where the taper reduces your award to zero, your UC stops — but the claim remains open for up to six months. If your earnings fall again in that window, payments can restart quickly without a brand-new claim or another five-week wait.

Working can also affect the extras in your award. You may become entitled to the childcare element, which covers up to 85% of eligible registered childcare costs while you are in paid work — there is no minimum hours requirement. Remember the capital rules still apply: savings between £6,000 and £16,000 reduce your award, and over £16,000 UC stops entirely.

Before accepting a job or increasing your hours, run your figures through a benefits calculator such as Entitledto or Turn2us so you know what your new monthly award will look like.