£684 Income Limit: DWP Confirms Working Thresholds That Could Axe Your Universal Credit

Millions of individuals and families receiving Universal Credit (UC) payments in the United Kingdom face strict, clearly defined earning limits set by the Department for Work and Pensions (DWP). Exceeding these thresholds, which include not only wages but also savings and other income sources, can result in immediate reductions to the benefit or the payments being withdrawn entirely.

The DWP has consistently stated that the UC system is designed to support those on low incomes and with limited financial resources, while maintaining a clear incentive to move into or increase employment. Claimants are not restricted by the number of hours they work, but by the total amount of income they receive.

The Work Allowance and Taper Rate

The key mechanism for reducing payments for working claimants is the Work Allowance—the amount a person or couple can earn before their Universal Credit begins to be reduced. The level of this allowance depends on a claimant's circumstances, with the following monthly rates confirmed for the 2024/2025 and 2025/2026 tax years:

Pounds411 per month: Applies to claimants who receive help with housing costs through their Universal Credit payment or those living in temporary accommodation.

Pounds684 per month: Applies to claimants who are not receiving housing support via UC.

Once a claimant's earnings surpass their applicable Work Allowance, their UC award is reduced via the taper rate. The current taper rate is set at 55%, meaning that for every \pounds1 earned above the Work Allowance, the claimant’s Universal Credit payment is reduced by 55\text{p}.

For example, a claimant with the \pounds684 Work Allowance who earns \pounds1,000 in their assessment period would have \pounds316 of earnings subject to the taper (\pounds1,000 - \pounds684 = \pounds316). This would result in a deduction of \pounds173.80 (\pounds316 \times 0.55) from their maximum UC entitlement.

How Other Income and Savings Can End Your Claim

In addition to income from employment, the DWP rigorously assesses other financial resources held by the claimant and their partner. These rules are crucial as they define the absolute eligibility limits for Universal Credit:

Pounds6,000 Savings Limit (Lower): If a claimant's total accessible savings or capital are \pounds6,000 or below, this will have no effect on their UC award.

Pounds6,001 to \pounds16,000 (Savings Reduction Zone): Savings and investments within this bracket will reduce the monthly UC payment. The DWP applies a tariff of \pounds4.35 deduction for every \pounds250 (or part of \pounds250) above the \pounds6,000 threshold.

Pounds16,000 Savings Limit (Upper): If a claimant's total savings or capital exceed \pounds16,000, they are deemed ineligible for Universal Credit entirely and the claim will stop.

Accessible savings include cash, bank account balances, stocks, shares, and other financial assets. For couples, the DWP counts the combined household total for savings and investments.

Self-Employment and Reporting Earnings

For those in traditional employment, wage data is typically reported directly to the DWP via HMRC’s Real Time Information (RTI) system. However, self-employed claimants are personally responsible for accurately reporting their monthly income and expenses to ensure their benefit calculation is correct.

It is critical for all claimants to report any change in circumstances, including fluctuations in income or an increase in savings, immediately via their online Universal Credit account to avoid overpayments or payment stoppages. Recent DWP updates have also increased the Administrative Earnings Threshold (AET)—the income level that determines which claimants must meet job-seeking requirements—further reinforcing the government’s focus on encouraging a pathway towards financial independence.