What the earnings taper is and how this affects Universal Credit
The taper rate sets the amount of benefits a claimant loses for each pound they earn. The Universal Credit earnings taper is a reduction to your Universal Credit based on your earned income. The earnings taper rate is currently 65%.
This means for every pound you earn over your work allowance (if you are eligible for one) your Universal Credit will be reduced by 65 pence.
To work out the earnings taper that applies to your award, Universal Credit will:
Take your total monthly earnings figure after tax, National Insurance and relevant pension contributions have been taken off
Deduct your monthly work allowance, which is the amount you can earn without your benefit being affected (if you are eligible for one)
Apply the taper rate by multiplying the remaining earnings by 0.65
This is the amount that will be taken from your Universal Credit maximum amount when calculating your award.
Reduction in the Universal Credit earnings taper rate
There will be a reduction in the taper rate to 63% from 10 April 2017. This means for every £1 you earn over your work allowance (if you are eligible for one) your Universal Credit will be reduced by 63 pence instead of 65 pence as it currently stands. The entitledto benefits calculator will show you your entitlement using the current and the new taper rate so you can see how this change will affect you when it is introduced.