Warning for thousands of workers who could see Universal Credit payments reduced or stopped – are you affected?

THOUSANDS on Universal Credit face having their payments lowered or stopped completely due to a salary increase and bonus.

Healthcare workers in Northern Ireland are receiving a 5% pay rise this month and a bonus worth £1,505 in August.

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Healthcare workers face being hit with lower Universal Credit payments[/caption]

But while the pay boost is good news for thousands of employees, it is bad news for those on Universal Credit.

This is because Universal Credit is a means-tested benefit and reduces when you start earning money through the “taper rate”.

The Department for Communities, a devolved Government department in Northern Ireland, said those on the benefit will see payments reduced following the pay rise.

A spokesperson for the Department for Communities said: “The Department has confirmed that the amount of Universal Credit a person receives will be reduced if their earnings increase.

“However, a person can earn a certain amount before their Universal Credit payments are reduced, for example they keep £0.45 of every £1 they earn.”

Lee Healey, benefits expert from Income Max, said the impact of the Universal Credit reductions on healthcare workers would be a “smack in the teeth“.

He added: “If you earn more, the UC calculation reflects those changes in earnings.

“If you earn less payments can go up – so it works both ways.

“As always good money management is key; be on top of your finances, plan for fluctuations and changes in Universal Credit payments if your wages vary, and be prepared to adapt accordingly when things like bonuses or overtime hits your pay packet.”

How pay affects your Universal Credit payments

Universal Credit is a means-tested benefit, which means when you start earning money it is reduced.

This is because the benefit is designed to encourage people back to work.

For every £1 you earn from working, your Universal Credit payment goes down by 55p.

This is through what is known as the taper rate.

Some people are also eligible for a “work allowance” – where deductions aren’t made until you earn over a certain amount.

You get a work allowance if you (or your partner) are responsible for a child or have “limited capability for work”.

Limited capability for work is when you may not be able to look for work now, but have to take steps to procuring some.

The Universal Credit work allowance is lower if you also get help with housing costs.

Because of the taper rate, this means if you get a pay rise from work, your Universal Credit entitlement will fall.

But it also means if you were to lose your job and your salary with it, your Universal Credit entitlement could go up.

Because Universal Credit payments are worked out monthly on what your pay is, a one-off bonus can temporarily impact your entitlement for the following month.

In most cases, it should return to your previous entitlement the following month, if your salary stays the same.

Bear in mind, you may be entitled to benefits like Universal Credit without realising.

Recent figures from Policy in Practice reveal millions of people aren’t claiming the extra help when they could be.

In total, £23billion went unclaimed over the last financial year, with £8.3billion worth of Universal Credit not claimed for.

You can apply for benefits on the Government’s website.

It’s not just extra money you get from benefits either, with a number opening up additional perks.

Those on Universal Credit can get help covering the cost of childcare, for example, as well as help with travel costs.

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