Universal Credit Explained Simply
What you get, how it works, and the taper rate
Universal Credit (UC) is the UK’s main welfare benefit, replacing six older benefits: Jobseeker’s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Employment and Support Allowance, and Income Support. It is paid monthly and managed through an online journal.
Who Qualifies
You can claim Universal Credit if you are aged 18 or over (some exceptions for 16-17), under State Pension age, living in England, Scotland, or Wales, and have savings under £16,000. You can be working, unemployed, or unable to work. Couples must make a joint claim.
There is a five-week wait from your claim date to your first payment. During this time, you can apply for an advance payment which is repaid from future UC payments over up to 24 months.
How Much You Get
UC is made up of a standard allowance plus additional elements depending on your circumstances. The standard allowance for 2025/26 is approximately £393 per month for a single person aged 25+ and £617 for a couple. Additional elements include:
| Element | Monthly Amount |
|---|---|
| First child (born before Apr 2017) | £333 |
| First child (born after Apr 2017) | £287 |
| Second child | £287 |
| Limited capability for work | £407 |
| Carer element | £198 |
| Childcare (max 1 child) | Up to £951 |
| Housing element | Based on rent |
The Taper Rate
If you work while on UC, your payment reduces as you earn more. The taper rate is 55%, meaning for every £1 you earn above your work allowance, your UC is reduced by 55p. This replaces the old system where some people faced effective tax rates of over 90%.
The work allowance is the amount you can earn before the taper kicks in. If you have housing costs paid by UC, your work allowance is £404 per month. If not, it is £673 per month. Only people with children or a health condition get a work allowance. Everyone else has the taper applied from the first pound earned.
Example Calculation
A single parent aged 30 with one child (born 2020), earning £1,200 per month with £600 rent. Their UC would be: standard allowance (£393) + child element (£287) + housing (£600) = £1,280. Earnings above work allowance: £1,200 - £404 = £796. Taper: £796 x 55% = £438. Final UC: £1,280 - £438 = £842 per month.
Tips for Claimants
Keep your online journal updated. Report earnings changes immediately. If you are self-employed, be aware of the Minimum Income Floor which assumes you earn at least the equivalent of minimum wage hours. Check if you qualify for Council Tax Reduction separately as this is not included in UC. Most importantly, use an independent benefits calculator to check your entitlement before claiming.