The rules have been extended to ensure the ‘efficient administration’ of Universal Credit
Universal Credit rules on excess earnings that can stop your benefits have been frozen for another year.
The Department for Work and Pensions today (March 13) published its decision to keep the current level of £2,500 in place during the next financial year.
Sir Stephen Timms, Minister for Social Security and Disability, announced that the £2,500 limit – first established in legislation in 2015 – would be extended and will end on March 31, 2026.
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The Government statement says Work and Pensions Secretary Liz Kendall considered this move “necessary, in order to safeguard the efficient administration of Universal Credit.” The decision applies in England, Wales and Scotland.
Several other DWP amounts, including the benefit cap and the Local Housing Allowance, which determines how much someone gets towards their rent, are also being frozen for the upcoming financial year.
What exactly are the surplus earnings rules?
Under Universal Credit earnings rules, each individual receives a benefit payment based on their circumstances in the preceding month. For those who are working, this amount goes down by 55p for every £1 in wages.
If wages reach a high enough level, then Universal Credit payments are completely wiped out by these deductions.
In some cases, such as receiving a big bonus or a sudden increase in self-employed income in one particular period, a person’s earnings may go way above the level needed to negate a Universal Credit payment.
Rules say that when this surplus is £2,500 or more, it can be carried over into further months and added to your next sets of earnings to determine if you qualify for any Universal Credit.
In such cases, you will not get any Universal Credit until your earnings, including the amount that’s carried over, go under the limit and you become entitled to Universal Credit again.
If your wages reduce enough for you to be eligible for Universal Credit within five months, your Universal Credit payment will be automatically restarted. If it’s after five months, your Universal Credit claim will be closed and you will need to apply again.
If you were in a couple who then separated, any surplus earnings would be divided equally between the two of you. Your half will be taken into account if you make a new single or joint Universal Credit claim.
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